October 2016 - Changing of the Guard

TheMReport — News and strategies for the evolving mortgage marketplace.

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TH E M R EP O RT | 9 TAKE 5 M // How are mortgage origination and servicing today different from mortgage origination servicing a year or two ago? Other than more regulation that requires more compliance, are there any differences? ROBINSON // The most substantive changes are taking place in technology. I'm a firm believer that technology advances, particu- larly in the realm of workflow management, is the differentiator for high-performing mortgage originations and servicing. Given the complexity of rules and regulations, we need to ensure files and activities are queued up directly for the professionals writing or servicing mortgages. There have been signifi - cant advancements in incorporating work- flow directly into mortgage loan origination systems. Some technology firms have found a niche in developing tools that wrap around core mortgage servicing systems. Workflow drives speed, quality, service, cost, and most importantly compliance. Another way that both origination and servicing differ is the fact that lenders and servicers are actively performing primary market research to truly understand how to better directly serve consumers. Using Voice of the Customer helps us actively engage our customers and consumers more broadly to understand their needs and to devise meth - ods to better serve those needs. M // How hot (or not hot) is the refinancing market right now? ROBINSON // The refinance market is still doing well due to the prolonged low interest rate environment. According to the Mortgage Bankers' Association, the industry is ex - pected to produce approximately $857 billion in refinance originations for the full year 2016, an increase of nearly 15 percent from 2015 refinance originations of $749 billion. The market is anticipated to shift signifi - cantly from refinance to purchase beginning in 2017 as refinance originations are expected to decline by approximately 47 percent to $455 billion, as well as an additional decline of 34 percent to $301 billion in 2018. This will be partially offset by increases of purchase originations increasing from $981 billion in 2016 to $1.085 billion and $1.446 in 2017 and 2018, respectively. M // What, if any, effect have the low interest rates had on the mortgage banking business? ROBINSON // Low interest rates are always viewed favorably for the mortgage industry. It is almost a natural hedge for other areas of the banking business that are hurt by a low- interest-rate environment, like capital markets. In January of 2016, the Mortgage Bankers' Association expected loan originations to be down 7 percent and for the 30-year mortgage rate to grow as high as 4.6 percent by fourth quarter. They are now expecting originations to be up 13 percent and the 30-year mortgage rate to grow to 3.7 percent. That's a pretty big swing in expectations. Forty-seven percent of the originations are projected to be refinance volume, similar to 2015. Obviously, this is good for the consumer, as they get the benefit of making the largest investment they will make at historically low rates; it helps generate revenue for the mortgage industry as a whole. While there are some nega - tive impacts in the mortgage industry that we could get into, like the impact to our $70 billion servicing or capacity to get loans closed, a low-rate environment will bring very good opportunities that we can benefit capture from as long as we are operationally sound. M // How are you reaching the low-income buyer or encouraging home buying in low- income tracts? ROBINSON // We have an overarching Community Economic Development plan designed to assist low to moderate income buyers and those buying in low to moderate income tracts, including a commitment to originate more than $10 billion in mortgage production from 2016 to 2020. In certain areas we have mortgage loan originators who are solely focused on originating loans in low to moderate income tracts or on assisting low to moderate in - come buyers. We're expanding the number of these MLOs, as well as assembling teams of MLOs, processors, and underwriters solely focused on these loans. We have designed products geared for these needs, including our Down Payment Assistance Program. We know the biggest obstacle to home ownership is the down payment, and this program deals directly with this obstacle. The program pays 3 percent of the total loan cost, up to $3,600, for low-income buyers and those buying in low-income neighborhoods. We're continuing to evaluate consumers' evolving needs and creating products to meet those needs. 888.653.8357 Identify Associations Retrieve Pertinent Documents Determine Account Statuses Compliance & Complete Payment Services H O A A C C O U N T M A N A G E M E N T H O A A C C O U N T M A N A G E M E N T "Sound execution of any process requires attention to service, quality, and speed."

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