formula for success
34 | spring 2017 cmba-achc.ca CmB magazine
W
e all know that in
the current era of
lender efficiencies,
more and more lenders
are pushing back on
brokerages and individual mortgage advisors
to maintain high funding ratios.
Why Funding Ratios?
Imagine, for a second, the underwriting centre
of your favourite lender.
Last year, Broker 1 sent 20 files to this
lender; 12 were approved and two were
funded. Now you are sending a new file. When
the underwriter picks up Broker 1's new file,
he or she knows that the probability of that file
actually getting funded is very low. So why put
in the effort? Why work hard for the approval
if it will be cancelled later? e lender is
paying a good salary to this underwriter who
in this case would be doing tons of work that
produces minimal revenue for the lender.
Compare that to Broker 2, who last year
only sent 11 files to the same lender, but
had 10 approved and eight funded. Now the
underwriter picks up Broker 2's new file and he
or she is motivated to approve it, knowing this
is productive work. e lender is happy and
views this broker as highly professional.
Keeping your funding ratios high leads to plenty
of perks and fewer pitfalls
By Camilo RodRiguez,
CmBa-BC diReCtoR, moRtgageslaB FinanCial inC.
Safety in
Numbers
CalCulate YouR 2016 Funding Ratios
Go to your past files for last year and get the following information
(A) Number of Files Funded in the Year _____________________________
(B) Number of Files Approved in the Year _____________________________
(C) Number of Files Submitted in the Year _____________________________
(Including cancelled, declines, All files sent by you)
Submission to Fund Ratio = # Files Funded per Year
# Files Submitted per Year
so in the above example:
Broker 1: Submission to Fund ratio = 2 / 20 = 10%
Broker 2: Submission to Fund ratio = 8 / 11 = 73%
You should aim for a minimum Submission to Fund ratio of 60%.
Approval to Fund Ratio = # Files Funded per Year
# Files Approved per Year
again, in the above example:
Broker 1: Approval to Fund ratio = 2 / 12 = 17%
Broker 2: Approval to Fund ratio = 8 / 10 = 80%
You should aim for a minimum Approval to Fund ratio of 75%.
