Take 2020’s Lessons to Heart And Get Refi-Ready Now–Ed Austin of SingleSource Property Solutions

Ed Austin is chief operating officer at SingleSource Property Solutions, a leading provider of property services supporting the U.S. housing industry, where he is responsible for the company’s overall operations and growth. Austin has more than 25 years of appraisal and title management experience and has developed relationships with many of the top 20 U.S. mortgage lenders. He can be reached at eaustin@singlesourceproperty.com.

When the COVID-19 pandemic arrived in 2020, the Federal Reserve’s response was swift and its impact on the housing market was dramatic. Interest rates plummeted to historic lows, and over the next two years, millions of homeowners across the country rushed to refinance their mortgages, sometimes more than once. But for the industry, what was a golden opportunity also became a logistical nightmare.

Overwhelmed by the sheer volume of applications, many lenders simply couldn’t keep up. Overworked and understaffed teams exposed lenders to operational inadequacies and compliance risks, while processing and underwriting backlogs left both lenders and borrowers frustrated. In fact, customer satisfaction levels for both banks and non-banks fell significantly during 2020 due primarily to refi volumes, according to J.D. Power’s 2021 Mortgage Satisfaction Survey. While mortgage originators saw record profits during this time, most could have performed much better had they been prepared to handle the sudden and sustained increase in demand.

Fast forward to today. Once again, our industry faces a potential surge in refinance demand, particularly from homeowners who purchased homes during the recent high-rate period. The Federal Reserve has already lowered key interest rates this year, and with inflation still cooling, there are strong indications that further rate cuts are on the horizon. We may not know when the next refi boom will hit, but we do know exactly what happens when lenders don’t prepare.

Lenders that want to avoid the same bottlenecks, staffing issues, and operational strains during the Great Pandemic Refi Wave need to take steps now to get their systems ready. And while recruiting seems like the most obvious step, the reality is that it’s not the most efficient or sustainable strategy. Onboarding, training and bringing new employees up to speed takes time and drives up costs as well. Instead, lenders should consider investing in outsourcing and technology that enables them to scale quickly during periods of high demand.

This is where trusted third-party help comes into play. To be sure, there are many outsourcing options. Most third-party providers don’t offer a blend of comprehensive services that allow lenders to streamline processes without extra staff, but they are out there. By leveraging these partnerships now, lenders can outsource multiple processes and tasks such as title searches, property valuations, and document management tasks through a single provider. This frees up their internal teams to focus on higher-level decision-making and customer relations.

Outsourcing alone isn’t enough, though. Investing in digital applications, automation and AI—or partnering with third party experts that have these tools—is key to scaling up operations efficiently while reducing errors and maintaining high customer service standards. Beyond streamlining processes and improving efficiency, these technologies empower lenders to manage higher volumes more effectively and move refi applications through the pipeline faster.

Digital applications are now table stakes for every lender. The ability to streamline interactions and allow borrowers to submit necessary documents and track their loan status in real-time not only enhances the borrower’s experience but also frees up a lender’s internal resources to focus on sales and other aspects of the loan process. Meanwhile, automation can significantly reduce the time a lender’s staff spends on manual data entry and document verifications, thus accelerating the approval process and decreasing the likelihood of human error.

Refinances are also a great opportunity to utilize appraisal waivers, which allow lenders to avoid one of the most time-consuming and least controllable aspects of loan production, thanks in part to appraiser shortages in many markets. By partnering with a vendor who can provide a range of valuation products, including ACE+PDR data collection services, lenders can offer waivers on more transactions while creating a faster, less stressful closing experience for borrowers. Refinances also lend themselves to title insurance alternatives as well as e-signings and remote online notarization (RON) opportunities, which can help lenders move deals along even faster.

Take time now to establish right partnerships and put the right technological solutions in place before rates drop further. If you aren’t sure you have the right pieces in place, the time is now to find trusted third-party service providers and title vendors that offer a full suite of title and closing solutions. Being “refi-ready” means more than simply hoping for the best. It requires foresight, planning and investment.

The bottom line is that no one knows the exact moment when another refi boom will hit. We only know that it will. While it may be tempting to wait for it to happen, lenders that take these steps now will have a significant, first-mover advantage over those who scramble to react. In other words, you can be behind the 8-ball or leading the way. The choice is yours.

(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 NewsLink Editor Michael Tucker.