Jennifer Dozier: Four Ways for Mortgage Lenders to Maintain a Competitive Advantage During a Volatile Market
Jennifer Dozier is a partner with Franzen and Salzano, PC, focusing on both federal and state regulatory compliance. Jenny advises banks, mortgage lenders, real estate brokers, title agents and other settlement service providers on the laws of all 50 states and federal law including, but not limited to, RESPA, TILA, ECOA, FCRA and HMDA. She received her B.A. in Political Science from the University of Georgia and her J.D. from the University of Mississippi School of Law. While at Ole Miss, Jenny served as a member of the Mississippi Law Journal.
When the mortgage industry is in a constant state of change, it’s important for lenders to stay on top of their game. With new reports coming out every day about market dynamics, competitive pressures, supply shortages and the persisting economic impacts of the global pandemic – mortgage lenders may be seeking ways to remain profitable and compliant. Here are four considerations for lenders to remain competitive, speed up digital transformation efforts, and manage costs in a volatile market.
1. Better streamline origination tasks by utilizing technology and automation
With loan volumes decreasing and interest rates climbing, some lenders are forced to downsize their workforce. Lenders can implement and utilize tools to help streamline time-consuming tasks that are traditionally paper-based. Lenders can create a win-win situation for themselves and consumers by automating document extraction and management, income and asset verification, employment verification, automated compliance, and decisioning. Companies using these tactics in lending can increase efficiency while providing a smoother and more secure application process for new and existing consumers.
2. Managing origination costs and fees
Margins are tightening, causing lenders to reevaluate pricing and fee structures. Lenders may be considering whether to pass third party charges – previously absorbed by the lender – on to the borrower. Credit report costs are a common example of a third-party service usually charged to the borrower. Lenders are now increasingly turning to third-party services to verify a borrower’s income and employment status and considering charging these costs to the borrower. While this may be a viable option, there are a few issues to consider first. Mortgage fees are often regulated by state law (especially for non-bank lenders), so lenders should consult with their legal and compliance teams to ensure the fees are permissible and can be paid by the borrower. Lenders must also ensure that fees are disclosed in accordance with applicable law. This is particularly important for consumer mortgage loans subject to TRID. For these loans, third party charges must be disclosed upfront and generally cannot increase once disclosed. To stay compliant, lenders should review systems and processes and confirm new fees are disclosed properly and timely.
3. Enhance the borrower experience and find new pockets of opportunity
Delivering an optimal experience is key to deepening the relationship with your customers.Lenders should consider technologies to better interact with borrowers in the digital lending market. Consumers want a pleasant and seamless lending experience. Today’s lending landscape requires businesses to be flexible and responsive to meet borrower expectations. As the mortgage industry continues to streamline the decisioning and lending process through automation and systems integration, consumers can complete tasks from their preferred channels. Digital capabilities and near real-time insights can help more consumers get the loans they need.
4. Help your borrowers be more informed homebuyers
Lenders should take measures to educate borrowers about the home lending process. While this may seem like common sense, borrowers are often bombarded with complicated jargon and paperwork. As a result, they can feel overwhelmed and uncertain about their loan options. A lot can happen between loan application and closing. By providing clear and concise information about the loan process, lenders can help to reduce borrower anxiety and build trust. Furthermore, borrowers who are well-informed about their options are more likely to be satisfied with their loan experience. In today’s competitive market, lenders who provide a positive borrower experience will be well-positioned to attract and retain customers.
In uncertain economic times, many businesses are forced to tighten their belts and do more with less. Mortgage lenders are no exception. By carefully managing their resources, they can weather the storm and come out stronger on the other side.
This article is for general information purposes only and does not constitute legal advice.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)
