MReport May 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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40 | TH E M R EP O RT 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 Thriving vs. Surviving What should lenders do to maximize business in a low-originations environment? By Joe Wilson L ast year presented a challenging set of market conditions in the mortgage industry. With interest rates rising, strong home price appreciation, and tight housing supply, lenders must be strategic in their approach to responding to these conditions. And ultimately lenders must find ways to thrive going forward. It may be tempting for lenders in the current market atmosphere to look at cutting costs in an effort to combat lower revenue. The effect of these cuts often results in a reduced number of loan officers (LOs) and a slashed marketing budget. The danger in this type of approach is that lend- ers dramatically reduce opportu- nities to grow their revenue. This "penny-wise and pound-foolish" approach of making decisions with smaller amounts of money that end up making bad sense for affecting larger amounts of mon- ey, makes it all the more difficult to survive current conditions. A better approach for lend- ers looking to thrive in a down market environment is identifying areas where they can increase revenue through judicious spend- ing. Create Long-Term Loyalty: One such opportunity lies in the rec- ognition that LOs are a lender's best source for revenue growth. Making cuts in your LO force will, in turn, reduce your ability to increase revenue. A better ap- proach should include a strategic focus on recruiting and retaining top talent. Be known as a com- pany that invests in employees. Grow your LO force and focus on helping them work more efficiently and ultimately have a better quality of life. Make Smart Technology Investments: The current market conditions also present an opportunity to evaluate the role technol- ogy can play in growing your revenue. Technology platforms for digital mortgage give loan officers the ability to access their loan pipeline, order credit, run pricing, view appraisals, and send pre-approval letters from their mobile device—all while sync- ing in real-time with your loan origination system. This type of technology empowers your loan officers and increases their ability to close faster without sacrificing their nights and weekends. This savings allows them to spend that extra time working in the field. A proven digital mortgage platform will reduce turn times, help increase loan application submis- sions, and lead to more referral business. That's a real return on your technology investment. Provide a Better Customer Experience: Finally, there is an op- portunity for lenders to improve the borrower experience. Lenders have found success by engag- ing borrower prospects earlier, removing stress from the loan process, and ultimately getting people into their homes faster. When borrowers can start the application on one channel and seamlessly continue on another you've already improved on their experience. Now add to that the customers' ability to securely scan and upload documents using the lender's app from their mobile device. Now you have solved the paper chase and are on track to getting them into their homes sooner. You're also giving your borrowers a platform that keeps them connected to you and their Realtor throughout the loan transaction. Borrowers will value the convenience and transparency this connection offers as they receive status updates and have immediate contact options at their fingertips. You've removed a lot of the stress from the approval process and provided a borrower experience that delivers on the digital mortgage promise. In 2019, many of the trends seen in 2018 will more than likely remain the norm. Smart lenders recognize this as an opportunity to grow at a time their competi- tion is shrinking their workforce and slashing budgets. Doubling down on your people and mak- ing a smart investment in the right technology is a recipe to thrive while your competition simply seeks to survive. Joe Wilson is the Chief Sales Officer at SimpleNexus. Since joining the executive team in 2017, Wilson has lead SimpleNexus to become the industry-leading digital mortgage solution used by over 200 mortgage companies and 20,000+ loan officers nationwide. Under Wilson's leader- ship, SimpleNexus has tripled its size of clients, and the company now serves 15 out of the top 25 retail lenders in the U.S. He is a regular speaker within the mortgage industry and has received several recognitions, including Ellie Mae's Circle of Excellence award and HousingWire's Rising Star award. Falling Rates, Rising Risks Overall fraud risk recorded an upward spike, partially on account of natural disasters. T he First American Loan Application Defect Index revealed that the frequency of defects, fraudulence, and misrepresenta- tion in the information submit- ted in mortgage loan applica- tions increased by 4.6 percent compared with the previous month. Compared to the past year, the index recorded a 9.6 percent increase. According to the index, this is down 10.8 percent from the high point of risk in October 2013. The defect risk for refinance transactions recorded an upward spike by 5.1 percent compared with the previous month, and is up 20.3 percent compared with a year ago. The purchase transac- tion defect index increased by 5.6 percent was up 3.3 percent from a year ago. While overall fraud risk has been on the rise since July 2018 due partially to the impact of natural disasters, the last two months have experienced an acceleration in fraud risk. Citing the reasons behind the surge, Mark Fleming, Chief Economist at First American, said, "Surprisingly, mortgage rates declined in December and continued falling into January, reaching their lowest levels since April 2018. Prospective home buyers and existing homeowners reacted to the lower rates, resulting in a mini-boom

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