TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/522162
Th e M Rep o RT | 25 Feature T here's no way around it; when it comes to the types of loan products available in today's origination, we are pretty limited. If we liken the pre-crisis environment to Baskin Robbin's 31 flavors, then today's origination trends would be variations of the same flavor, French vanilla, vanilla bean, vanilla swirl. While the new lending envi- ronment may have cut down on the originators' burden to navigate a wide spectrum of available products, today's originator faces new challenges. The documenta- tion necessary for loans today has dramatically increased from where we were pre-crisis, and compliance and disclosures related to the loans have also seen a dramatic uptick. What has been lost in terms of quantity has been replaced with quality, as origina- tors find it a much more in-depth application and paperwork process to get the loan delivered to the customer. How about this: It is safe to say that while the industry might not have the large number of originations, it is more likely to have loans that will maintain strong performance in the long run. Market trends show originators are finding new ways to navigate through these changes. They are modifying their underwriting schedules, leveraging new marketing tools, using more technology to their advantage and shifting the way the mortgage industry is seen as a whole. As the regulatory backdrop continues to ebb and flow, we can only expect more of these market-wide changes in the years to come. Up-front Underwriting as the Norm O ne of the most over-arching trends affecting originators today is the need to make sure that the proper documentation is in place and that the bor- rower has everything they need according to new government requirements. An underwriter is crucial to this process. Having an underwriter actually review that documentation up front is more critical now than it ever has been. At Movement Mortgage, we go into the process with an up-front underwrite, where an underwriter will review the borrower's documen- tation within six hours of the application being received and make a full credit decision based on that information. In the past, if you discovered information in the process that disqualified the borrower, you could address it. For example, if we found something that no longer qualified the borrower for a Fannie Mae or Freddie Mac approvable loan, we would move them into a non-prime product, no problem. Today, if we find a snafu late in the process, there are no non-prime products to place the borrower into. Even if we have to readjust the rate or change something material about the loan, there's now a re-disclo- sure process that has to occur, and that pushes the closing back even further. The further in the process that underwrite occurs, the more problematic it is for the bor- rower. Lenders have to push the underwriting portion of the loan process to the very beginning—to immediately after the application is taken. That's the way to really solve for any surprises, and is a huge competitive advantage for us in the market place—offering that up-front underwrite for the borrower's file. Social Media is the Key W hen it comes to leverag- ing technology in today's origination practices, the discus- sion eventually comes around to how to market to the millen- nial borrower. There are many perceptions about the character- istics of the millennial, and the argument has been raised that millennials are not nearly as relational as previous borrowers. While it is true that millenni- als do not rely on face-to-face networking as much as previous borrowers, Movement Mortgage has found that millennials are just as or more relational and referral-driven as any borrower generation we have seen. While mom and dad might have asked people at church or in their so- cial groups for recommendations when searching for a mortgage, millennials are checking you out on Facebook, Twitter, and Glass- door. They are using a lot of social tools and getting real, live feedback from their peers about what their experience was like. Considering the way the mil- lennial shops, it is more important than ever that you manage your social brand to tell your story and make sure you are promot- ing what it is you do with your peers. Movement Mortgage was founded in 2008, at a time when we did not have a multi-million dollar marketing budget. All we had was the ability to tell the great experiences our borrowers were having. Many of the origina- tors on staff are in their mid-20s, and all of their peers are buying homes for the first time. As a company, we encourage them to tell their stories on Facebook. Facebook costs our originators nothing and is a great way for any company to compete with the biggest and baddest companies in the industry that have virtually unlimited marketing budgets. Up- starts need to use their budgets to provide a great level of service and then get that story out to mil- lennials. Increasing Accessibility for All E very originator has seen the phrase peer-to-peer lending gain traction in the news. For the most part, mortgage banks should not be concerned about the competition for the traditional consumer in the peer-to-peer lending space, as no one can com- pete with the prices and implied guarantees of a Fannie Mae or Freddie Mac loan. However, one takeaway that can be gained in the peer-to- peer lending space is in the Considering the way the millennial shops, it's more important than ever that you manage your social brand to tell your story and make sure you're promoting what it is you do with your peers.