Three Strategies CFOs Should Prioritize to Optimize Mortgage Accounting in 2025

As CFOs and financial professionals in the mortgage industry navigate 2025, efficiency and cost reduction remain top priorities. With fluctuating interest rates and margin compression continuing to challenge profitability, mortgage originators must optimize their warehouse funding strategy to protect the bottom line. Among the many ways to improve warehouse expense management, three key areas stand out:

1. Reducing dwell time through automation
2. Leveraging data-driven decision-making for optimal fund allocation
3. Keeping gestation lines full

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Reduce Dwell Time Through Automation and Integrations

Dwell time directly impacts warehouse costs. The longer a loan sits, the higher the interest expense. Reducing dwell time involves automating loan management processes, from identifying cost-effective warehouse facilities to streamlining document verification and triggering funding and paydown requests, all of which minimize delays and interest expenses.

Modern warehouse management solutions equipped with automation capabilities can:

• Automatically identify the most cost-effective warehouse facility for each loan in real time.
• Streamline document verification and delivery through direct integrations with secondary market platforms.
• Trigger funding requests and paydowns automatically, minimizing delays due to manual intervention.

By integrating systems and eliminating manual touchpoints, originators can ensure loans move swiftly through the pipeline, increasing operational efficiency and reducing unnecessary costs.

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Leverage Data-Driven Decision Making for Optimal Fund Allocation

Strategic, data-driven decisions about warehouse funding are essential for originators aiming to maximize profitability. With multiple warehouse and gestation lines available, choosing the right funding source for each loan can significantly impact costs and efficiency.

Key data points CFOs should focus on include:

• Current warehouse line utilization and available capacity
• Financing costs across different facilities.
• Projected loan delivery timelines to investors.
• Market trends affecting liquidity and funding costs.

Advanced warehouse management platforms with AI-driven analytics provide real-time insights, enabling CFOs to assess key data points and allocate funds efficiently. These platforms can automatically recommend the optimal warehouse facility for each loan, balancing cost savings with operational efficiency, reducing reliance on static spreadsheets and manual analysis.

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Keep Gestation Lines Full to Maximize Efficiency

Gestation lines provide a valuable opportunity to reduce financing costs and optimize liquidity by holding loans for short periods before selling them into the secondary market. To fully capitalize on these advantages, originators need proactive planning, real-time tracking of line capacity, and automated loan selection for gestation.

A well-managed gestation strategy ensures loans move through the pipeline efficiently, keeping the line consistently full and maximizing its use. This requires:

• Proactive planning to align the gestation facility with loan delivery schedules.
• Real-time tracking of line capacity to optimize usage.
• Automated selection of which loans should be placed on gestation to optimize cost savings.

By keeping gestation lines full, originators can reduce warehouse expenses, increase profitability, and improve overall liquidity management.

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Conclusion

As CFOs continue to navigate the complexities of mortgage accounting this year, a focused strategy around warehouse funding is critical. By ensuring leveraging automation to reduce dwell time, using data-driven insight, and keeping gestational lines full, originators can significantly cut costs and improve profitability. Every basis point saved contributes to a stronger bottom line, making warehouse expense management a top priority for the months ahead.

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