In part one of this series, we discussed the current outlook of the mortgage industry in the face of a looming recession. While many companies are worried about economic uncertainty, lenders have a unique opportunity on their hands with the lower mortgage volumes. Lenders have a chance to evaluate and improve operational challenges that hinder the efficiency of the lending process. A slower market lends itself to implementing new procedures that will ultimately benefit your organization in the long run.
During a down market cycle, a smaller staff takes on additional work; hence the process automation pressure can be as fierce as during a strong market. Underwriting costs increase when employees work overtime or on Saturdays until new hires once again become indispensable.
To avoid the vicious cycle of frequent hiring and firing, lenders must apply a long-term approach to underwriting automation that secures a balanced, easily adjustable mix of traditional underwriting and automated loan processing.
Market activity varies by location, lender and market conditions. During a loan origination downturn, however, lenders have an opportunity to redirect underwriters to use some of their time to assess business operations, implement innovative technology and improve overall loan processing efficiencies.
Among the key reasons lenders should act now to future-proof the company from recurring underwriting nightmares due to market cycle changes is the certainty of another strong mortgage market return, probably sooner rather than later.
It is extremely important to work with a mortgage fintech company specializing in loan processing automation designed to ease future volume fluctuation changes. Particularly during a recession, it’s equally important to expedite the underwriting process, so borrowers don’t get frustrated enough to abandon the application or apply with another lender.
If employers ensure employees have easy-to-use, time and cost-efficient tools to cut the loan application processing time for borrowers, the underwriters’ workflow remains consistent.
Automation positively affects staff retention boosting workforce productivity and morale, which in turn increases mortgage borrower satisfaction and retention. Knowing technology will fill the gap when loan volume fluctuates up or down gives employees peace of mind regarding job security.
Ultimately, borrowers and employees develop priceless, long-term brand loyalty that lenders appreciate.
In the current market where interest rate hikes fuel borrower frustration, lenders need to offer high-quality services as fast as possible to remain competitive. Closing a loan over 45 days of processing is not feasible for most consumers and their rate locks. For many borrowers, the most critical lending quality metric right now is time gained before a new Fed-approved interest rate hike kicks in.
Satisfied borrowers return for additional services and refer their lender to others.
Lenders can distribute “business cards” to stay in touch and inform borrowers how much faster it takes to close a loan using 24/7 accessible technology from anywhere. Updated information may entice frustrated borrowers to appreciate the opportunity even if the lender’s rates are slightly higher.
Now is a good time for lenders to assess processes and functionalities, including mundane tasks, archiving files, or audit preparations, not technology alone. Business operations managers may inquire how to improve services, understand borrowers’ perspectives and enhance what sets the company apart, engage a new marketing team, or reintroduce the company to the community.
Investing in technology that will ultimately enhance your lending experience is crucial to remaining competitive in a downward market.