Delegated underwriting vs non-delegated underwriting? That is an important question for every retail mortgage lender, and there are many factors to consider. It’s not just about mitigating risk or controlling costs—you must also think about your efficiency, your borrower relationships and how you can build a scalable business foundation.
The move to delegated underwriting can seem intimidating if you’re used to outsourcing your process. You might be worried about making costly mistakes or you have concerns that your current staff is spread too thin to take on yet another task. Consider that more than 330 MAXEX sellers have found success utilizing the delegated process for jumbo, non-QM and business purpose loans (DSCR). Odds are, you can too.
Check out the top 5 reasons why MAXEX sellers utilize delegated underwriting vs non-delegated underwriting to help grow their business efficiently.
- Cut costs and maximize margin
Most decisions about choosing delegated underwriting vs non-delegated underwriting are based on opportunity cost. Will it cost me more to do this myself or will it be less expensive for me to outsource this job? Moving to delegated underwriting might seem like it comes with high up-front costs to find investors and hire staff. With MAXEX, you get immediate access to multiple investors with one contract (and no sign-up fees) and no minimum transaction requirements. This means you can take your time getting your team up to speed on guidelines and processes. Also, bringing the underwriting process in house means you can control your margin more accurately and lower your per-loan production expenses.
- Mitigate risk
No one knows your borrowers better than you. And no one serves your company better than your own people. Bringing underwriting in-house allows you to oversee the process more closely, serve your borrowers in a more personal way and more quickly address any mistakes that could turn into extended delays or even worse, buybacks. Furthermore, you’re still responsible for closing the loan with non-delegated underwriting meaning you still take on a good portion of risk with less control over the whole process.
The MAXEX business model inherently protects against risk by giving you multiple investor options for each loan program. The single counterparty system also gives you peace of mind knowing MAXEX is the only entity you face directly if problems occur. “When we had a last-minute issue on a loan, MAXEX acted as our partner to find a solution,” said Allied Mortgage Group. “MAXEX stepped up and honored a commitment in a difficult market – which is not always an easy thing to find. It’s comforting to know we have them working on our behalf to help us succeed.”
- Control = efficiency
When you choose the non-delegated process, you give up a lot of control over how quickly loans get completed and how they are done. Jason Broomfield, the National Underwriting Manager for Gold Star Mortgage, said his team chose to delegate DSCR with MAXEX because “Delegated underwriting is all about control. It allows us to do 24-48 hour turn times and one-day underwrites. We can do rushes. Our Sales team appreciates this and prefers the way we underwrite versus brokering.”
Speed is a critical factor in a highly competitive environment. Giving your sales team the ability to work quickly and get their clients a faster turnaround could help retain your staff and prevent costly employee turnover.
- Scalable infrastructure
The standardized process and guidelines for MAXEX investors allow sellers to more easily re-tool existing production processes to make them more efficient and scalable. Delegated underwriting also allows you to build institutional expertise in-house and periods of low volume are the perfect time to rebuild existing processes and train your current staff.
“You have to recognize whether your staff has the time to learn a new program like this,” said Broomfield. “We have a lot of seasoned underwriters that have been in the business for a long time. And we were able to take them out of normal production and learn DSCR and jumbo specifically to where they weren’t confusing guidelines across programs. That was one of the biggest things for us. And it was just trusting your technology and trusting your conditions. If you have faith in your own system, then non-QM shouldn’t be a scary world.”
- MAXEX support staff
The thing we hear the most from our sellers about delegated underwriting with MAXEX is the excellent support they receive from our team. Each seller is assigned a client advocate to help answer questions and resolve any issues that might arise. Our credit team, lock desk and capital markets team are also readily available to get on the phone or email to answer questions quickly. MAXEX Credit Manager, Teri Prowant, is a regular on training calls with sellers and on MXU webinars helping answer questions in real time. She actively works on behalf of sellers. “Our team is well-seasoned and more than happy to partner with you to ensure a seamless, quick loan underwriting process.”
There are a lot more ways you can succeed with MAXEX when you choose to use delegated underwriting vs non-delegated underwriting. Contact us today if you’re interested in learning more about the MAXEX loan exchange. If you’re already a seller, contact your Account Manager to set up a 1:1 training session with our Operations team to see how delegated underwriting can work for you and your business.
