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Earlier this month, I spoke with MReport about the balancing act our industry is performing to keep up with internal and external pressures in the two-part series titled, “Mortgage Tech Update, Part 1 and Part 2.” Given we are midway through 2022 and still adjusting to changing mortgage market trends and the role of technology top of mind for many, the questions asked of me and my fellow panelists are timely. Below I share my expanded thoughts on the topics I was originally asked to address in the article.
How did your company pivot to handle the challenges presented by the pandemic over the past few years? Have you found that certain processes and functions have been more relied upon over others in light of this dilemma?
As loan volumes went through the roof, we examined our own processes and introduced more automation so that we could maintain the service levels our clients were accustomed to. We also accelerated our ability to respond to our clients’ rapidly evolving requirements. It wasn’t just about enhancing the automations we marketed and sold to clients, but how we went about doing that. Today we continue to explore ways to make our automation even faster and ever more accurate.
Because we rely heavily on rapid development and operational excellence, we examined our own technology infrastructure and cloud technology architectures to improve our technical efficiency. Today, project management automation is enabling us to better prioritize where our time and investments are best focused.
Now that origination volumes have subsided, we are again pivoting to find new ways to help our clients become more competitive in the current rate environment, implement better controls, and address loan quality management in a purchase market. As a result, we’re placing greater focus on origination automation and rules-driven technology that create greater certainties, better manage risk and improve investor confidence. LoanLogics’ acquisition of LoanBeam at the end of 2021, helped us take a large step into the origination automation space. And, our propriety business rule library will be enhanced and packaged into new products that will help the mortgage industry buy and sell mortgage loan assets with better insights into loan quality.
What processes and digital tools have you seen the industry embrace and gravitate toward in a post-pandemic environment?
The pandemic and the recent refinance boom showed us that forces beyond our control can significantly affect loan volumes at any time. These forces drive digital technology, too. At the same time, many lenders weren’t ready for this enormous market shift. As a result, many were forced to invest heavily on increasing staff. This has only made it harder to unwind that decision now that we’re entering a period of inflation and rising mortgage rates.
Granted, the pandemic did push lenders toward digital technology such as eClosings, but mostly out of necessity. Speed and borrower convenience through social distancing were paramount at the time. Today, as lenders deal with lower volumes and narrower profit margins, the focus is shifting toward point-of-sale (POS) and origination efficiency to attract borrowers in a considerably more competitive housing market.
We have also seen lenders emphasize systems and digital tools to help improve accuracy and alleviate potential repurchase risks. Purchasers of mortgage loan assets are seeking ways to efficiently evaluate quality. And, more servicers are using digital tools and processes to reach out and engage borrowers as delinquency, default and foreclosure volumes slowly increase.
What has yet to be uncovered in terms of mortgage technology by the industry to ease the mortgage process? Have we reached a ceiling in terms of growth?
As far as trends, we’re seeing greater trading of mortgage servicing rights (MSRs) as well as new technology that is expanding opportunities for buyers in the secondary and MSR markets. The Freddie Mac® FAST program, launched in the Fall of 2018 with LoanLogics technology as the underlying technology, has been a great channel for facilitating efficient transfers between multiple counterparties. There is also a tremendous opportunity this year and next to build a better network ecosystem for sellers and buyers to find each other in the secondary market beyond what exists in the market today. While mortgage loan commerce is still very one-to-one, single seller to single buyer, that trend may be changing this year.
In addition, there is room to use digital technology to create buyer-seller connections during the origination process, while the facts of a particular loan scenario are changing, which can ensure greater sales certainty in the secondary market.
Navigating the current 2022 mortgage trends will drive the need for more technology.
With a dominant purchase market, an expanding gig economy and ever-changing investor requirements, today’s underwriting requires accurate loan file data and intelligent origination automation tools. Bringing greater transparency earlier in the process, while combining the 3 R’s—risk mitigation, revenue optimization, and reputation—with technology will help originators improve secondary trading prowess and create positive results for both buyers and sellers.
Two other questions I found thought provoking in the initial MReport article I contributed to were, “What can the industry expect next in terms of digital and AI processes to move into the future ? and “What do you feel is your greatest accomplishment in the mortgage tech space?” which I’ll tackle in a follow-up post to this.
For more insight from LoanLogics on 2022 mortgage trends and technology, take a look back at this blog.
