The year was 2017. Independent mortgage originator Sierra Pacific was celebrating 30 years in business and having survived the 2018 financial crisis. Enjoying a productive and peaceful market lull, the company set its sights on restructuring and future-proofing the company from technology innovation and market shifts.
Enter Jay Promisco.
Joining Sierra Pacific as Senior Vice President of Retail Lending, Jay quickly got to work reimagining ways to improve an antiquated, 30-year mortgage refinance process in dire need of modernization.
“Redesigning and reimagining how a mortgage should work takes a lot of planning,” said Jay, who is now Sierra Pacific’s Chief Production Officer. “We spent hours and days and weeks in the planning stages, and then we figured out a baseline workflow on what we think the mortgage should look like in the future.”
Jay and his team then refined company processes and optimized workflows that enabled Sierra Pacific to close a refi in seven to 10 days, resulting in satisfied customers and increased turnaround times.
“By speeding up your process, you eliminate the ability for the customer to go shop and go somewhere else,” he said. “It’s not totally possible for every loan that you do, but if you can really take some time at your individual companies, sit on a whiteboard for a week or two, and if you can get 30 to 40 percent of your transactions done this way, you’re already winning.”
Shore up front-end and back-end tech stack
Sierra Pacific undertook a comprehensive review of all third-party vendor contracts, including credit reporting, appraisal and title insurance, making adjustments where necessary. The company also leveraged internal resources to develop an in-house loan origination software.
“You’ve really got to vet your vendor stack,” Jay said. “The way we were able to figure out real quick whether it was the appropriate vendor or not, was by saying, ‘Hey, what is your roadmap three years from now?’ If they didn’t have an answer for that, we knew we were working with the wrong vendor. A lot of vendors – and it’s mortgage companies and companies as a whole – get really excited about the shiny, bells, and whistles that fix one of their problems, but it don’t fix the global solution. If all you’re doing is fixing one problem, go find a different vendor that can solve for multiple issues and has more of a future vision of what it should look like. It’s really expensive to bring a vendor on and do all the integrations and spend time and your developers’ time and then to find out six months from now that it’s outdated.”
The customer is always right
“Every customer that applies for me deserves for me to work on their loan,” Jay said. “Getting the front-end up and the consumer experience right first is what we heavily focused on. Really, what it looks like underneath the hood is of no concern to your consumer, so the first step is getting that front-end process looking nice.”
Giving customers more transparency into their loan status is paramount, he added.
“I think what is transparency to the consumer – if that’s the ultimate thing – is like, ‘Guys, here’s your closing disclosure, here’s all your documents. Now spend the next three days revisiting it, and when you’re ready and you think you want to close this transaction, give me a call. We’ll jump on Zoom and we’ll get it done,’” Jay said.
Underwrite the deal up front
“I always thought that it was a little bit counterintuitive not to get the customer and answer way up front on the transaction,” Jay said. “As a loan officer, I’m going to take your application and find out if you qualify three weeks from now. That’s a mistake, right? It’s going to sit in processing for two weeks, and then I’m going to sit in underwriting for two weeks. Meanwhile, I don’t even have any idea if I can underwrite this mortgage and get it approved, so I wanted to move the approval status before we process the funds – a quick yes or a quick no upfront.”
To accomplish this, Sierra Pacific streamlined its process by integrating all of its product guidelines into its pricing engine.
“So I pull a credit report, I have the income in there, and I know pretty much up front this is going to work,” Jay said. “But then it’s layering on a couple of other processes: Making sure your security income and asset validation are happening at point of sale, and seeing if I can get an income or an employment waiver through your work number. If I don’t have a work number, or they’re not in the database, we use a partner called Veri-Tax, which does the same things that a work number does, but they do it manually and solicit HR companies to go and be in their database.”
Prevent appraisal pitfalls
One of the most common holdups in a refi transaction is the appraisal. To address this pain point, Sierra Pacific runs an automated underwriting system (AUS) concurrently with property inspections, waivers and automatic collateral evaluation. Doing this will yield “a scorecard, and you’re like, ‘Well, this one’s giving you a property inspection waiver, and this one isn’t. This one’s giving you income, this one’s not,” Jay said.
“By putting both AUSs and running them at the same time, we’re now at like 38 percent of our applications have an inspection waiver. That’s 38 percent of our loans where I don’t have to worry about an appraisal anymore,” Jay said. “That, by itself, saves you five to seven to 10 to 15 days, and I know it’s going to come in at value and from a credit underwriting perspective. That’s less time I have to work on that.”
Re-engineer your closing workflow
Take your close-of-escrow date and re-engineer your workflow backwards, Jay advised, and look for ways you can save time on each step.
“If you want to close on June 30, make sure the Closing Disclosure (CD) is going to go out seven days prior to that. This means I need to start collaborating 12 days before that to give me enough time to get the fees in. Ask, ‘how do I save time here, here, and here?”
Harness the power of collaboration
Under TILA-RESPA Integrated Disclosure (TRID) rules, a mortgage lender must provide the customer with a CD at least three days before signing. If any of the information provided to the consumer on this initial form changes, a revised CD must be issued, triggering a new three-day waiting period.
To prevent this delay, Jay advised working with your title and settlement providers far in advance to ensure the CD is ready to be issued.
“For example, we use ClosingCorp as our fee engine and our disclosure portal,” he said. “When I open the order, ClosingCorp reaches out to the title and settlement provider. They collaborate and send their fees, and I don’t have to worry about under disclosing or over disclosing – it’s already guaranteed. Using ClosingCorp as you move down the process helps me collaborate before I’m getting to the closing disclosure. By the time we are ready for a CD, the fees have already been validated. I’m pressing a button and kicking a closing disclosure out.”
Founded in 1986, Sierra Pacific is one of the oldest and largest independent mortgage originators in the United States. The company serves retail and wholesale mortgage banking markets in 48 states through three regional fulfillment centers and originates billions of dollars in residential loans nationwide as a direct lender. To find out more about how States Title partnered with Sierra Pacific to reduce its mortgage refinance process from 28 to 7 days, view our case study.