In an increasingly competitive hiring environment, some mortgage lenders are letting underwriters work from home to attract and retain top talent.
Telecommuting isn't a new concept for front-office loan officers, particularly since a sales force can provide superior customer service by meeting borrowers face-to-face at locations convenient to clients. And employees like telecommuting because it frees up more personal time, said David Zugheri, co-founder of Envoy Mortgage.
"We would rather have someone that is more qualified but works remote rather than someone who is less qualified but lives a block away from the office," he said.
Embrace Home Loans recently publicized its efforts to hire work-from-home underwriters. The Newport, R.I.-based lender told the story of Michelle Baker, who lives 25 miles away from an Embrace office in the Orlando suburb of Maitland, Fla.
"Not only has it saved me fuel and the wear and tear on my vehicle, I love not having to commute. I find I am actually more productive working from home," Baker said in an Embrace press release.
Executives at Embrace were initially hesitant about letting employees telecommute because the lender's corporate culture "favors on-site leadership and one of the things we were conflicted with in a virtual environment was the absence of having that active leadership," Embrace President Kurt Noyce said in an interview.
Baker's situation was typical for why Embrace began letting employees work from home. Underwriters already working for Embrace, which also offers fulfillment outsourcing for other lenders, began requesting it because they needed to relocate or had problems arranging childcare.
When internal metrics showed output, productivity and job satisfaction were all higher for people working from home, executives were convinced.
"We've been able to accommodate those [requests] and they have worked out remarkably well," said Noyce.
It's a similar situation for Houston-based Envoy, where the "traffic is just atrocious," said Zugheri. Some of Envoy's underwriters have a commute in excess of one hour because living further away from the city center offers employees a better quality of life.
"Giving them the ability to work from home a day or two or three has been instrumental in us being to hire," Zugheri said.
Envoy hires remote underwriters who live near its three centers in Houston, Atlanta and southern California, which ensures that executives can still regularly interact with telecommuting employees face-to-face.
While Embrace hires telecommuting underwriters nationwide, it brings remote workers together on a regular basis for training, product discussions and to generally maintain good relationships with employees.
Secondary market investors are generally ok with lenders letting underwriters telecommute, both Noyce and Zugheri said, and Fannie Mae and Freddie Mac confirmed.
"We would be concerned with issues such as system access and security, the protection of private personal information, pipeline management, employee training and communication," Freddie Mac spokesman Brad German said in an email.
And the practice doesn't violate Consumer Financial Protection Bureau compliance guidelines, an agency spokesperson confirmed.
"The CFPB expects creditors to comply with the law and to make a reasonable, good faith determination of a borrower's ability to repay a mortgage. Institutions should take appropriate steps to ensure that their employees and service providers are in compliance as well," CFPB spokesman Samuel Gilford said in an email. "Whether underwriters meet this standard depends on the work they do on behalf of a creditor, and not on where that work is conducted."
However, the practice isn't universally embraced. The StoneHill Group employs telecommuters, but has certain clients that specifically prohibit the Atlanta-based mortgage outsourcing vendor from using telecommuting underwriters on their accounts, said CEO David Green.
"The majority of underwriters I know would rather work from home," Green said. The StoneHill Group benefits from telecommuters, too, because "you don't have to worry about having desk space for them. You can have it as work-on-demand or a per-file basis. And it allows you to level off the peaks and valleys of when work comes in, which allows for economies of scale."
A remote staff can be recruited from a bigger talent pool across the country, but Green added that communication challenges exist. "In my opinion, you lose the ability to have interaction between underwriters in solving problems. Because no one person knows everything," he said.
StoneHill set up a blog to improve communication and share knowledge, and it uses webinars and virtual meeting technology to keep employees connected.
Data security is another issue that companies have to address. Envoy and Embrace supply their employees with the necessary technology, StoneHill does not. All use multiple layers of authentication for underwriters to connect to their respective systems.
Ensuring the proper security infrastructure is in place is crucial for any lender considering virtualization, said Rebecca Walzak, owner of rjbWalzak Consulting, in West Palm Beach, Fla.
When working on a criminal case, Walzak had to attest that she had certain security protocols in place on her computer. "I had to have errors and omissions and all kinds of liability policies in order for them to send me information and for me to send information to them."
"It is not overwhelmingly expensive, but it is not cheap either," she added.
Companies that don't supply employees with technology can mitigate potential issues by requiring workers to provide the company with access to their machines for virus scans and other security checks, said Green, who added, "sometimes we need access to their system to help them with a problem."
Another concern is making sure remote underwriters have a thorough understanding of loan products and investor guidelines, especially when it comes to unique cases like a mortgage application for a self-employed borrower.
"That's probably the most critical thing and the thing I worry the most about with work-at-home people. Do they have the knowledge and experience to really do this?" Walzak asked rhetorically.
Effective employee monitoring is also key. "How do you measure the quality of the work? Do you do additional QC reviews on them? Do you have some way to test that the quality of their work is what you expected?" said Walzak, who recommends lenders spot-check telecommuters by randomly calling them to check in.
Despite the challenges, virtualization can be effective, and the practice isn't likely to go away.
"Productivity is just as good in a virtual environment as long as you employ the right people and do your vetting and due diligence during the hiring process," Green said.