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32 | M R EP O RT QUICK TAKE Turning Around Turn Times Here are some ways lenders can tackle costs and time-to-close in originations. By Sam Verma T his year is expected to see a continued streak of the historic low rates that became a highlight of last year. The 30-year mort- gage rate is expected to average 3.075% this year, down from 3.125% in 2020, according to an average of forecasts from Fannie Mae, Freddie Mac, the National Association of Realtors, and the Mortgage Bankers Association. The mortgage industry is expected to experience some dramatic swings throughout the year. It will be a volatile year for mortgage rates, with fixed rates falling even lower early in 2021 on economic concerns but rebound- ing in the second half of the year as widespread vaccinations will potentially lead to a strong surge of economic activity. The Biden administration will likely pull out all stops to ensure the economic engine of the United States does not sputter. The overall forecasts mean that mortgage lenders whose business has seen huge highs through 2020 will continue to flourish even in 2021. However, they must find ways and means to tackle origi- nation costs and closing times, so they are better equipped to deal with the high volumes. Here are some aspects that lenders can take into consider- ation. Avoiding High Closing Times and Origination Costs W hile 2020 taught the whole world so many new ways of living life, it also taught a few key aspects to the mortgage industry. One of them was that overall borrower experience can suffer because of delays in paper- work and due to lack of technol- ogy utilization. The mortgage process is complex, requiring borrowers to furnish tons of paperwork. But more paperwork also means delays that lead to bottlenecks in the workflow, killing productiv- ity, impacting ROI, driving up overhead, and ultimately losing customers. Additionally, loan origination fees are one of the largest costs that customers must pay upfront. For a smooth transi- tion from the seller to the buyer, the closing documents must be collated properly and should be duly signed by both parties. Failing to comply with the regu- latory guidelines laid down in this process can attract penalties, which means lenders will have to be diligent throughout the mortgage closing process. To reduce closing time as well as originations costs, lenders can partner with service provid- ers who have the expertise to identify inconsistencies in closing documents and any impending compliance issues before they happen. Engaging with the Right Vendors I n the mortgage sector where time is a primary concern, lenders need services that deliver ROI from day one. It helps to engage with vendors who can offer flexible "pay only for funded loans" models to reduce risk in case of non-funding. This means that lenders do not require dedi- cated internal infrastructure and can convert from a fixed price and capital-intensive model to a variable price and more capital- efficient pricing version. Lenders will only have to spend on the loans funded instead of having to incur losses on non-funded loans. Improving Closing Ratio by Engaging with Borrowers W ith larger loan applications come stricter deadlines, more documentation, and more rigid compliance regulations.