Mortgage BPO is when a bank or lender outsources the processing of mortgage files to third-party companies, which can be a cost-effective way to save on rent, wages, and other expenses. This strategy is used during periods of high or low mortgage volume, and the professionals handling the files have the same duties as internal employees.
Mortgage BPO, which stands for business process outsourcing, occurs when a bank or mortgage lender outsources the processing of your mortgage files. Some banks and lenders have in-house loan originators, loan officers, underwriters, and closers. Banks and mortgage lenders that do not have such employees on staff outsource the process to third-party companies.
One of the reasons a lender would utilize mortgage BPO is that it can be a highly cost-effective way to originate and process mortgages. Because the mortgage company doesn’t have to house all of these employees, companies can save on rent and operating costs to run an office or commercial space. Outsourcing also allows the mortgage lender to save wages, health insurance, worker’s compensation, and other insurance that it would have to cover if it had full-time employees.
Mortgage BPO also allows the mortgage lender to only pay professionals when there are mortgage files to work with. For example, during times of slow mortgage business, employees at a mortgage company may be sitting around without much work, but they are still collecting their wages. In an outsourcing situation, if there are no mortgage files to process, the mortgage company does not owe the outsourcing company any money.
This strategy is also used in spillover situations for lenders, banks, and mortgage companies. For example, during periods of high mortgage volume, lenders may not have enough staff to cover the workload they have. Rather than hiring additional staff to cover peak hours and then laying them off when business slows down again, banks and lenders often turn to mortgage BPOs to solve the problem.
Employees of these companies have the same duties as internal employees of a mortgage lender. These people usually conduct business from their own office or another company’s office location. After a bank applies for a mortgage, a customer sends the mortgage file to the third-party loan officer. When the loan officer has worked the file he will hand it over to the underwriter who has been outsourced by the mortgage lender. The process continues until the mortgage file is closed.
The only difference between mortgage BPO and in-house processing is where the individual professionals handling the file are located. In that case, they are not employees of the lender.
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