MReport May 2021

TheMReport — News and strategies for the evolving mortgage marketplace.

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Page 17 of 67

16 | M R EP O RT COVER FEATURE O ne thing has been certain on the mort- gage lending front over the past year: despite a labyrinth of challenges both expected and novel, there's been no shortage of work to go around for an industry that has remained strong despite the economic hardships that have pummeled the nation. Last year saw a boom in refinancing activity, driven by continued low rates, and this year is experiencing a strong originations market even as the refis continue. But while having plenty of work to go around is a good thing, the real-world logistics of managing that workload can prove challeng- ing, especially when it comes to navigating the interplay between the purchase and refi markets, as well as ground-level issues such as staff- ing concerns and bandwidth. For this month's cover story, MReport spoke to representatives of Planet Home Lending, Blue Sage, SLK Global Solutions, and the STRATMOR Group about the factors keeping loan turn times elevated, the headwinds the industry is facing from staffing perspectives, and how they can work to address these challenges in order to better serve homebuy- ers and the booming American housing market. The MBA recently forecast that "purchase originations are on track to grow 16.4% to a new record of $1.67 trillion in 2021." With mortgage rates on the rise since January, the pendulum looks to be swinging back toward the purchase market, but regardless of how the year plays out, the industry will need to remain nimble and adaptive in order to best meet the needs of homebuy- ers and homeowners. One critical metric, at least from the viewpoint of your aver- age homebuyer, is loan turn times. According to a recent Origination Insight Report from ICE Mortgage Technology, "the average time to close all loans fell to 52 days in March, down from 53 days in February." While that's down ever so slightly from October 2020, when that average stood at 54 days, that number was already 10 days longer than a year prior, and some of the slowest loan turn- around seen since 2012. "Many lenders still have not achieved economies of scale as volume has spiked," said David Aach, COO of Blue Sage, a cloud- based digital lending platform for retail, wholesale, and corre- spondent lenders. "This is largely a function of their technology platforms being much the same as they always have been, where people are manually typing in most of the data rather than having it automatically derived based on upon rules and data. It doesn't lend itself to being able to maintain your turn times when volume increases." Jim Cameron is Senior Partner at STRATMOR Group, a mort- gage advisory business founded in 1985. He noted the results STRATMOR found from their Mortgage SAT program, which he described as a "borrower satisfaction survey benchmarking program." In the past year, the Mortgage SAT program received more than 250,000 borrower re- sponses, compiling the results into a net promoter score (NPS). The higher the NPS, the more favor- able the customer reviews. According to Cameron, the results for 2020 showed that when turn times for refinances are 15 days or less, the NPS is 94 points. When the turn times are 16 to 30 days, the NPS is 91 points. When turn times are greater than 90 days for refinances, the NPS drops to 42 points. For homebuy- ers, clearly, turn times are a factor. "The big challenge is to set expectations with the borrower and then meet those expecta- tions," Cameron said. "There are communications challenges and expectation-setting challenges. When lenders fail, or when it takes too long, it dramatically and negatively impacts borrower satisfaction." One of the mortgage industry's primary tools for managing capac- ity is to raise prices and increase margins, according to Cameron. "We've had such a prolonged period of the refinance cycle that the operations group can't get out of the backlog, because it just continues to pile up. It's hard for operations managers to look at the backlog and figure out how to mitigate problems," Cameron explained. "Many lenders have done it by adjusting how many applications they're taking or adjusting their pricing to try to control too many loans just sitting in their pipeline." However, this approach puts lenders at risk of "an overwhelmed operations staff and unhappy customers." Remote Work, A Not-So-Remote Risk of Burnout T he struggle to manage record volumes began unfolding last year in a time of economic and health strife, paired with the chal- lenges of navigating a widespread shift to remote work for many industry professionals. Cameron explained, "Because there are only so many experi- enced mortgage operations staff available, many lenders have, as a fallback, offloaded those tasks to less-experienced people, who are easier to hire and train. It's a way to survive, and it's throwing bodies at the problem, but not in a cost-effective way." Racing the Clock Meeting the needs of today's mortgage customers with accuracy and speed is more important than ever. Here's how the industry is working to shorten turnaround times while maintaining a commitment to quality. By David Wharton

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