MReport February 2021

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16 | M R EP O RT COVER FEATURE years ago, and we got a big 3.75% or something like that. And we thought that's insane." Yet Garth Graham, a part- ner with Stratmor Group in Greenwood Village, Colorado, argued that capacity management issues will impact on originators who are too heavily focused on refinancing. "At some point, when rates go up, there will be a dramatic shift to a problem with excess capac- ity," he said. "It won't be a capac- ity management issue, it's going to be shedding excess capacity—i.e., staff—and very quickly. It's going to be an increase of purchase, roughly 10% year over year, and for lenders who were focused primarily on purchase, it should look pretty good. But for lenders who built the capacity to handle a huge surge in refinance, it's not likely to be a soft landing. I just have no clue when the landing occurs." The Non-QM Sector O ne area in the mortgage in- dustry that was temporarily disrupted by the pandemic's eco- nomic upheaval was the non-QM sector. Atlanta-headquartered Angel Oak Mortgage Solutions saw its business hit the pause button during the initial weeks of the pandemic but has since moved forward and is looking into 2021 for the possibility of new competitors to challenge its lead. "Absolutely, we see more lenders on the origination side starting to get involved in non- QM," said Tom Hutchens, EVP of Production at Angel Oak. "They've enjoyed an amazing run in 2020 on the agency refi side and that could continue, but it also could end abruptly. So, we're seeing people want to drive their business more towards purchases, and non-QM is really built for that. A lot of lenders, and a lot of new lenders, are getting signed up with Angel Oak to build a non-QM business." But not everyone is on fully board the non-QM train. "I don't really see it as a growth channel," UWM's Ishbia commented. "I think they've been talking about that for five years, and it's never really done much. I don't see non-QM as a growth plan in 2021 at all." "Lenders are not rushing down the credit spectrum right now, when they can make up very high margin on really vanilla product," Stratmor Group's Graham added. Paul Buege, President and COO of Inlanta Mortgage in Pewaukee, Wisconsin, shared the lack of enthusiasm in non-QM, but he admitted being able to originate those loans could help with customer appreciation. "Good referral partners will bring in customers that might need that non-QM loan," he said. "I think it's starting to become a bit more available, although it going to represent a very small proportion of our business." The High-Tech Touch T he 2020 pandemic gave a new priority to technologies that bridged the barriers separating stakeholders in the origination process. Buege predicted origina- tors would be wise to put more effort into strengthening digital offerings to improve customer service. "We move loans fast, get them done, and create awesome ex- periences because we're going to want all of those customers and those referral partners that are bringing us loans to be ready to tell everyone else how delighted they were with the experience," he continued. "And they're going to be very much needed in the second half of the year, when many people predict the head- winds of slower production. We think the second half of the year is going to give us a great environment where we can start putting our focus on investing in some more technologies that can prepare a company for the future in which we want to be much more of a digital experience for our clients and our referral partners." UWM's Ishbia observed "most of the companies that have really struggled are ones that have not invested in technology," which has resulted in slower closing times. He expressed concern that too many originators are not seeing the proverbial picture when it comes to using tech- nology to create time and cost efficiencies. "We're in an interesting industry because nobody wants our product that we're selling," he explained. "Nobody wants a mortgage, they want the house, right? Or they want the savings. So how do you make it faster and easier? People really have to go all-in on technology, because too many times in our industry, companies spend a lot of time partnering with this vendor and kind of doing a halfway job of really investing in technol- ogy. You've got to be all-in with technology if you're going to make the process faster and easier for consumers. If you're doing that, you're going get a lot more business." Some originators are bypassing the vendors for the creation of proprietary technologies designed to improve their operations. "We have a very sophisti- cated and robust proprietary tech platform," stated Rick Seehausen, President and COO at Denver- based Cherry Creek Mortgage. "It may be the best kept secret out there, but we're hoping to change that." Seehausen credited Quicken Loans and Rocket Mortgage for putting a new emphasis on pro- priety systems. "Companies are looking, not only at technology, but at process reengineering to make the mortgage process simpler," he continued. "It shouldn't be as complex as it is, and it shouldn't take as long as it does. Rocket Mortgage was founded on the notion of creating a better mort- gage process, and that goal and objective is shared by Cherry Creek. Having a proprietary tech platform gives us a lot of flexibil- ity in being able to apply automa- tion and focus on the consumer experience, automating tasks and simplifying processes." "We are always looking at tools and resources that we can use for ourselves or give to our origination partners that speed up the process, offer surety of execution, and give them quick answers." —Tom Hutchens, EVP of Production, Angel Oak Mortgage Solutions

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