Why has Better Mortgage's average time to close increased from 21 to 28 days over the past quarter?

Introduction

Better Mortgage's average time to close has increased from 21 to 28 days over the past quarter, signaling a significant slowdown in their mortgage processing efficiency. This analysis will systematically identify, validate, and address the root cause of this issue, considering both immediate and long-term implications for the company's operations and customer satisfaction.

To tackle this problem, I'll employ a structured approach that covers issue identification, hypothesis generation, validation, and solution development. My response will follow a clear agenda, moving from clarifying questions to external factor analysis, product understanding, metric breakdown, data gathering, hypothesis formation, root cause analysis, validation, and finally, a resolution plan.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking there might be seasonal factors at play. Has this increase coincided with any particular season or market trend?

Why it matters: Seasonal patterns could explain temporary fluctuations and help us differentiate between cyclical and systemic issues. Expected answer: There's no clear seasonal pattern; the increase has been consistent across months. Impact on approach: If seasonal, we'd focus on capacity planning; if not, we'll dig deeper into internal processes.

• Considering the metric itself, I'm curious about the distribution of closing times. Has the increase been uniform across all loans, or are we seeing more outliers?

Why it matters: This helps us understand if the issue is systemic or related to specific loan types or customer segments. Expected answer: The increase is relatively uniform, with a slight skew towards longer times for larger loans. Impact on approach: Uniform increase suggests a systemic issue, while skewed data would point us towards specific loan types or processes.

• Thinking about recent changes, have there been any significant updates to the mortgage processing system or workflow in the last quarter?

Why it matters: System changes often have unintended consequences that could explain performance shifts. Expected answer: A new underwriting algorithm was implemented two months ago. Impact on approach: If a system change is confirmed, we'd focus on technical issues and potential rollback strategies.

• Considering external factors, has there been any notable change in regulatory requirements or market conditions affecting the mortgage industry?

Why it matters: External factors could be forcing longer processing times across the industry. Expected answer: No major regulatory changes, but there's been an increase in mortgage applications industry-wide. Impact on approach: Industry-wide changes would shift our focus to competitive analysis and capacity planning.