TheMReport — News and strategies for the evolving mortgage marketplace.
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34 | M R EP O RT FEATURE Turning Things Around D espite the complexities and risks, lenders and mortgage professionals have a unique op- portunity to take advantage of the profits construction loans afford. Thankfully, technology is available that makes the process more seamless and efficient. The key is implementing a transparent, end- to-end platform that serves as the system of record for all construc- tion loan programs. Such a plat- form can be used to manage and track all the processes involved in construction loans—inspec- tions, lien waivers, draw requests, change orders, and more. This type of innovation does two things: first, it removes the manual processes involved with managing construction loans that inevitably lead to profit leakage. Second, it serves as risk manage- ment for any bank or mortgage company making construction loans, especially when a platform comes equipped with state-specif- ic lending requirements. If there's ever an issue involving approvals or disbursements, the platform can instantly report everything that took place during the pro- cess. Today's cloud-based technolo- gies can maximize profits, reduce risks, and help streamline and simplify construction lending. It can make things safer and more convenient for borrowers, too. This includes an app for bor- rowers and builders to submit requests and documents, view accurate budget information, and communicate with your team. A centralized system of information and communication will provide transparency, eliminate friction points, and deliver an exceptional experience. Construction lending technol- ogies can save money in other ways as well. For example, one of our clients reported an 80% decrease in emails from bor- rowers during the construction draw process after implementing our platform. That translates to a significant reduction in time that staff is dealing with back- and-forth communication, which can enable employees to focus on more value-added activities. There are still other benefits. For instance, right now, there's a premium in our industry for top producers. But if you're a lender that does not have a robust selection of products that includes construction loans, you're at a severe disadvantage when it comes to recruiting. On the other hand, lenders that do offer construction loans and have adopted technology that makes the process fast and hassle-free are much better positioned to attract a high-performing sales team. At the end of the day, lend- ers are in this business to make money, but today's market has made this more difficult to do so. With substantial profits in con- struction lending, huge demand for new housing, and technologies available, construction lending represents one of the biggest opportunities for lenders and originators to turn their fortunes around. And there is no better time to capture this opportunity than right now. Smart professionals are always looking at the road ahead. You can go back to the Great Recession to see that lend- ers that picked up their FHA designations to take advantage of first-time homebuyers jumped far ahead of the pack when the market began to recover. The same thing happened several years ago for lenders and loan officers who foresaw the historic, extended refi boom. For lenders that offer construction to permanent loans but are wasting time and money wrestling with spreadsheets, now is the time to invest in sensible technology that eliminates these historical inefficiencies. The same goes for lenders who may be thinking about launching a construction loan program. With technology, it's never too late to start maximizing profits today and certainly as the nation's next building boom moves forward. As Director of Strategic Relationships at Land Gorilla, SHANNON FARIES oversees consulting and new product development for lenders looking to enter the construction lending space and provides best practices of loan program development and risk management. Faries also manages strategic partnerships and provides consulting services for Land Gorilla's industry partners, including loan closing doc providers, MI companies, insurance providers, and government agencies. Faries has lifelong experience in mortgage banking and construction lending. He has founded and managed mortgage banking operations and is the former Chief Lending Officer of a Federal Savings and Loan. Throughout his career, starting as a loan officer, Shannon has focused on construction and renovation lending, including A&D loans, and builder financing. Smart professionals are always looking at the road ahead. You can go back to the Great Recession to see that lenders that picked up their FHA designations to take advantage of first-time homebuyers jumped far ahead of the pack when the market began to recover.