MReport Jan 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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TH E M R EP O RT | 39 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION ORIGINATION The Questions Every Lender Must Ask An Ellie Mae webinar explored ways lenders should engage with borrowers for seamless customer service. A s more young Ameri- cans look at buying a home, lenders are faced with new ways of approaching the buying process to ensure that first-time home- buyers have a seamless mortgage origination experience. During a recent webinar, Joe Tyrell, EVP of Corporate Strategy at Ellie Mae, gave insights into the latest research on the divide between homebuyer demands for trans- parency, speed, and a high tech- human touch process and how it compared to the lenders' view of consumer engagement. Starting on what consumers looked for today, Tyrell said that Ellie Mae's survey of around 3,000 homebuyers who had just com- pleted the mortgage process found that 92 percent of respondents began their homebuying process with some online research. A huge jump compared to just "50 percent who went online five years ago," according to Tyrell. Additionally, he said that 72 percent of the re- spondents looked for the best rates on offer and 59 percent looked for how much loan they could qualify for online. "If you ask any lender what their competitive advantage is, most of them do not say it's our rates, our loan programs," Tyrell said. "Typically, what we hear from lenders is that they tell us it is customer service. That's how they differentiate their ability to compete in the marketplace." Tyrell asked that how lend- ers who were rushing online to engage with customers made sure that this was what the customer also wanted? When Ellie Mae had asked the respondents during the survey what was the No. 1 thing that lend- ers could improve in the mortgage origination process, the answer, es- pecially by millennials, was, "make the process go faster." The second- most-important reason given by the respondents, however, was more surprising, Tyrell explained. "It was to have more personal interaction with their lender," he said. So in that case, how could lend- ers engage with their consumers in a high-tech, human-touch way? "It really starts with asking yourself as a lender three basic questions," Tyrell said. First, he said, lenders must ask how they were creating interest. It could include channels such as buying leads, sending emails, and counting on the loan officers to bring in the business. The second question, according to Tyrell, was how could lend- ers engage consumers once they responded to the interest created by them? And third, and most important, was "what is your strat- egy to cover 100 percent of those people who expressed interest and are willing to engage?" It was by asking these questions, that lenders could take the help of a true digital mortgage experience, which personalizes the importance of balancing personalized com- munication with automation, using data and analytics to engage more borrowers, and create solutions that drove effective engagement to close more loans. Rising Rates Can't Hold Them Back Millennials are still strong mortgage candidates, despite fluctuations in the market. M illennials have continued to close purchase loans, de- spite rising interest rates, according to the latest Ellie Mae Millennial Tracker. Millen- nials are closing more purchase loans than refinance loans, with purchase loans comprising 89 percent of all loans closed by millennials as of September 2018, three percentage points higher than a year earlier. Most of these loans, 88 percent, were conventional loans. Conventional loans are up by seven-percentage points year-over-year. "Despite rising interest rates, millennials are still looking to buy homes," said Joe Tyrrell, EVP of Corporate Strategy for Ellie Mae. "We're still seeing the majority of millennial loans fall into the con- ventional loan category, and with interest rates increasing, there is an even greater opportunity for the industry to educate these buyers on all of the options that they have available to them, including some of the higher loan-to-value prod- ucts and FHA loan programs." Conventional loans make up 68 percent of all loans closed by millennials in September, while 27 percent of closed loans were FHA loans and 2 percent were VA loans. Other findings in the Millennial Tracker include data on who is borrowing. Ellie Mae found that millennial males make up 61 percent of primary borrowers on loans closed in September, while women made up 32 percent, with the rest not listing a gender. The average age of these young buyers was 29.7, relatively unchanged from 29.8 in July and August, and 29.4 a year ago. Across all home loans, it took an average of 42 days to close last month. Year over year, it took two days longer at 44 days to close. Purchase loans took an average of 41 days to close last month, compared to an average of 42 days to close a year ago. Refinance loans closed in 45 days last month, on average, compared to 46 days in 2017. Twenty-eight percent of closed VA loans in September 2018 were for refinances, up from 21 percent the month before.

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