Everyone knows just how competitive the mortgage market is today and just how hard you must work to stay ahead of the pack. Likewise, everyone is aware that the right technology solutions are essential tools for entrepreneurial mortgage brokers and loan officers.
The best technology allows you to produce more loans while working more effectively and providing your clients with the best possible experience — the kind of experience they tell their friends and family about, as well as one that drives referral and repeat business.
The assumption is the best technology is cost-prohibitive and is available only to the largest lenders with the money, resources and technical staff to support it. Wrong. As trite as it sounds, cloud computing — on-demand delivery of computing services over the internet — has changed every-thing when it comes to mortgage technology. Cloud computing produces economies of scale that have put truly best-in-class solutions within the reach of any mortgage originator.
So, just how competitive is the market? Let’s look at the numbers. Mortgage originations broke records across the board last year and 2021 is shaping up to be a top sales-volume year as well, despite interest rates rising from historic lows. No wonder the broker/correspondent lending channel is the industry’s fastest-growing segment.
Nearly $3 trillion in refinances were originated in 2020, but in the last quarter of the year, more than eight in 10 refinance borrowers chose another lender for their new loan. Think about this: Growth and recapture rates remain the name of the game, and everyone out there is fighting for the same business. As the cost to borrow climbs, there will be even more competition for less business.
The 18% recapture rate for all refi borrowers is the lowest share on record. Rate-and-term refi clients were recaptured at a significantly higher rate (23%) than cash-out refi clients (11%), but this a finite market. Sure, there are still about 14 million high-quality refinance candidates who could cut their current rate by at least three-quarters of a point, but this is nowhere near the amount seen last year, when refi prospects seemed to be coming out of the woodwork.
The cash-out recapture rate is notable given the $7.3 trillion in tappable equity that homeowners racked up by the end of 2020 — the highest amount ever recorded. With lenders losing 90% of these clients, however, it’s obvious there’s some work to be done there as well.
Accurate pricing is critical in determining losses and recaptures, with the difference between losing and keeping a client being in the range of one-eighth of a point. Timing and staying in front of the client are crucial, too, as borrowers whom lenders have worked with more recently are recaptured at higher rates.
Borrowers have plenty of options when it comes to getting a mortgage and they appreciate personal connections to win their business. Communication — on their terms — is key.
They expect quick turn times, competitive products and pricing, responsiveness and self-service convenience. They probably wouldn’t use the phrase themselves, but they want seamless interconnectivity between all the moving parts involved in the origination of a loan.
To give them what they want, you need tools like a digital point of sale (POS), a robust product pricing and eligibility (PPE) engine, e-close capabilities and so on. Luckily, all of this and more is available to today’s mortgage broker, and often requires little more than a credit card, a subscription and an internet connection to get started.
What about lengthy and costly implementations? The right broker technology can be set up within a few hours, even from your home office, with a support team on standby to assist with setup and training. Additionally, with the right technology, all software updates, system security and other technical requirements are hosted by the provider.
Then, once you’re set up, you can originate loans and interact with your clients anytime, from anywhere, and from essentially any device. This lets you provide a level of responsive service that sets you apart from your competitors — and the added efficiency means you can originate more loans.
Entrepreneurial brokers and loan officers who want to grow their businesses now have the tools to do so, often literally in the palms of their hands.
A cloud-based LOS with a digital point of sale for your clients, paired with application programming interfaces, provides the best of all worlds — namely, an all-in-one approach to originating mortgages. Originators get the full complement of services and functionality they need, combined on one seamlessly integrated platform to support the complete production workflow.
An integrated PPE gives you the best available pricing across hundreds of investors so you can quote the borrower in seconds. More importantly, you can quote them accurately and with precision pricing geared toward their specific circumstances. Plug in a fee-monitoring service and you can populate disclosures with real-time fees from thousands of jurisdictions and recording offices nationwide. Collaboration and communication can happen in real time.
Automated loan production accelerates turn times and reduces origination costs. And doing it with an affordable, subscription-based, all-in-one system enhances the benefits of this automation even more. Time spent on routine tasks such as document collection and data entry can be reduced to the bare minimum, while other tasks can be automated entirely. This includes pulling credit reports, calculating fees, establishing underwriting conditions, running compliance checks and delivering disclosures.
The process automation and efficiency that can be achieved using cloud technology ultimately benefits borrowers, improves their experience and makes it possible to originate more loans. Clients can quickly access prequalification results, pricing and status information. They can securely upload documents and receive proactive communications about the status of their loan. Online chat and screen sharing help the originator engage the borrower during the mortgage process and provide assistance when needed.
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When the client has a good experience getting a mortgage, they talk about it. This is an amazing time to be in this industry. Entrepreneurial brokers and loan officers who want to grow their businesses now have the tools to do so, often literally in the palms of their hands. Better yet, cloud-based LOS platforms can be deployed within a single day, quickly giving all types of originators robust process automation and digital capabilities. This will help them win more business in today’s competitive market. ●