BLOG VIEW: Thanksgiving 2020 is going to be different from other years. Some of us may not be able to celebrate it with our loved ones in the same manner as before. Yet, we all have something to be thankful for – something for which we wish to express gratitude – something that has made us much stronger this year. The challenges have been enormous, yet there have also been so many opportunities and it is important to be thankful for them.
The devastating consequences of COVID-19 pandemic reached every industry in the world and the mortgage industry was no exception. Across industries, a lot of people lost their jobs and livelihoods, and some had no option other than to enter forbearance plans.
Toward the end of March, the CARES Act was enacted to provide some relief to battered Americans. Many U.S. economists have credited this Act for keeping many American families, and the economy at large, afloat. The $2 trillion bill provided hundreds of billions of dollars in aid, including enhanced unemployment benefits and stimulus checks for workers and their families. The Act also created emergency loans for small businesses struggling during the lockdown. Many Americans are thankful for the CARES Act because, among other aspects, it ensured that millions of homeowners did not lose their homes.
Soon after the Act passed, the number of forbearance requests started piling up. As homeowners started exploring the option of forbearance, mortgage servicers came under tremendous pressure to handle the sudden surge. In March and April, thousands of borrowers started to inquire about forbearance options. Servicers that were already operating with lean budgets and lean staffing had a hard time handling the spike. And with staff suddenly needing to work remotely, the challenges were myriad. The additional paperwork after reaching out to thousands of homeowners and initiating requisite procedures on all the requests proved to be a herculean task.
Thankfully, the situation was soon under control. Servicers made rapid, highly informed decisions, and immediate actions to protect and support their clients and ensure that their critical business operations continued through the pandemic.
Servicers also engaged proactively with borrowers – who were panic-struck – to allay their fears and put them at ease. We are thankful to all the people who made the lives of incumbent and potential homeowners a little more comfortable by standing firm to their commitment and delivering exclusive solutions.
While there were a host of difficulties, initially, servicers were able to deliver stellar service.
Another positive development that the mortgage industry can be grateful for is that social distancing finally paved the way for a technology-first approach to origination and servicing. Both lenders and servicers have stepped up to offer expert assistance through superlative digital solutions. These have helped streamline workflows and efficiently meet rising volumes. Robotic process automation (RPA), artificial intelligence (AI) and machine learning (ML) have proven key for servicing, origination, and even areas such as property valuations and settlement services.
As the pandemic has progressed, every other sector has remained massively impacted, yet the mortgage sector has grown to become more robust than ever. Home sales in the U.S. have increased through the fall, despite record prices and the sudden loss of some 22 million jobs.
As the historically low borrowing costs driven by record-low rates fueled a housing-market surge, demand spiked in a way that lenders and servicers had never experienced before. Lenders were swamped with business from homeowners who were trying to take advantage of cheaper borrowing costs, while sercvicers were swamped with forbearance requests.
The good news is that profit margins have increased. The mortgage business has been booming – while other insdutries, including retail, tourism and hospitality, have experienced immense losses.
While our heart goes out to those affected, we, in the mortgage industry, are eternally thankful for the continued business we received.
What’s more, we are proud that the mortgage industry has played a role in boosting the economy. The Mortgage Bankers Association (MBA) is now forecasting that mortgage originations will reach $3.18 trillion in 2020 – the highest since 2003.
And while mortgage originations are forecast to fall to around $2.49 trillion in 2021, it would still be the second-highest total in the past 15 years.
Purchase originations are expected to grow 8.5% to a new record of $1.54 trillion in 2021 – which would eclipse the previous all-time high of $1.51 trillion in 2005.
This forecast means lenders whose business has been experiencing a high through 2020 will likely continue to grow even in 2021.
Mortgage lending hasn’t been this profitable since 2013, according to data from the MBA.
All in all, this year has been a rollercoaster ride – especially for the mortgage industry.
The good news is that we have emerged stronger than ever.
So, on the occasion of this very special Thanksgiving, we wish to be thankful from the bottom of our hearts for everything that we have received during this year. May the true spirit of Thanksgiving be with us all.
Sam Verma is president and CEO at Peoples Processing, an outsourcer offering origination and servicing processes. Peoples Processing is a d.b.a. of Direct Mortgage Corp., a mortgage banker licensed in multiple states that conducts wholesale and correspondent business.