Over the past three years, the cost of living has increased substantially. Prices rose by 9.1% in 2022, 3.3% in 2023, and 3% in 2024. Just like American consumers, mortgage lenders are facing a cost crisis of their own. As of 2023, the average cost per loan was nearly $12,500.
As loan origination costs rise, lenders’ profits are dwindling. During Q1 of 2024, lenders reported an average net loss of $645 per loan, marking the eighth consecutive quarter of net production losses. In light of these statistics, most mortgage lenders are highly motivated to find ways to save money in 2025.
So, how can you keep costs down and protect your profits? Below, we’ll offer three effective strategies to save money and pad your bottom line.
Table of Contents
#1 Assess Your Current Workflows
While you can’t control interest rates, inflation, or credit report prices, you can control your own efficiency. Enhancing your operational efficiency is one of the most effective ways to cut costs.
Before you can cash in on increased efficiencies, you need to create them. You can do so by mapping out the steps of your loan origination process, from prequalification to closing. Once you have a clear understanding of your workflows, ask yourself the following questions:
- How long do loans stay in each stage?
- Which steps feature the most friction, delays, and bottlenecks?
- Are these bottlenecks caused by people or systems?
- Are there any redundancies I can eliminate?
- Are there any manual tasks that I can automate?
- At what stage do loans typically stall or fall off?
- Can I employ strategies to move loans through these stages more smoothly?
- How well is my team collaborating during each stage?
As you closely examine your workflows, you can pinpoint areas for cost reduction and uncover opportunities to improve your borrower experience.
If you need help with this process, the workflow optimization experts at Certified Credit are happy to assist. We’ve helped mortgage lenders from across the country improve their efficiencies. Since we’ve analyzed so many lenders’ operations, we can offer creative ideas to streamline your origination costs and hone your competitive edge.
#2 Employ Automation
While there are many ways to enhance your lending efficiencies, automating manual tasks often yields the most immediate and impactful results. Automation can save you money by reducing labor costs, expediting turn times, and eliminating human error.
Here are three of the most important loan origination workflows to automate in 2025:
Verification of Income and Employment (VOE)
One manual workflow that’s frequently fraught with frustrating delays is VOE. Many lenders complete their verifications by contacting applicants’ employers directly. This process can take several days or weeks, especially if their employers are hard to get a hold of.
Thankfully, there’s an easier and faster method. You can automate your VOE and speed up verifications using an automated solution, like Cascade VOE. Here’s how it works:
- You select your preferred vendors – Cascade VOE can integrate with a variety of instant hit and consumer permission vendors, including The Work Number, Experian Verify, and Experian CPD. After choosing your preferred vendors, you can arrange them in your desired order. To cut costs, we suggest placing the most affordable vendors at the top of your cascade.
- Let Cascade VOE cycle through your vendors – When you’re ready to order an applicant’s verification, you can do so in a few clicks. Cascade VOE will take care of the rest, cycling through your vendors one by one until it returns a hit. Cascade VOE typically returns verifications in a few minutes.
- Attend to other tasks – Since Cascade VOE uses advanced automation and sends out timely hit alerts, you don’t need to check on its progress to know it’s working for you behind the scenes. Instead, you can focus on other items on your to-do list, whether that’s meeting with clients or reviewing new applicants’ credit reports. Once Cascade VOE yields a hit, it will alert you via text, email, or LOS notification.
- Outsource manual verifications to Certified Credit – While Cascade VOE can verify most applicants, some may require a manual review. Fortunately, as a Cascade VOE user, you can outsource this process to Certified Credit’s experienced VOE team, which completes over 50% of manual requests within two days.
- Access applicants’ VOE data in your LOS – Since Cascade VOE can integrate with your LOS, you can access your applicants’ verification data with ease and avoid any errors associated with manual data entry.
- Pass VOE costs on to your borrowers – Cascade VOE uses the same process every time, so it can standardize your verification costs considerably. Cascade VOE can also generate itemized invoices, enabling you to pass your verification costs on to your borrowers in a compliant manner.
- Implement milestone ordering – If you want to automate your VOE process even further, you can set up strategically timed milestone ordering. With milestone ordering, Cascade VOE will order verifications for your applicants automatically as soon as they complete specific milestones.
Based on these benefits, lenders who use Cascade Alerts typically save 15% to 25% on their verification costs.
Lead Generation
If you’re worried about your bottom line, you may invest a lot of time and money on lead generation initiatives. Marketing, advertising, and networking are all excellent ways to attract new leads. However, these methods can be time-consuming and expensive.
You can attract a steady stream of qualified leads effortlessly and affordably by leveraging an automated solution, like Cascade Alerts. This low-cost tool uses continuous credit monitoring to pinpoint when your past and present borrowers are in the market for a new mortgage product, whether that’s a purchase loan, refinance, or home equity line of credit (HELOC). It can also identify when borrowers may be facing upcoming rate buydown expirations.
Learn more: How to Protect Your Portfolio and Retain Borrowers Amid 2022 & 2023’s Rate Buydown Expirations
Here’s how Cascade Alerts works:
- Cascade Alerts scans your past and present borrowers’ credit reports for new mortgage-related inquiries. After that, it compares these potential leads’ credit data to your pre-set credit thresholds.
- Cascade Alerts compiles qualified lead lists every 24 hours and shares them with you via text, email, or LOS notification. These lead lists contain key details about each borrower, including their contact information, so you can refresh your memory and reach out right away.
- Once you receive a Cascade Alerts lead list, all you need to do is contact each lead and tailor your product proposal to their current situation. By reaching out promptly, you can increase your chances of retaining their business and gaining an edge over competitors.
Prequalification
Back in 2022, FICO announced that it would be raising its soft pull credit report costs. While soft pulls aren’t as affordable as they used to be, there are still several ways you can reduce your prequalification expenses.
For instance, you can order your soft pulls from one credit bureau, as opposed to requesting a copy from all three. You can also employ Cascade Prequal, our automated prequalification solution. This tool can save you time and money by:
- Automating prequalifications – Comparing applicants’ submission data to your credit thresholds can be tedious. Fortunately, with Cascade Prequal, you can avoid this process altogether. Based on your custom credit thresholds, Cascade Prequal can determine which applicants satisfy your eligibility criteria in seconds, providing instant responses for your applicants.
- Personalizing credit report selections – As we mentioned earlier, using one-bureau credit reports is an easy way to reduce your prequalification costs. Cascade Prequal lets you align your credit report preferences with your budget, whether you prefer to pull reports from one, two, or all three credit bureaus.
- Integrating with your LOS – Like our other Cascade solutions, Cascade Prequal’s submission data will automatically populate into your LOS, enabling you to reference applicants’ information without entering it manually. Better yet, you’ll eliminate the hassle and irritation of requesting it from them again in the future.
Learn more: Cutting Costs & Building Business with Prequalification & SmartSelect
#3 Work With an Accommodating Credit Vendor
After automating key processes, the next way to protect your budget is by reviewing your current partnerships. Most notably, you want to make sure you’re working with a credit vendor that’s dedicated to helping you reduce costs and drive efficiencies.
At Certified Credit, we recognize that escalating loan origination costs are putting significant pressure on lenders. That’s why we work closely with our clients to provide customized solutions that suit their specific needs and budgets.
Here are a few ways we help our clients save money:
- We offer flexible pricing bundles – Our mission is to help our clients leverage innovative mortgage lending technology at a price they can afford. That’s why we provide flexible pricing options that allow you to purchase the services you need without paying for extras you won’t use.
- We provide tailored workflow optimization assessments – While we offer a wide range of cost-saving solutions, we understand that no lenders’ operations are exactly the same. That’s why we take the time to understand your unique processes and suggest solutions that are tailored to your business model and goals.
- We design cost-saving solutions – Along with our Cascade line, we offer a wide range of solutions that can help you save money by improving efficiencies, streamlining turn times, preventing fraud, and protecting against last-minute loan fallout.
Learn more: Reducing Fraud and Repurchase Risk with Undisclosed Debt Monitoring
Lower Your 2025 Loan Origination Costs With Certified Credit
In summary, there are many ways you can refine your lending operations to cut costs, from optimizing workflows to leveraging automated solutions. Even small improvements can yield significant savings over time.
If you want to cut costs this year, Certified Credit can help you make it happen. Along with the solutions we mentioned above, we also offer:
- Customizable credit reports
- Credit score improvement tools
- Automated credit supplements
- Undisclosed debt monitoring
- Property and valuation support
- Fraud and risk mitigation
- Underwriting compliance
- Settlement services
Ready to slash your loan origination costs in 2025? Schedule your credit consultation with Certified Credit today.
Sources:
Mortgage Bankers Association. IMBs Report Net Production Losses in the First Quarter of 2024.
National Mortgage Professional. ‘Massive’ Increase In Credit Report Cost Coming In 2023.
https://nationalmortgageprofessional.com/news/massive-increase-credit-report-cost-coming-2023
