A Technical Consultant’s View on What’s Really Driving Lender Expenses

It’s no secret—mortgage origination costs have reached record highs. According to the MBA, the average cost to originate a loan has climbed well past $11,000, with some lenders seeing even higher figures. At the same time, loan officer and underwriter productivity has dropped significantly. Everyone is doing more but getting less out of it.

As a technical consultant working closely with lenders across the industry, I see the same challenges playing out again and again. Let’s break down what’s really going on—and what can be done to course-correct.

1. Too Many Manual Processes Still in Place

Despite the availability of automation and AI-driven tools, many lenders are still stuck in workflows that require human review, manual data entry, and excessive “stare and compare” tasks.

For example:

• Verifying income and assets manually from documents instead of using document AI
• Keying data into multiple systems that don’t integrate
• Manually checking loan guidelines that could be automated with rules engines

Each manual step adds time, increases the risk of error, and slows the process down—costing both money and productivity.

2. Fragmented Technology Ecosystems

Lenders often run on a patchwork of systems—LOS, POS, CRM, compliance engines, data providers, and more—that don’t communicate well. As a result:

• Staff spend time copying data from one system to another
• There’s duplication of effort across departments
• IT spends more time managing vendors than delivering innovation

A modern tech stack should be integrated, with APIs and middleware that allow systems to “talk” to each other. But in many orgs, legacy software and silos prevent that from happening.

3. Compliance and Regulation Complexity

Over the last decade, regulatory demands have grown—TRID, QM, HMDA, state-specific rules, and more. Compliance isn’t optional, but it has introduced layers of documentation, checks, and processes that slow down origination.

Instead of using technology to manage compliance intelligently, many lenders throw people at the problem. This is expensive and unsustainable.

4. People-Centric Workflows That Don’t Scale

In many lending shops, workflows are still designed around people, not systems. That means when volume goes up, more people need to be hired to handle it. When volume drops, productivity metrics crash—but the systems haven’t been designed to scale up or down efficiently.

Automation, machine learning, and decisioning logic should absorb volume swings—not just headcount.

5. Talent Shortage and Burnout

Loan processors, underwriters, and closers are being asked to manage more complexity with fewer tools. There’s a growing skill gap, and many experienced professionals are burning out or leaving the industry altogether.

Without smart automation to support them, teams are stretched thin leading to slower turn times, higher costs, and quality control issues.

6. Misuse (or Underuse) of Automation and AI

There’s no shortage of vendors promising automation, AI, and digital transformation—but most lenders are still only scratching the surface. Tools like:

• Document AI for reading borrower documents
• Robotic Process Automation (RPA) for repetitive tasks
• Rules engines for underwriting logic
• LLMs (Large Language Models) for guidelines and borrower communication

are often underutilized, poorly integrated, or not trusted. The tech exists. The challenge is implementation and change management.

7. The Hidden Burden: Total Cost of Ownership (TCO) of the Tech Stack

This is a critical area that’s often overlooked. Many lenders focus only on licensing costs when evaluating new technology. But the true cost is much higher—and more complex.

Here’s what goes into the total cost of ownership:

• Licensing Fees: The obvious line item. But often tiered or volume-based and may increase with usage.
• Implementation & Customization: Most tech doesn’t work “out of the box.” Integrations, data mapping, UI tweaks, and workflow setup can take months—and tens or hundreds of thousands of dollars.
• IT & Vendor Management: Each new tool adds complexity. IT teams spend time managing vendor relationships, security reviews, maintenance windows, and patch cycles.
• Training & Change Management: Getting staff to use new tools correctly takes effort. Without adoption, even the best tech sits unused.
• Ongoing Support & Maintenance: System updates, bug fixes, customer support tickets, and configuration changes all require ongoing attention.
• Integration Fatigue: When tools don’t connect well, teams spend hours building workarounds. That means delays, rework, and double handling of data.

In many cases, the hidden TCO of a poorly integrated tech stack is higher than the cost of the entire operations team. Worse, it often delivers less return.

That’s why smart lenders are starting to:

• Consolidate vendors and reduce “tech bloat”
• Prioritize platforms over point solutions
• Require measurable ROI and time-to-value from any tech investment
• Standardize integrations using APIs and middleware for long-term flexibility

TCO isn’t just a finance metric—it’s a strategic lens. And it’s often the difference between scalable innovation and expensive frustration.

What Needs to Change

To reduce costs and boost productivity, lenders need to think differently:

1. Digitize the Core: Automate the entire loan flow—not just the borrower experience, but the back office too. Underwriting, doc review, and condition clearing are prime candidates for automation.
2. Think Platform, Not Point Solution: Move away from one-off tools. Use platforms and integrations that bring the whole ecosystem together.
3. Use Data Intelligently: Leverage AI and machine learning to predict risk, guide decision-making, and reduce rework.
4. Empower Teams with Smart Tools: Don’t replace people—enhance them. The right tech can help staff focus on exceptions, not routine tasks.
5. Prioritize ROI: Invest in solutions that offer real cost savings, not just flashy features. Every dollar spent on technology should reduce effort or increase capacity.

Final Thoughts

The cost of mortgage origination didn’t spike by accident—it’s the result of outdated processes, siloed technology, and reactive strategies. But it doesn’t have to stay that way. With the right blend of intelligent automation, platform thinking, and operational discipline, lenders can reverse the trend and build a scalable, efficient, and future-ready business.