Mortgage – HousingWire |
- Lenders tread carefully around targeted lending programs
- Ex-employee alleges rampant sexual misconduct at mortgage lender EPM
- Mortgage delinquencies continued to improve in November
- Mortgage rates fall to 3.05% amid Omicron fears
- Report urges rent payment history in underwriting
- Mortgage apps fall as higher-end market takes off
- Private-label RMBS market has cause to celebrate
- Automation helps lenders respond to rising mortgage rates
- Anxiety grips LOs as layoffs sweep the industry
| Lenders tread carefully around targeted lending programs Posted: 24 Dec 2021 05:00 AM PST  Last week's announcement from the Department of Housing and Urban Development cleared the way for lenders to adopt targeted lending programs, but so far, they are treading carefully. The pronouncement was more than 40 years coming, and arrived after both the Consumer Financial Protection Bureau and the Federal Housing Finance Agency had publicly weighed in on the issue. "The pieces are coming together," said Bob Broeksmit, president of the Mortgage Bankers Association. Special purpose credit programs allow lenders to target loan products to benefit protected classes without running afoul of fair lending law. There is a lot of excitement, the MBA said, but the trade association estimates it will be several months before lenders can operationalize the programs. Earlier this year, the MBA, together with the National Fair Housing Alliance, wrote a letter to HUD to urge clarification of SPCPs under the Fair Housing Act. But in the wake of HUD's announcement, some lenders have, privately, grumbled that there are not sufficient incentives to develop the programs. Properly documenting and targeting the programs could be costly. Some lenders fear documenting that their current lending practices are insufficient could inadvertently expose them to regulators hunting for evidence of redlining. Whether lenders choose to make the targeted lending programs is entirely optional, although doing so could help depositories meet their Community Reinvestment Act requirements. The programs could also help lenders give force to the promises they made in the wake of last year's George Floyd protests. "Many lenders made bold proclamations wanting to take strong action in pursuit of racial justice," said Nikitra Bailey, senior vice president of public policy at the National Fair Housing Alliance. Broeksmit said he hoped to see lenders take the first step, by designing a program and floating it to the GSEs. Other lenders could then see their success, implement a similar program, and the effect would snowball. "I'm quite sure [the GSEs] would be open to lenders saying, 'Can we try this in this market and see how it works,'" Broeksmit said. That will be a gradual process. Without a clear incentive — or a template to follow — few expect lenders to adopt SPCPs en masse. There are two ways federal policy could dramatically change that calculus. In the short-term, the government-sponsored enterprises could weigh in. In the long-term, banking agencies could overhaul the Community Reinvestment Act. The first scenario is much more enticing for lenders. Fannie Mae and Freddie Mac could spur lenders to create SPCPs by committing to buy such loans. They could introduce pilot programs to help develop the targeted programs. SPCPs could even be factored into the GSEs' equitable housing finance plans the Federal Housing Finance Agency expects the GSEs to submit by the end of this year. Affordable housing advocates are hopeful. So far, the GSEs have been noncommittal on whether the equity plans will say anything about SPCPs. "Hopefully we will see swift guidance from the GSEs," said Bailey. "I think the equity plans will tell us a lot about what we can expect in terms of how the GSEs will use liquidity to push for SPCPs." FHFA raised the possibility of including SPCPs in the equitable housing finance plans in September, when it ordered the GSEs to produce them. The agency asked, "Could special purpose credit programs … be included in the Enterprises' plans? How should such programs be structured?" But at the time, HUD still had not clarified whether SPCPs would run afoul of the Fair Housing Act. The all-clear came three months later, just weeks before the GSEs' plans are due. Still, FHFA Acting Director Sandra Thompson is pitching targeted lending programs. In a statement this week, Thompson urged the GSEs to "consider SPCPs as a powerful tool to advance equitable outcomes and ensure fairness in the housing finance system." "In addition to contemplating SPCPs of their own, Fannie Mae, Freddie Mac, and the Federal Home Loan Banks can impact the availability of these programs by providing liquidity and support for existing and future SPCPs, within the umbrella of safety and soundness," Thompson said. Depositories could also be compelled to make SPCPs if the Community Reinvestment Act — the anti-redlining statute — got a serious update. While the statute was crafted to address redlining, it never included language specifically referencing race. The process to overhaul the statute is already underway. An uncoordinated Community Reinvestment Act reform process was definitively scrapped this month when the Office of the Comptroller of the Currency issued a final rule rescinding its effort. The final rule set the stage for multi-agency reform. Marshaling that process is Federal Reserve Board Gov. Lael Brainard, who was recently elevated to the number two position at the central bank. In an October 2020 advanced notice of proposed rulemaking, she signaled that the reform process would take race into consideration. Guidance from the GSEs and Community Reinvestment Act could encourage lenders to craft SPCPs. But Bailey cautions that the targeted programs are not a panacea, and SPCPs will not, alone, solve inequality. "But that doesn't mean this isn't substantial and significant," Bailey said. "It has the potential to make a huge impact." The post Lenders tread carefully around targeted lending programs appeared first on HousingWire. |
| Ex-employee alleges rampant sexual misconduct at mortgage lender EPM Posted: 23 Dec 2021 03:20 PM PST A former employee alleged that an executive at Atlanta-based mortgage lender Equity Prime Mortgage (EPM) sexually assaulted her, and executives fostered a culture of widespread sexual harassment at the firm. Former mortgage loan processor Tiar McCart claims, in a suit filed in the U.S. District Court of the Northern District of Georgia in October, that during her employment at EPM, executives — including CEO Eddy Perez — and other employees submitted her to sexual comments, touching, inappropriate images, and solicitations. The lawsuit claims Perez, on one occasion, asked McCart's work acquaintance if "he'd hit that," referring to having sex with McCart. Lawyers for EPM, in a response filed with the court Dec. 23, denied any wrongdoing. According to their response, EPM did not "intentionally nor willfully [violate the] Plaintiff's rights in any manner." Several members of the executive team engaged in inappropriate behavior while she was employed by EPM, from March 2020 to March 2021, McCart's lawsuit claims. McCart alleged Mark Moloughney, EPM's chief technology officer, tried to sexually violate her after a work-related event. The lawsuit states that, after Moloughney apologized for the alleged assault, he "made a direct threat" to McCart's continued employment at EPM, and directed her to tell no one of the incident. The lawsuit claims that McCart subsequently filed a report with the company's human resources. After investigating, EPM allegedly concluded the incident was "unrelated to work." Two days later, the company terminated McCart for "poor performance," the lawsuit alleged. McCart called the termination "blatant retaliation" for reporting Moloughney's behavior, according to court filings. In its response, EPM claimed that whether Moloughney engaged in any unlawful conduct, “which he did not, such conduct was outside the scope and course of his employment and was not in furtherance of Defendant EPM's business.” EPM did not respond to requests for comment. McCart also alleged the company's COO, Jason Callan, repeatedly referred to her as "my bitch," and made lists of female co-workers he would have sex with. But the incidents of sexual harassment extended well beyond the executive team, the lawsuit claims. McCart accused upper management at the company of demeaning her by catcalling and making lewd written comments. On repeated occasions, McCart claims co-workers and members of the management made unwelcome comments about her appearance. She also alleges that management circulated an email that discussed the plaintiffs body. A male coworker pretended to unzip his pants during a work videoconference, the lawsuit alleges, and still works at the lender. On one occasion, the lawsuit claims, McCart arrived at her desk to find it "covered with penis-shaped confetti." Founded in 2008, EPM is licensed in 49 states and provides an array of lending products including conventional mortgages, those insured by the Federal Housing Administration, the Department of Veterans' Affairs, reverse mortgages, and United States Department of Agriculture loans. Per LinkedIn estimates, the company has over 700 employees. This lawsuit is the latest in a string of similar suits filed this year, accusing lenders of allowing a toxic workplace culture and not taking steps to prevent sexual harassment. Former employees at both loanDepot and Residential Home Funding Corp. (RealFi) filed lawsuits this year, accusing the lenders of allowing repeated sexual harassment and gender discrimination. McCart seeks declaratory and injunctive relief, equitable relief, damages, and attorney's fees and costs. The post Ex-employee alleges rampant sexual misconduct at mortgage lender EPM appeared first on HousingWire. |
| Mortgage delinquencies continued to improve in November Posted: 23 Dec 2021 08:31 AM PST The delinquency landscape continues to improve on a monthly basis, with the total delinquency rate in the nation falling to 3.59% in November, according to Black Knight's November mortgage monitor published this week. In October, the analytics vendor clocked the national delinquency rate at 3.74%. The 15-basis point improvement continues to point to the effectiveness of initiatives taken by policy makers and industry participants over the pandemic period to help borrowers stay in their homes. Serious delinquencies are also starting to clear, with Black Knight's report noting that 90+ day delinquencies dropped by 80,000 in November. However, the company noted that despite the decline, over 1 million serious delinquencies remain, which is 2.5 times more than at the start of the pandemic. On a state-by-state basis, Louisiana (4.17%), Mississippi (3.62%) and Oklahoma (2.77%) have the highest serious delinquency percentages as of November. Black Knight’s report states that further improvements in the overall delinquency picture should be expected in the months to come as borrowers exiting forbearance plans continue to work through loss mitigation options with their lenders. Concurrently, forbearance has tumbled, dropping below the 1 million mark last month, Black Knight found. As of Nov. 30, only 994,000 mortgage holders remain in COVID-19 related forbearance plans, representing 1.9% of all active first lien mortgages, Black Knight said. Out of the mortgage holders in forbearance, 1.1% have a GSE loan, 2.9% have FHA/VA loans, and 2.5% are portfolio held and privately securitized loans. Getting more granular, over the past 60 days, more than 800,000 forbearance exits have been recorded, with nearly 560,000 homeowners remaining in post-forbearance loss mitigation, Black Knight said. Meanwhile, foreclosure starts (3,700) and active foreclosure inventory (132,000) hit new record lows last month. But despite things going in a good direction, Black Knight added that "given the size of this population, both serious delinquency and foreclosure metrics demand close attention as we enter 2022." The post Mortgage delinquencies continued to improve in November appeared first on HousingWire. |
| Mortgage rates fall to 3.05% amid Omicron fears Posted: 23 Dec 2021 06:50 AM PST The average 30-year-fixed rate mortgage dropped to 3.05% during the week ending Dec. 23, after achieving 3.12% the week prior, according to the latest Freddie Mac PMMS Mortgage Survey. A year ago, the 30-year fixed-rate mortgage averaged 2.66%. The reasons for rates to climb next year are a more hawkish Federal Reserve, a strongly recovering economy, and large federal budget deficits, according to Mike Fratantoni, MBA’s senior vice president of research and industry technology. Rising mortgage rates have already begun to sap demand. According to MBA, mortgage applications fell 0.6% for the week ending Dec. 17. The purchase index fell 3.3%, while the refinance index increased 2.2% from the week prior. The post Mortgage rates fall to 3.05% amid Omicron fears appeared first on HousingWire. |
| Report urges rent payment history in underwriting Posted: 22 Dec 2021 05:00 AM PST Utilities, telecommunications and rent payment data ought to be used in mortgage underwriting, especially since federal regulators say they are focused on improving racial equity and may update their credit scoring models. So argued a report released Tuesday by Michael Stegman, a non-resident fellow at the Urban Institute and former senior policy advisor on housing in the Obama White House, and Kelly Thompson Cochran, deputy director of FinRegLab. But, the authors acknowledge that obstacles abound in changing an underwriting process dictated in part by Fannie Mae and Freddie Mac. Including rental data is a crucial first step from a racial equity standpoint, Stegman and Cochran declare, because renters are disproportionately people of color and it is the payment most analogous to a mortgage. However: collecting rent payment data is hard since there are 10 million smaller landlords, which make up 44% of the U.S. rental market, the report notes. "It's much more complicated to gather that data, rather than utility or telecommunications [data], because both of those markets are more consolidated," said Thompson Cochran. "Thinking through how to build and subsidize that infrastructure, to potentially reach more consumers, is really important." Also, standardizing rental payment data means cooperation from numerous stakeholders, the authors state. Stegman said that federal agencies such as the Federal Housing Finance Agency (FHFA) could facilitate the transition by providing funding or clarity on regulations. That’s not quite happening right now, though Fannie Mae has taken an initial step to include rent payment history. "There is no grand strategy and there is no grand plan," said Stegman. "But certainly there needs to be coordination across a range of regulatory and executive agencies." Rental history was a centerpiece of mortgage underwriting, before automation took over in the 1990s. It was then that the government-sponsored enterprises created the architecture for their now-ubiquitous automated underwriting systems — and those credit models didn't include rental payments. It is those automated underwriting systems that undergird credit decisions across the GSEs' whopping $7.2 trillion mortgage portfolio. They're baked into the mortgage securitization process, too. The secondary market prizes consistent data across lenders and portfolios. So, even if FHFA approved alternative credit scoring models, the report’s authors expect the switch would take a long time to implement. The FHFA, which oversees Fannie Mae and Freddie Mac, launched an effort in 2017 to study the impact of adopting an alternative credit scoring model. Four years later and the study is still ongoing, though FHFA expects to complete it by early 2022. The FHFA has taken more action toward alternative credit scoring than the other federal agency that supports the mortgage market, the Federal Housing Administration. Unlike the FHFA, the FHA, which provides crucial support for first-time homebuyers and borrowers of color, hasn't yet announced its intention to use a different credit scoring model, although Congress has sought to push the FHA in that direction for more than a decade. In 2009, Congress tasked the FHA with creating a pilot program to test out using alternative data such as rental history. But the authorization expired in 2013 without the FHA taking any action. Legislation proposed in 2019 to restart the process failed to advance from the House of Representatives. Earlier this year, advocates asked the Biden administration to direct the Department of Housing and Urban Development to use existing programs — many of which serve low-income borrowers and borrowers of color — and its relationships with subsidized rental housing providers to report rental data. But the path forward for those initiatives is unclear. "There are 2 million families that receive rental assistance through vouchers, where they pay part of the rent and HUD delivers the rest, and that happens seamlessly," Stegman said. "Extending rent-reporting to on-time payments to landlords that are a part of the voucher program is certainly something that should be up for discussion, along with a number of other rental assistance and self-sufficiency programs that HUD runs." There are steps by federal regulators that don't need Congress’s go-ahead, and some are underway. Fannie Mae earlier this year said it would include positive rental payment history in its underwriting process. But Fannie Mae's plan depends on additional cooperation from both the lender and the borrower. For loans that Fannie Mae's automated underwriting system rejects, the GSE now checks to see whether 12 months of positive rental payment history would make the loan eligible. If so, Fannie Mae alerts the lender. Then, the lender can, if they wish, ask the prospective borrower for permission to share their bank account information with the GSE. Freddie Mac has taken a different approach. It hopes to encourage landlords to provide access to rental payment data, by recouping a portion of closing costs for properties it finances. In exchange, the landlord would use a platform that reports on-time rent payments to the credit bureaus. But sharing the data also hinges on consent from the prospective borrower. The report's authors say that they hope to take advantage of a new sense of urgency to close the racial homeownership gap. "It's not going to happen overnight," said Stegman. "But we hope to bring enough information from these different sources into one place to begin a broader conversation about the importance of using alternative data in credit underwriting." The post Report urges rent payment history in underwriting appeared first on HousingWire. |
| Mortgage apps fall as higher-end market takes off Posted: 22 Dec 2021 04:00 AM PST Mortgage applications fell 0.6% for the week ending Dec. 17, with fewer borrowers looking for purchases in the lower end of the market, according to the Mortgage Bankers Association (MBA) survey published on Wednesday. The decrease was driven by the purchases index falling 3.3% from the previous week on a seasonally adjusted basis. Concurrently, the refi index increased 2.2% from the week prior. Compared to a year ago, mortgage applications declined across the board. The overall market composite index dipped 31.9% on a seasonally adjusted basis. Refi apps fell 42.4% year over year, and purchase applications decreased 9.1% in the same period. Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a statement that the average purchase loan increased to $416,200. That marks the second-highest amount ever, indicating more activity in the higher end of the market. He added, "Home-price appreciation growth remains faster than historical averages, and inventory, particularly for starter homes, continues to trail strong demand." Refinances gained share last week, representing 65.2% of total mortgage applications, up from 63.3% on the previous week. VA loans comprised 11.5%, an increase of nine basis points. Meanwhile, the share of FHA loans remained unchanged at 9.6% in the period. The share of USDA loans was 0.5%. Regarding the refi market, Kan said rates at the lowest level in four weeks helped spur an increase across all loan types. For example, FHA and VA refis jumped 4% and 12%, respectively. The trade group estimates that the average contract 30-year fixed-rate mortgage for conforming loans ($548,250 or less) decreased from 3.30% to 3.27%. For jumbo mortgage loans (greater than $548,250), rates went to 3.31% from 3.32% the week prior. Economists expect that rates will increase in 2022 but will still be close to record-low levels. MBA forecasts that 30-year mortgage-rates will reach 4% by the end of 2022. The post Mortgage apps fall as higher-end market takes off appeared first on HousingWire. |
| Private-label RMBS market has cause to celebrate Posted: 21 Dec 2021 01:26 PM PST  As 2021 draws to a close, it's clear that the private-label residential mortgage-backed securities (RMBS) market has notched a year for the record books. For the full year, the RMBS 2.0 market — defined as all post-financial-crisis prime, non-prime and credit-risk transfer (CRT) transactions — is projected to exceed $115 billion in issuance. That's more than twice the volume recorded in 2020 and nearly double 2019's $60 billion mark as well, according to a recent forecast from the Kroll Bond Rating Agency (KBRA). "Low mortgage rates, stable collateral performance and comparatively favorable spreads for much of the year showed a strong level of investor demand in RMBS paper, making 2021 the record post-global-financial-crisis issuance year," the KBRA forecast states. The major driver of private-label issuance this year has been the jumbo-loan market. RMBS offerings backed by jumbo loans are projected to reach the $60 billion level for 2021, according to estimates by Redwood Trust, a sponsor of multiple private-label offerings through its Sequoia securitization program. The value of transactions backed by investment properties, including second homes, stood at nearly $23 billion as of the end of November, according to data from KBRA and digital-mortgage exchange MAXEX. Securitizations in the non-QM market are projected to reach $25 billion in 2021, according to estimates from Dane Smith, president of Verus Mortgage Capital, and Tom Hutchens, executive vice president of production at Angel Oak Mortgage Solutions. Non-QM mortgages include loans that cannot command a government, or "agency," stamp through Fannie Mae or Freddie Mac. Non-QM loans typically make use of alternative-income documentation because borrowers cannot rely on conventional payroll records or otherwise fall outside agency credit guidelines. The pool of non-QM borrowers includes real estate investors, property flippers, foreign nationals, business owners and the self-employed, as well as a smaller group of homebuyers facing credit challenges, such as past bankruptcies. On the CRT front, government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac recorded a combined issuance through mid-December of nearly $18 billion, according to GSE transaction records. Through a CRT transaction, private investors participate with Fannie and Freddie in sharing a portion of the mortgage credit risk in the reference loan pools retained by the GSEs. Despite the outsized performance of the private-label market in 2021, compared to the prior post-crisis years, the so-called non-agency sector remains well below the level of market dominance it commanded in 2005 and 2006 — just prior to the housing-industry crash. At that time, it represented nearly 60% of RMBS issuance across agency and non-agency lines. "The non-agency share of mortgage securitizations increased gradually over the post-crisis years, from 1.83% in 2012 to 5% in 2019," a recent Urban Institute report states. "In 2020, the non-agency share dropped to 2.44%, and as of September 2021, it stood at 3.79%." The Urban Institute report, produced by its Housing Finance Policy Center, notes that the steep decline in private-label activity in 2020 — as a share of the entire securitization market — was due, in part, to expanded agency refinancing activity as well as "less non-agency production due to dislocations caused by COVID-19." "The [private-label] market is recovering in 2021, although the share remains lower than 2019," the report notes. "While the share is lower, as [GSE] securitization volume is high due to refi activity, this is the largest year of non-agency securitization since 2008." The 800-pound gorilla in the private-label space in 2021, as reported previously by HousingWire, is J.P. Morgan, the investment bank side of New York-based banking holding company JPMorgan Chase & Co. J.P. Morgan, via its private label conduit, J.P. Morgan Mortgage Trust, through mid-December had sponsored 15 offerings backed by jumbo loans with a total value of $16.4 billion and eight investment-property/second home-backed securitization deals valued at $3.9 billion, according to bond-rating agency reports. The combined value of those private-label transactions, $20.3 billion, represents nearly 18% of KBRA's projected $115 billion in deal volume for the entire private-label market this year. For J.P. Morgan's jumbo-loan securitizations, bond-rating agency reports show that nearly 50% of the mortgages involved in those deals were originated in California. "California has by far the highest prices in the country, with the median price of a home today in the state over $800,000," said Rick Sharga, executive vice president of marketing for real-estate research firm RealtyTrac. "And, so that prices most borrowers out of getting a conventional loan, even with the higher [GSE loan-limit] allowance. "So, you’re going to have a higher percentage of jumbo loans in California … and California also has a high percentage of overall sales relative to other states." Adds Tom Piercy, managing director of Denver-based Incenter Mortgage Advisors: "The jumbo market has expanded as we've seen property values increase nationwide. … The appetite for jumbo loans has increased significantly." Rising interest rates, coupled with increased agency loan limits and the Federal Housing Finance Agency's decision to suspend the cap on the purchase of mortgages backed by investment properties, however, are expected to slow the growth of the private-label market in the year ahead. The Federal Reserve is increasing the pace of its bond tapering in the months ahead, including reducing its purchases of mortgage-backed securities. It also is planning up to three bumps in the benchmark interest rate in the year ahead. That upward pressure on rates is expected to bend the arc upward on 30-year fixed rates as well, depressing the housing-refinance market. "It is still expected that [jumbo] RMBS issuance will start to slow in the coming months as rates rise and supply wanes," states MAXEX's December market report. "…We continue to think that issuance [of RMBS backed by investment properties also] will subside in 2022 as originators sell many of these loans back to the agencies." Still, the non-agency market is expected to continue to expand in the year ahead, even if it's at a slower pace than in 2021, according to KBRA. "Our fiscal year 2022 forecast is $132 billion across the prime, non-prime, and CRT segments, which, if realized, would make it a new record year for RMBS issuance post-GFC [global financial crisis] and an approximately 15% year-over-year increase from 2021," KBRA's market-projection report states. Rising rates, rising GSE loan limits, the suspension of GSE caps on the purchase of investment property mortgages, as well as a housing market that is shifting toward purchase loans, are in combination, then, expected to act as a governor on the growth of securitization volume in the year ahead. At least that may be the case for the jumbo and agency-eligible investment-property segments of the private label market. But that rising-rate environment is expected to be a boon for the non-QM sector. Verus' Smith projects that non-QM private-label issuance will swell to over $40 billion in 2022, approaching a doubling of this year's already robust transaction volume. "We believe the conditions are ripe for considerable growth of the expanded non-agency market," Smith said. "Considerable unmet demand for mortgage financing exists from self-employed borrowers and real estate investors. "… We are also seeing considerable renewed interest from mortgage lenders who are looking to diversify their product mix away from conventional refinances." The post Private-label RMBS market has cause to celebrate appeared first on HousingWire. |
| Automation helps lenders respond to rising mortgage rates Posted: 21 Dec 2021 12:40 PM PST Higher inflation, post-pandemic economic recovery and a reduction in Federal Reserve stimulus incentives are key economic factors expected to put upward pressure on interest rates as we move into 2022 — increasing the already stiff competition among mortgage lenders. Furthermore, a more competitive mortgage lending environment will only magnify the importance for lenders to have an efficient loan application and approval process. Some fintech companies have already made inroads against incumbent banks by automating underwriting processes, but now, as the fight for market share intensifies, automation will become mission-critical for maintaining profitability. Shrinking market aheadLenders are already feeling rate-related pressure, and it’s going to continue into the new year. According to the Mortgage Bankers Association (MBA), 30-year fixed-rate loans could reach 4% by the end of 2022. Those higher borrowing costs are expected to slow consumer interest in refinancing, resulting in a lower volume of loans. While interest rates are likely to stay relatively low compared to historical levels, they are forecasted to remain above the record lows of the past 18 months. The good news is that a red-hot housing market will fuel a 9% increase in purchase mortgage originations, based on MBA projections. But as rates rise, refinancing is expected to decrease. Overall, the MBA forecast for 2022 predicts that total origination volume will drop 33% to $2.59 trillion next year, and $2.53 trillion in 2023. With fewer consumers choosing to refinance, mortgage lenders — who have profited from high volume due to low rates — must choose to transition to more automated systems or to implement even more advanced systems for underwriting and analytics to maintain the same margins they experienced over the past few years. With the forecast of a shrinking market ahead, here are some must-haves for mortgage lenders in 2022: Improved ability to scale on-demandThe boom of the last two years resulted in lenders scaling up their staffing to meet the record demand from consumers. For most, automation wasn't even an option as they were simply trying to keep up with the flood of applications. However, as the demand for refinancing slows down, many lenders will be left with idle staff, and the unfortunate result will see lenders balancing staffing to match application volume. Automation is the solution. Automation can provide operational elasticity for mortgage lenders, enabling them to adapt more easily and quickly to fluctuations in demand and to ensure that customer experiences are streamlined and efficient. Faster onboarding and automationLenders who are faster and more efficient at onboarding new customers will experience improved margins. Rising interest rates will reduce the total number of borrowers who apply for a mortgage, which means a smaller pie and increased competition among lenders. Many mortgage lenders still rely on cumbersome paper-based loan approval systems and processes. These legacy artifacts can slow decision times and, in a competitive marketplace, cause borrowers to switch to a financial institution that can move more quickly. Automation can facilitate decision-making at every step in the process, all while improving accuracy and compliance. One common example of such automation is the extraction of data from borrower applications and supporting documents, which eliminates the manual effort typically conducted by processors and underwriters to pull information out of documents. Additionally, digital onboarding tools enable the use of artificial intelligence to quickly determine which loans are ready for a decision and which require more documentation or closer scrutiny. Using a slowdown for digital transformationOutside of remote closings (which exploded in growth), the boom caused by the record mortgage loan volumes largely paused digital transformation across the mortgage industry – many lenders simply would not have been able to keep up with the sheer volume of business in their pipeline had they switched to new systems. But the expected reduction in overall volume starting in 2022 will give lenders more elbow room to develop the workflow strategies required to overcome automation challenges. Making an automation transition takes planning and time to implement, but it is not impossible! While 2022 promises to bring changes to the mortgage industry, it will also be an opportunity to implement automated processes that will reduce manual underwriting costs, optimize efficiency, improve customer experiences, and boost profitability. If interest rates rise, it will create challenges for both legacy lenders and digital-first fintechs… and the survival of the fittest will boil down to who can automate most efficiently. Avi Marcus is vice president of mortgage strategy for Ocrolus. This column does not necessarily reflect the opinion of HousingWire's editorial department and its owners. To contact the author of this story: To contact the editor responsible for this story: The post Automation helps lenders respond to rising mortgage rates appeared first on HousingWire. |
| Anxiety grips LOs as layoffs sweep the industry Posted: 21 Dec 2021 12:17 PM PST If you take the temperature of how loan officers are feeling ahead of the holiday season, the scale would likely read “uneasy.” They have good reason to feel anxious. Numerous shops, including Better.com, Interfirst Mortgage, and Freedom Mortgage have announced layoffs in the past few weeks, and some LOs worry their jobs may also be on the chopping block. According to Fahad Janvekar, a loan officer at Fairway Independent Mortgage, "there is definitely some concern" about layoffs in the industry. But he feels confident that being a part of a more traditional shop, rather than a fintech, is a more stable option. "I think the fear always exists in our heads, being in the sales game you try to project positivity, but of course there is fear," Janvekar said. "Better and Interfirst hired a huge number of LOs, and it made sense because of the refi boom, but what is the sustainability there?" Meanwhile, Justin Woodward, a loan officer at American Pacific Mortgage and a newcomer to the mortgage industry, said that he anticipates cycles of boom and bust to impact the sector. Implementing social media policies for LOs that balance risk and maximize returns Black Knight’s social media platform manages all compliance obligations, so loan officers can maximize their returns and cut costs. Presented by: Black Knight"There was an expectation that the market will shift and it's just waiting for the foot to fall," said Woodward. "With newer folks, there definitely is more uncertainty because if there is a squeeze, am I good enough to survive? Someone with 10 years in the industry, they know the answer to the question—I don't." In 2020, hiring in the mortgage industry surged. Some shops doubled their employee headcount to keep up with the refi boom, and some offered signing bonuses to lure talent. However, for months now, industry insiders have predicted that as margins start to compress, shops will move to shed employees. Among half a dozen LOs interviewed by HousingWire, there was a common theme. They expect shops with a consumer direct model, which tend to be refi-heavy and rely on call centers for intake, will be more likely than retail shops to cut employees in the months to come. "Retail people don't get laid off as much because they own their book of business. As long as their realtors and partners are doing business, they're doing business," said Blake Bianchi, founder and CEO of mortgage start-up Discount. "Whereas with the consumer direct model, there will be less volume, so shops are probably way over staffed." "The thing is that the only way that they can keep people (LOs) fed is keeping rates low and they may not be able to do that," added Bianchi. And while less-experienced LOs will have to ramp up their networking to thrive in a purchase environment, high-performing loan origination sales talent will always have employment options, said Paul Hindman, managing director at Grid Origination Services. "However, when every mortgage lending forecaster, economist and expert analyst is predicting less volume and margin contraction, leaders must react,” he said. Regarding cost-cutting measures that lenders might take, Hindman reasons that companies will "deploy thoughtfully measured fixed expense management initiatives". Examples might include cutting or restructuring salaries and benefits, or trimming technology expenses. Hindman added, "Most companies go to great lengths safeguarding their core expert talent, so they will explore every possible sales expansion strategy to retain these value creating resources. Companies must invest in the core talent they want to retain. So highly productive, quality minded Loan Originators should not be worried about their employment." Rather than await the pink slip — or Zoom announcement, as the case may be — loan officers may want to brush up on their skills and expertise. Seasoned loan officers advise "sharpening your tools and getting good at your craft,” Woodward said. “It’s easy when it's a lead generated business to not understand how to survive in the business." To stay afloat in a purchase-heavy market, he advised getting referrals from clients and making inroads with referral partners. The post Anxiety grips LOs as layoffs sweep the industry appeared first on HousingWire. |
| You are subscribed to email updates from Mortgage – HousingWire. To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google, 1600 Amphitheatre Parkway, Mountain View, CA 94043, United States | |
No comments:
Post a Comment