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Addressing Risks & Challenges in the Mortgage Industry

Risks & Challenges in Mortgage Industry
In: Blog

The mortgage industry is going through a state of transition as it adjusts to the fast-increasing interest rate environment, inflation pressure, and an overall economic slowdown. The risks & challenges in the mortgage industry continue due to low levels of housing inventory and other economic disruptions. While the pandemic seems to have run its course, experts feel housing inventory levels could still take years to rebound.

Furthermore, refinance applications have declined by 11% and are now at a 22-year low considering there are only a few borrowers who can benefit from a refinance at today’s higher rates. The average interest rates for 30-year fixed-rate mortgages have also increased to 6.52% from 6.25% — the highest level since mid-2008.

Moreover, there has been a significant decline in loan origination profitability in 2022, as average production costs per loan has risen to a new high. To mitigate the risks & challenges in the mortgage industry, many lenders announced layoffs or business line closures. As the great hiring binge of last two years ended, lenders are looking to reduce staff throughout 2022 and into 2023.

Bottom line: the housing market will continue to provide both challenges and opportunities for some time to come.

Here are some ways to alleviate the risks & challenges in the mortgage industry:

  • Increasing workplace efficiencies

Increasing efficiency in the workplace can help lenders ensure they serve more clients, while still providing top-level service to each one. A proper audit of the services can show process issues, if any, that take up an alarming amount of the team’s time, leaving little time to do the tasks that directly contribute to revenue.

A key to increased productivity is having structures and systems in place that can help streamline the entire process and maximize automation when possible. This frees up the time of the in-house team to work with clients. One way of increasing productivity is by partnering with mortgage loan boarding support services company who can do the heavy lifting while letting the lenders’ team focuses on core tasks.

  • Opting for HELOCs/HELOANs

Now is the time for lenders to explore new loan programs like HELOCs and HELOANs and add them to their business portfolio. Needless to say, new products could spike up the risk and lead to increased underwriting needs.

However, it’s not practical to go on a hiring spree to add more people in-house to manage all of the underwriting needs. In this case, lenders can tie up with the right mortgage loan boarding support services to off the risk. These third-party vendors are experienced in a variety of loan programs and can supply a customizable bench of underwriters.

Find out how PrivoCorp can provide Processing Support that cuts across Originations as well as Post-closing

PrivoCorp - Case Study - Improving Closing Ratio in Contract Processing

  • Effectively managing service levels

This is the time when customers across industries are looking for instant information and response from service providers. Lenders need to put their best foot forward to deliver a great user experience.

To do so, they need to improve service levels by ensuring their back-office processes are ready to scale to handle any task quickly and accurately. They can partner with the right outsourcing companies that offer flexibility, customer-centricity, trained resources, state-of-the-art infrastructure and industry know-how that will allow lenders to enhance their service levels. These partners create targeted solutions to address specific problem areas.

  • Leveraging tech for better turnaround times

Once homebuyers are ready to get a mortgage, they don’t want the process to take more time than it needs to or be more complicated than necessary. While the pandemic has accelerated digital tool adoption across sectors, consumers have become accustomed to completing transactions online quickly and efficiently.

This is why lenders need to rely on digital tools to speed up the lending process. As per studies, 40% consumers said they would leave their financial institution for a digital banking experience comparable to an online shopping experience. Self-service tools like chatbots and advanced technology like artificial intelligence (AI) and machine learning (ML) tools are available to speed up the loan approval process. Lenders need to make the most of such technologies.

  • Outsourcing to trusted & reliable partners

Outsourcing can help lenders focus on their core competencies and leave other tasks to the experts. This will help save money and improve efficiencies as well as a significant amount of time.

Additionally, by outsourcing, lenders can avoid the need to hire and train in-house staff. When lenders outsource to trusted partners, the latter bring best practices that can help to enhance the entire process and improve quality.

How PrivoCorp can help

PrivoCorp offers end-to-end Services providing Processing Support that cuts across Originations as well as Post-closing. PrivoCorp can process loans faster with experienced teams. Their teams also ensure that all compliance and auditing standards are strictly met. PrivoCorp’s quick scalability feature helps lenders handle more business, without investing on any infrastructure.

Get in touch with us today to know more!

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