Using checklists to safeguard your mortgage business

You have worked hard to build up your business. But is your business protected from risks associated with the way you conduct your business? For instance, the National Consumer Credit Protection (NCCP) Act was established to protect consumers. Under the Responsible Lending provisions, the systems and procedures required under NCCP was built to protect consumers’ rights – ie they may protect your customers, but they may not protect your business.

So what are you doing to safeguard your business? How secure are the processes and procedures around your loan writing activities. Do you (and your staff) follow these procedures consistently? What quality assurance techniques have you put in place to prevent mistakes and inconsistencies on the loans that you write?

Having a good quality assurance system in place can protect your business. It also allows you and your business to provide a consistent experience to your customers. A consistent process will add value to your business, and most importantly, can also reduce compliance and regulatory risks for your business. Having documented processes will also allow you to improve the processes and increase the efficiencies in your business.  And efficiencies can mean a better bottom line at the end of the financial year.

Use Checklists – for adherence and business improvement

Using a checklist or flow chart will ensure the same process is applied consistently. It also allows you to fine tune the process over time.

For instance, everyone generally agrees that asking for referrals is a good thing, but few mortgage brokers actively ask for them. Making asking for referrals as part of the sales process checklist guarantees the customer is asked every time.

Other examples where a checklist can help include:

• When you perform an important task (eg AML/CTF identification of your clients), a checklist will capture and preserve knowledge about that task in your business,
• If you pass a deal to your admin person (or from a Loan Writer to the Admin person), a checklist is the most basic form of agreement on what is important and how to communicate it,
• Checklists improve the outcome of less frequently conducted tasks, which may otherwise seem overwhelming and will reduce mistakes or inefficiencies
• Lender application forms have a checklist of supporting documents that are required – yet it is amazing the numerous number of times that Credit staff will attest to documents that are not supplied with loan applications. Using and following the checklist will prevent delays, and can speed up the approval process.
• Checklists will establish regular patterns for communication, including meeting and pre-interview preparations – for instance an email sent to your client with a listing of supporting documents required before the meeting.

A checklist to create a checklist

Here is a list of action items to consider for creating a checklist in your business:

1. Target areas that are underperforming or are “mission critical” in your business
2. Establish a benchmark for improvement.
3. Document the sequence of tasks for each person involved.
4. Prioritize each task and identify those that are essential.
5. Identify every area where a decision is made or judgment is required.
6. Implement a checklist and measure results.
7. Create a checklist for future edits — don’t assume you will get it right the first time.

Use the Checklist

There are many examples of how checklists and processes have been used: in hospitals by surgeons and ICU staff, by pilots from pre-flight checklists to pre-landing checks, to Formula One pit crews.

The key isn’t that the individual tasks are ‘no-brainers’, but whether each of the tasks on the checklists are done all the time, and consistently. This is the power of the Checklist.

So take a look at your business – Checklists can safeguard your business, and increase its value. Most importantly – make sure you use the checklists.

References:

• Atul Gawande, “The Checklist: If something so simple can transform intensive care, what else can it do?” The New Yorker, December 10, 2007