Lenders cited the health and safety of staff as the biggest challenge they are facing in the midst of COVID-19, according to a recent survey conducted by Fannie Mae. Clarity regarding updates to loan eligibility and navigating supply chain disruptions rounded out the top three.
The GSE released the special topic analysis as part of its Mortgage Lender Sentiment Survey series that captured feedback from close to 200 senior mortgage executives in early May.
The survey asked lenders two primary questions:
- What are the biggest challenges that they’ve faced in loan origination and mortgage servicing in response to COVID-19?
- What are their most important business priorities, and to what extent has COVID-19 influenced those priorities?
Handling evolving regulatory and investor requirements, managing cash advances and preparing for loss mitigation programs were additional concerns lenders cited.
For mortgage servicers, understanding and navigating post-forbearance options for distressed borrowers was the leading challenge reported – followed by gaining clarification on forbearance programs, according to the report.
“Mortgage banks are significantly more likely than depository institutions and credit unions to report people taking advantage of the situation and liquidity issues as top mortgage servicing challenges they faced as a result of COVID-19,” Fannie Mae said.
Business process streamlining and consumer-facing technology topped the list as the two most important business priorities for the fourth year in a row, the report said. However, in 2020, the importance of “business process streamlining” rose 10% in terms of priority since 2019’s survey.
“Presumably, the prioritization of process streamlining by lenders is due in part to the recognition that at some point the current refinance boom will come to an end, and lenders will need to be more efficient in order to remain profitable in a potentially thinner origination market,” Mark Palim, vice president and deputy chief economist of Fannie Mae said.
The impact of COVID-19 on digital applications was polarizing for lenders – with 40% citing they do not offer, nor plan to develop, a digital portal despite lender reports that all digital applications saw an increased or consistent usage, according to the survey.
The largest increases in digital applications for loan originations were video meetings between borrowers and personnel of the firm, online applications and electronic verification of income, employment and assets, the report said.