PERSON OF THE WEEK: The COVID-19 crisis has created numerous obstacles for the mortgage industry during the past 10 months but that hasn’t stopped lenders from capitalizing on strong purchase demand and a robust refinance market.
Indeed, lenders have been deftly managing a surge in demand throughout most of the crisis. The rise in purchase demand has been driven mainly by city dwellers looking to move to single-family detached homes in the suburbs in reaction to the virus, while the strong refinance activity of the last 10 months has been driven by historically low mortgage rates.
This surge in activity, combined with social distancing constraints, has forced many mortgage lenders to quickly deploy self-serve technologies in order to attract, engage and close with potential borrowers. Those that already had self-serve systems in place may have needed to enhance those systems with more capacity or additional features and capabilities. Either way, lenders have risen to the occasion, handling the surge under the most challenging of circumstances.
To get inside perspective on how the mortgage market has stayed resilient through the pandemic, MortgageOrb recently interviewed Mark Revard, division executive vice president and Oklahoma market president for Gateway Mortgage, a division of Gateway First Bank.
Q: What areas of the mortgage industry would you say have been most affected by the COVID-19 crisis?
Revard: Right now, achieving homeownership is more important than ever as peoples’ homes become their safe space, workplaces, classrooms and so much more. Unfortunately, it’s at risk for Americans due to the impact of the COVID-19 crisis. Many homeowners have lost their jobs and are forced to consider forbearance plans. Additionally, renters are less likely to enter the housing market due to financial concerns and social distancing recommendations.
This has affected the way that lenders originate loans. As borrowers continue to social distance themselves from one another, it’s important that lenders have a strong digital presence and the ability to complete the loan origination process remotely.
As we navigate the current environment, mortgage products such as VA loans, HFA loans and FHA loans can help prospective homebuyers build equity. It is critical for mortgage lenders right now to educate first-time homebuyers on their options and be available to consumers.
Q: How has the mortgage industry as a whole weathered the pandemic?
Revard: In the past year, mortgage lenders have been forced to shift their approach to lending and evolve quickly, but the mortgage industry is resilient. Fortunately, most lenders took the pandemic seriously and implemented digital lending processes as early as February. We were lucky at Gateway to have previously adopted digital strategies in 2019. Employees were already equipped with laptops, so they were familiar with using our software remotely.
For others in the industry, making the digital shift was no longer optional. Lenders recognized that they’d quickly fall behind competitors if they were slow to innovate, so loan officers across the industry embraced the necessary technology to compete. Innovations that would have normally taken years to accomplish were achieved in a matter of months. I am really proud of the industry for making such huge strides so quickly and continuing to prove our strength and flexibility.
Q: What changes should mortgage companies be making in their approach to lending? What technological advancements will be most important?
Revard: With so much uncertainty in the wake of COVID-19, lenders and borrowers have found relief in effective and transparent communication. A lot of companies aren’t great at communicating with their customers, but it has become critical to success in our industry. In order to provide a high level of service, lenders need to be over-communicating with borrowers, meeting them at every touchpoint. We can’t meet a client for coffee or visit with agents face to face, so we’ve had to be creative to keep ourselves top of mind. In the last few months at Gateway, we’ve been trying to really ramp up our focus on customer service. One thing we’ve found beneficial are our “Tuesday Update” calls, where we invite everyone involved in the transaction to join and share relevant information, ask questions, get to know one another a little better and improve the overall relationship.
In addition to improving communication, the pandemic has changed consumer behaviors and expectations. The mortgage industry is seeing historical loan volumes that require a digital approach to processes and a new way of doing things.
Lenders can bridge the gap between current business limitations and the needs of their consumers by offering a streamlined customer experience with innovative technology. From start to finish, the lending process should be able to be completed remotely. This includes digital originations with e-closings and e-signatures, which connect potential customers from the internet to loan originators in the field. Additionally, implementing technology that monitors analytics can help lenders uncover opportunities to better serve their customers.
Q: What challenges will the mortgage and housing industry be faced with in the near future and how can lenders adapt?
Revard: I expect that supply and demand will be a challenge in the future. There aren’t many houses in certain price ranges, and those that are available often receive offers from multiple interested parties and go off the market quickly. While we have seen more building permit applications approved, construction also faces difficulties in regard to the supply chains of necessary appliances, tools and building materials.
When the refinance boom slows down, it will be hard for lenders to bring in new business, especially in this new environment created by the pandemic. Mortgage companies will have to find creative ways to market to potential borrowers, but having a strong digital presence is a great first step.
In the past year, new consumer behaviors have emerged that are likely to continue even after the pandemic subsides. Now is the time to move away from the “we’ve always done it that way” approach to lending and invest in technology that will drive lasting efficiency.