I read an interesting piece from HousingWire recently where Richard Weidel of Princeton Mortgage pushes back on something a lot of us in the business accept as gospel. He's saying that while everyone agrees technology will eventually solve our cost problem in lending, we've been saying that for years without actually getting better results. The real issue, he argues, isn't the software at all. It's about how honest and accountable we're willing to be with ourselves and our teams about what things actually cost.
Weidel describes his own journey at Princeton, where they started from the same place most of us are. They were spending about $12,500 to close a loan when they were only generating $10,500 in revenue. Instead of waiting for technology to save them, they decided to fix it immediately. What they did was radical in its simplicity: they put the cost to fund a loan right next to each employee's name. A processor might cost $800 per loan while another costs $400. An underwriter at $1,200 versus another at $350. Then they tied compensation to those numbers.
He expected his team to revolt, but what actually happened surprised him. The productivity gaps had nothing to do with the tools people were using. They had to do with the fact that everyone was doing the work differently, and nobody really knew what the baseline should be. Each processor had their own version of how to send a conditional approval letter. Some of it was just inefficient, and some of it was frankly embarrassing. The real breakthrough came when they stopped letting everyone figure out their own system and instead designed one system for how the work should get done.
Only after about eighteen months of grinding on process did Weidel and his team actually build custom software. By that point they knew exactly what work they were trying to remove. The numbers speak for themselves. Their non-sales cost per funded loan dropped to about $2,971, and their cycle time improved from seventeen days down to ten. They were able to eliminate an entire post-closing department. But here's the part that matters most to me: every dollar they saved in overhead went either to paying their remaining people more or to pricing loans lower for borrowers.
What I am seeing locally here in the Bay Area is that the lenders who are winning right now are the ones willing to have hard conversations about productivity and accountability. We're not in an environment anymore where you can hide inefficiency behind size or blame it on the market. The loan officers and borrowers I talk to every day can feel the difference between a lender that has its act together and one that's just hoping technology will eventually fix things. The gap is showing up in rate sheets and in what originators can actually offer.
