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[PULSE] With lenders under pressure, need for technology is heightened

COVID-19 is fast-tracking lenders to a destination they were already traveling toward

COVID-19 has had an immediate impact on the mortgage finance industry – causing borrowers and lenders alike to adapt to a new normal.

In most cases, lenders are being forced to manage their pipelines completely virtually at a time when refinance applications are soaring due to historically low interest rates. They also need to maintain business continuity while some borrowers may defer payment following forbearance allowances built into the CARES Act.

Jonathan Corr,
Guest Author

Consumers have had their lives upended and with human-to-human contact being a significant risk, technology has taken on an elevated role and now, more than ever before, is the lynchpin bringing the industry together.

Prioritizing the health and safety of employees, partners and clients comes first, but lenders need to drive their businesses forward during this unprecedented time as well. COVID-19, and the resulting rate cuts, have made business growth, or even sustaining moment, a major challenge. Some lenders are even strategically discontinuing online applications to make sure they can adequately manage their current pipelines.

At the same time, as they adjust to this temporary new normal, lenders are increasingly leaning into virtual solutions, which, among other things, allow loan officers to stay connected with borrowers and provide the high-touch approach that is expected by today’s customers. Capabilities like eClosing, borrower-guided appraisals, remote online notarizations and virtual verifications are now needed. In the years to come, as we look back at the industry’s response to this pandemic, the common thread among lenders who have maintained the best borrower relationships will be a swift and decisive commitment to technology. 

The value of online and virtual solutions goes beyond pipeline management. These tools also allow lenders to keep their employees engaged and customers informed. Workforce collaboration tools have exploded in popularity, allowing colleagues to maintain the human connection that is so vital to employee engagement and letting employers communicate vital information to a remote workforce at a time of uncertainty.

Similarly, lenders are now growing accustomed to using digital tools and communication channels to foster strong borrower relationships throughout each step of the loan lifecycle. Online applications, automated emails and texts and mobile capabilities for loan officers mean real-time communication between borrower and originator to provide updates on key milestones, answer questions immediately and ultimately drive stronger, long-lasting relationships.

On a micro-level, creative technology solutions will help our industry navigate this pandemic. Still, from a 30,000-foot view, there’s no doubt that COVID-19 has created chaos in the industry – making it challenging for lenders to complete loans.

The industry is seeing market volatility, the potential impacts of forbearance and social distancing measures. However, it is my belief that the CARES Act will not only benefit consumers but it will also benefit lenders through the liquidity facility built into the package. As we start to see the effects of the CARES Act register on our national economy and our industry, that chaos will subside. Our path to recovery is neither a marathon nor a sprint – it’s more like a 10K. The circumstances of our current market are far different than they were in 2008, and the housing market will have a major role to play in our economy’s recovery. 

While we don’t know the length of the recovery process, we do expect that this pandemic will have long-term effects on how our industry operates. When it comes to lender/borrower relationships, virtual processes will increasingly become the norm. Borrowers will expect lenders to offer these capabilities and do so in a way that results in a frictionless customer experience.

This doesn’t mean that everything will be automated, or in-person contact is going away, but COVID-19 will speed up the timeline for reaching the destination that lenders were already traveling toward –– one in which human touch and automation are incorporated into a balanced, customer-first approach. 

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