SOURCE: Optimal Blue LLC

Leading Mortgage Enterprise Lending Services

December 07, 2015 16:41 ET

Midwest Lender Increases Bottom Line by $360,000 With an Investment of Only $3,600

Case Study: the Power of Optimal Blue Insight

PLANO, TX--(Marketwired - December 07, 2015) -

THE PROBLEM
A well-known, mid-western mortgage bank received feedback from their loan officers and branch managers, who were concerned that their pricing was not competitive enough for the company's key conforming products in their largest market of Minneapolis.

Six months earlier, they had replaced their survey-based reporting service after becoming skeptical that the information being provided was accurate enough to be useful in making pricing decisions.

THE SOLUTION
With Optimal Blue Insight, management was quite surprised to see that, far from being uncompetitive, their pricing was consistently in the top 5% of the market. They also observed that there was a considerable amount of pricing disparity -- typically several hundred basis points (Bps) -- across all conforming lenders in Minneapolis. They decided to test and learn what impact increasing their mark-up would have on origination volume.

Management would run an Insight report after daily pricing had been set by other lenders, and then increase their standard mark-up by a modest amount, typically 5 to 10 Bps, making sure not to change their relative market position by more than one or two places. At week's end they would compare their origination volume to their forecast. If they detected neither a volume deterioration nor an increase in complaints from the field, they would adopt that mark-up strategy as the new champion.

THE RESULTS
After 6 months of utilizing Optimal Blue Insight, the company increased its margin by 50 Bps on each new loan without sacrificing volume or causing disruption with their sales team. At an average conforming loan size of $300,000, this represents an additional $1,500 in revenue for each new loan. Discovering the "elasticity of demand" with Optimal Blue Insight enabled this lender to price their loans more effectively and optimize their profitability. In fact, this lender recently reported using the platform to increase its bottom line by $360,000, all from a modest investment of only $3,600.

Optimal Blue Insight produced a return on investment of 10,000%. Unsurprisingly, management is now applying the same test-and-learn approach in their other markets.

About Optimal Blue
Optimal Blue is the premier cloud-based provider of managed-content, pricing and product eligibility (PPE), secondary marketing, consumer engagement, data and analytics, and compliance services. Based in Plano, Texas, Optimal Blue has developed an enterprise class suite of products and services designed to automate a lender's complex processes, improving efficiency and profitability while gaining a competitive advantage. With a 99.999% accuracy rate, Optimal Blue technology connects hundreds of investors with more than 1,500 financial institutions and currently touches nearly 1 of every 4 mortgage loans originated nationally.

For more information, please visit www.optimalblue.com.

Enterprise Lending Services in 60 seconds.

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