Newsletter: Closed Loan Economics, Mariah Carey, Better Mortgage

Written by Patrick O'Brien | Dec 28, 2021 7:01:23 PM

One of the most eye-opening concepts you can learn as a mortgage banker is to understand the economics of a closed loan.

According to the MBA, in Q3 2021 the numbers looked something like this:
Net Revenue per Loan: 396 bps
Expenses per Loan: 307 bps
Net Profit per Loan: 89 bps

Lending Insight from our CEO 💡

This means for a $250,000 loan, the company generated $9,900 per originated loan, incurred expenses of $7,675 to originate that loan, and ultimately profited $2,225.

When you unpack the expense line, approximately 67% (or 206 bps) of the expense of originating a loan is “personnel.” LO commission eats up about half of that, and the balance is spread across the rest of the company headcount.

As the market tightens and that 89 bps shrinks to “normal” levels, this should make you think twice about fee waivers, pricing concessions, and uncollected appraisal fees.

Something Festive 🎄

If you have ears, you’ve undoubtedly heard Mariah Carey’s “All I Want for Christmas Is You” played at some point this holiday season. Here are a few interesting facts about the song:

The song was recorded in August of 1994 and supposedly only took 15 minutes to write
Carey co-wrote the song with Walter Afanasieff, who went on to produce “My Heart Will Go On” for Celine Dion several years later
It’s reported that each December, Carey earns between $600,000-$1,000,000 in royalties from the song
The song was originally recorded at The Hit Factory on 421 West 54th St. in New York City

Speaking of Hundreds of Thousands of Dollars 💰

There’s no doubt that collecting fees upfront is a good idea. It increases the pull-through rate since borrowers are unlikely to walk away from fees they’ve paid and it allows you to cover expenses in the event that the deal falls apart. However, many lenders tell us simply don’t collect fees because it’s too much of an administrative headache. Fee Chaser always changes their mind. Find out why here.

All in This Together 📹

You’d have to be living under a rock to have missed the news and subsequent fallout from the Better Mortgage mass firing Zoom call. Rather than focus on how it was handled, we figured we'd share this spreadsheet of several hundred of the affected employees who are available for hire. There is a lot of great mortgage experience on that list!

It Was a BIG Year for Us 🙌🏼

New HQ, new employees, who dis?

LenderLogix not only moved into a beautiful new location in Buffalo, New York, but we doubled the size of our team this year too.

In 2021, we welcomed Emmi Sauls (Director of Marketing), Shawn Walsh (Director of Operations), Derrick Enderby (Director of Customer Success), Lisa Lee Howard (National Sales Manager), and Jeff Kopra (Senior Software Engineer).

These additions added 30 more years of mortgage origination experience to our team! Read more about these team members by following us on LinkedIn.

A bigger team means a bigger impact.

Over the past 12 months, LenderLogix has grown to help lenders in 545 counties in 42 states (nearly doubled from 272 counties in 22 states in 2020)... and we're just getting started, y'all. If you aren't already a QuickQual user, get ready to hear a lot more about how it's changing the game for lenders nationwide.

Yep, we joined TikTok.

November 30th was “Giving Tuesday” so LenderLogix made donations to the charities of each of our employee’s choice. Watch our latest TikTok to check out some of the causes the team chose to donate to.

Cheers to Closing Out 2021 🎉

From our families to yours, we hope you have a happy and healthy holiday season and a prosperous new year! Alas, our quote of the month: “I’m sorry I ruined your lives and crammed 11 cookies into the VCR.” – Buddy the Elf

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