Does your Branch lose money when submitting a file to underwriting and that file is denied?

I was recently told that every time a new client applies for financing, and is turned down because of low credit scores, it cost her Branch around $40 (Your cost may be more or less) because of the trimerge credit pull! How many applications come into your Branch every day, every week, month after month? Let's give it a fictitious number. 10 applications come in every day. In a larger mortgage branch there can be lots more, in a smaller branch there might only be 1 or 2. Anyway.....let's see what that looks like. In ONE month at 10 per day there would be 300+ denials that cost the Branch $40. That would be a net loss to the Branch of $12,000 for that month. THAT is a ridiculous number to me. I work with some of the largest mortgage companies in the world, some with hundreds of Loan Originators in ONE location.....thousands nationwide and I try and wrap my head around those numbers. Does anyone else think about those numbers? YOU bet they do......every Branch Manager trying to manage overhead. Lots of loans better be funding or that number can cripple a Branch quickly!

I think I have a solution! As Mortgage Professionals you need to keep an arms length from ancillary programs & products that may be available to a credit denied client. This satisfies HUD and RESPA requirements. What if the client reimbersed the $40 back to the Branch for the credit pull? This is what we do when we take on a new client. We reduce our fees to cover the cost of their credit pull, and ask them to reimberse the agency that pulled their credit. This allows us to obtain a copy of the report from the agency to assist the client with. They signed a release before the credit was pulled in YOUR office so you can legally send it to us. We find that the client that has been sent our way to help educate and rehabilitate their credit profile, is extremely loyal and returns to the referring agency for all future financing. We all know that ONE happy client means another 4 or 5 referrals from their circle of influence.

In business we are always looking for a Win, Win, Win scenario....but there are always losers somewhere. WHAT is your Branch doing to offset this cost? Are there 2 denials a day or 10? Even with 2....that adds up to about $2400 a month in operating cost.....HOW are you offsetting this number? I already know the answer.....this is one of those "sticking" points I deal with every day consulting with Branch Managers.

My pitch to you:

I will set your company up in my database so that you are able to track the client progress until they are complete. We will then refer the client back to the original source for financing. If this is something that makes sense to me.