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Lenders need to hire now to scale for the refi volume opportunity

Solidifi works with majority of the top 100 originators to help grow their market share

HousingWire spoke with Solidifi President Loren Cooke about what lenders can do to thrive in a disrupted and fast-growing market.

HousingWire: While COVID-19 has dampened the spring purchase market, refinances are set to surge as a result of historically low rates. What challenges are lenders facing right now as they work to capture this market opportunity?

Loren Cooke: The reality is, the spring market actually started a little bit early this year and it looked like it was going to be a strong spring purchase market. But on top of that, the 10-year treasury yield dropped, rates followed and we saw that lenders had overflowing demand and their pipelines were at capacity. That was near the first week of March.

And then COVID hit. Lenders were already at capacity, challenged because of the surge, and many weren’t ready.

Like most companies, they had to move quickly to implement work from home strategies but being an essential service, they also had to adapt and find new ways of keeping some of their physical locations open, changing their processes to adopt physical distancing recommendations from world health organizations on top of respecting state/local orders – which seemed to be changing almost daily.

The challenges were really twofold: dealing with a flood of demand, coupled with a major disruption to existing operations, which is a monumental task – especially for lenders with a national presence.

On the other side of this, the opportunity is absolutely massive for this market. With rates set to stay at these low levels, we estimate that it will take the industry another two to three years to cycle through this refinance opportunity.

I think the biggest challenge right now for lenders is how are they are able to scale their operations to capture this long-term opportunity and grow market share, or in certain cases, protect their existing market share.

HW: How have you seen lenders and their partners adjust their workflows to incorporate more remote work and social distancing requirements?

LC: One thing I know about our industry and this market is that it is resilient. Everyone has had to adjust, but the reality is that what we do is an essential service and so the work still needs to get done.

Solidifi has created Safe Space Appraisals and Safe Space Closings, providing guidelines on how to protect the appraisers and notaries on our networks, as well as lenders and homeowners. These guidelines are aligned with guidance provided by the WHO and CDC as well as state and local authorities.

With Solidifi Safe Space Appraisals, appraisers wear personal protective equipment, and they ask homeowners to open the doors, turn on all the lights and clear access to all spaces in the home to limit surface contact. They also physically distance during the inspection by asking homeowners to wait outside and they eliminate any face-to-face interviews with property contacts.

With our Solidifi Safe Space Closings, notaries pick a secure, neutral space for the closing, like a porch or driveway, so they can verify IDs and exchange documents while maintaining physical distance. It also means notaries don’t share pens or shake hands during appointments.

By adopting these measures, Solidifi hasn’t really skipped a beat during this pandemic. We have provided our clients with a level of assurance that we’re doing everything we can to keep customers safe.

There was no playbook for this pandemic – for anyone. I think it has tested our mettle, and all things considered, we’ve clearly demonstrated our resilience and ability to adapt.

Solidifi hasn’t seen any material change in our network capacity throughout this pandemic. We’ve also maintained our leading performance standards and SLAs, which is gives our clients a competitive advantage in this environment.

HW: What steps can lenders take to ensure their business not only thrives in the current environment but remains poised for long-term growth?

LC: I think the most important thing lenders are thinking about today is how to add underwriting capacity. This is a long game and we’re just in the first inning.

Figuring out ways to recruit talent remotely is going to be absolutely critical, but the challenges also extend beyond recruitment – you need to onboard these new employees in this environment.

That’s going to be tough. We’re going to have to bring in new people into the industry, which is a great opportunity, but those people have to be trained. I think that’s going to be a big focus for lenders.

This also makes having a strong operations backbone supported by trusted, experienced partners even more significant.

Lenders should be looking at the downstream impact of taking on more volume and ensure that they have vendors in place who can scale with the growth of their business – without compromising on quality or customer experience.

The next few years could represent a growth cycle that, frankly, we haven’t seen in a few decades. Having strong partners who can scale will be a key component in how lenders continue to win and grow market share.

HW: How can partnering with Solidifi help lenders scale to capture market share?

LC: Solidifi is already working with the majority of the top 100 originators in the market today to help them be more competitive and grow their market share.

Our business is built for scale. We create a better engagement model for the procurement of title, settlement and valuation services by focusing on quality at the start of our process.

Simply put, we’ve focused on finding the most qualified independent professionals who can deliver the highest quality product and the best experience for the customer in a scalable format, and we’ll continue to prove that out.

We’re a very long-term focused organization, and so we’ve been adding capacity to prepare the business for the long run. It’s about hiring today to handle the volume that’s coming.

We believe the opportunity will be significant over the next few years. We’re already helping our existing clients to rapidly scale their operations today, and we’re focused on continuing to provide them with capability to capture that growth.

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