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Issue link: http://digital.themreport.com/i/1066250
24 | TH E M R EP O RT FEATURE A pro football team pre- pares for the big game by training, watching team videos, examin- ing stats, eating and sleeping well, and practicing plays ad nauseam. Fans get ready by pur- chasing team apparel to wear on game day, planning their tailgates, and placing wagers based on what they have seen all season. Fans will be rank- ing teams by those that don't stand a chance, the ones that are bankable powerhouses, and the teams that are full of surprises. In the lead up to the big game, people generally feel pretty sure about what the outcome might be—whether it's good or bad. Then the game begins, and any- thing can happen. While many fans and sports- casters THINK they know what the outcome will be, no one knows. And, if you are a betting man, all you can do is go with your gut. The teams, on the other hand, have to adjust their game as the quarters unfold and things happen. Injuries, bad calls, and unforeseen plays—a good team stands ready for all these things and reacts. With luck, anticipation, and preparation wins the game. As 2019 takes shape, there are many things mortgage lenders should anticipate and prepare for as well. In our industry, winning the big game is akin to keeping your pipeline filled, keeping costs in check, and closing more loans. But, given the emerging trends that are expected to take hold this year, that may not be such an easy task. That's precisely why preparation is essential. Assessing the Field Conditions T he first step to proper preparation is understanding what you are up against. What are the things that may impact your game that are out of your control? A football team takes the weather and the condition of the field into account, among other things. Mortgage lenders must weigh industry forecasts. The Mortgage Bankers Associa- tion (MBA) anticipates home purchase originations to increase each year from 2019-2021, and that pace should continue to increase beyond the forecast horizon, given the wave of mil- lennial buyers beginning to hit the market. In addition, MBA Chief Economist Mike Fratan- toni said the Fed is expected to raise the federal funds rate three times in 2019, bringing the fed funds target to 3 percent. The MBA also expects the 10-year Treasury rate to increase to 3.4 percent and then level out, bringing 30-year mortgage rates to 5.1 percent. The mortgage industry contin- ues to be challenged by the ongo- ing drop in origination volume and significant margin compres- sion. This has resulted in lenders seeing an increase in costs coupled with extremely competitive pricing to capture loan volume that, in turn, is depressing volume. The 2019 field conditions for the mort- gage industry are less than stellar. Writing the Playbook J ust as a football team sizes up its competition in terms of its strengths, weaknesses, accomplishments, and failures, so too should the mortgage in- dustry examine how things are evolving regarding technologi- cal advances and the underly- ing factors contributing to an increase in fallout. • • Digital•Mortgage – Up until the past year or so, lenders have been mainly focused on all things compliance related. However, that changed dramati- cally in 2018 as the industry de- veloped a new, laser-sharp focus on technology–and that obses- sion is expected to continue throughout 2019. Application programming interfaces (APIs) will help the industry make great technological strides this year. APIs facilitate the use of short- cuts among programmers who are in the business of building new software. This is especially im- portant in the mortgage industry, where many existing platforms and programs must be retrofitted with automated programs—some- thing made possible through the use of APIs. The fact is, mortgage lenders today use multiple vendors and communication between vendor programs is not a luxury, but a necessity. Otherwise, loans cannot be processed accurately or on time. All of this means APIs have become a vital component of mortgage lending's digital future. • • Automation – With mortgage fraud on the rise, lenders are searching for tools to minimize their risk more effectively. Automation is helping to accom- plish this by making incidents of fraud easier to detect. Assets, in- come, and credit histories can all be obtained through technology now, which is eliminating the need for borrowers to submit information and possibly tamper with information. Technology is The Mortgage Playbook Arm yourself with reliable credit data and verifications to adjust your game for the year ahead. By Greg Holmes NEW YEAR'S ISSUE