3. OUTSOURCING COULD BE A PART OF THE SOLUTION So many functions of the mortgage banking process can now be performed on a contract basis by outside third parties that it’s hard to list them all here. Whole departments previously viewed as “sunk costs” can be evaluated against the cost of a third party that provides a just-in-time version of the service. This is true for everything from client-facing loan-servicing functions to staff augmentation options. Any evaluation of this type of outsourcing needs to consider not only the potential dollar savings but also the potential loss of control and ready access to key functions in the business. 4. NEW HEALTHCARE OPTIONS TO CONSIDER Many smaller and medium-sized organizations have been learning about self-insuring using group captive insurance plans that give them the option to pool their insurance risks with similarly situated employers in order to spread those risks across a larger group and, in turn, lower costs. In addition to their cost effectiveness, these plans also offer greater flexibility to the employers that choose them. For example, some offer patient advocacy resources that can take a load off of an organization’s internal HR staff as well, as the insurer is usually well-positioned to handle questions from employees about benefits that would otherwise route to internal human resources personnel. 5. REDUCING OCCUPANCY COSTS Like any other business coming out of the pandemic, mortgage lenders need to look closely at their space needs now that so much of the workforce has gone virtual. While there will always be a component of this sector that needs some office space, much of the process has been automated to the point that most lenders can significantly reduce their commercial real estate footprint. Some jobs, like call center support, may never need to come back to the office. Some key points to remember when evaluating space requirements in the months and years ahead include: • Does the business have an effective lease management system that can identify the types of penalties that will be incurred in the event executives decide to break a lease? • With the current conditions in the marketplace, does it make sense to buy commercial real estate where the business can consolidate those functions that require office space? • Understand that any lease can be broken or renegotiated, it’s just a matter of calculating the cost associated with that action to make sure that’s considered in the analysis of whether a different solution would be more cost-effective. • What functions are currently operating successfully from a remote location, and are there others that could be handled similarly? 6. CAN SPENDING ON TECHNOLOGY SAVE COSTS IN THE LONG RUN? For many organizations, the answer to this question is “Yes.” For lenders that currently have the liquidity to invest in technology during this period, the cost of technology has come down slightly in the economic downturn. An investment in a top-notch loan origination system, for example, could bring increased automation to the lending process. These types of new systems can also be programmed to interface with servicing and accounting systems in order to further reduce manual processing and potential input errors. IN THE LONG RUN The key to understanding financial flexibility during challenging times like these is to keep an open mind about which costs typically considered “fixed” can in fact be modified. The more creative you can be in terms of reducing costs, the better the chances you’ll outlast the economic downturn and position yourself to thrive when the cycle eventually starts to move upward again. n INDEPENDENT REPORT | 23
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