STRATMOR: Lenders’ Pain Points Shift Dramatically During Pandemic

COVID-19 has created problems for mortgage lenders, and their most daunting challenges have evolved considerably since early in the pandemic, according to the STRATMOR Group.

In his article “How Will History View 2020? Mortgage Banking Executive Perspectives,” STRATMOR GROUP Senior Partner Jim Cameron details how early issues involving productivity and processes have been overtaken by concerns over capacity management and recruiting.

Cameron’s article compares the results of STRATMOR Group’s May and August 2020 Operations Workshops, where mortgage executives were asked to share their perspectives on changes brought about by COVID-19, specifically their biggest pain points at each point in time. The findings are presented in the company’s latest monthly Insights Report.

According to Cameron, in May, productivity and process-related issues were at the top of the list, with “managing a remote workforce and overseeing the forbearance of mortgage payments next in line.

“In early May, we were relatively fresh off the shelter-in-place (SIP) rules established at the state and local level, so managing a remote workforce was of great concern at that time,” he adds. “Also, the CARES Act rules allowing temporary forbearance of mortgage payments and the ancillary issues created by these rules were a major concern.”

However, when STRATMOR asked the attendees of its August 2020 Operations Workshop what their top issues and pain points were, the lenders top-of-mind issues had changed significantly.

“Far and away the biggest issue in August was capacity management,” Cameron writes, noting 41 percent of lenders cited it as their top challenge. Meanwhile, 24 percent of lenders were concerned with retention and recruiting. In the May workshop, no lender cited those issues as problems.

“According to Black Knight, a record $1.1 trillion (that’s trillion with a “t”) was originated in the second quarter, 70 percent of which were refinance transactions,” he notes. “Operations executives were consumed by the challenge of processing, underwriting and closing this massive amount of loan volume – they could think of little else, and this trend has continued unabated into September.”

The Insights Report lists eight tactics lenders were using to manage capacity, including overtime and adjusting workflow processes as well as creative tactics lenders are employing to help mitigate the stress and workplace fatigue that comes with high-volume processing.

“So far this year, we have been challenged and stretched way beyond our comfort zone, and as a result, we grew as an industry despite the short-term pain,” Cameron writes in the report. He cites the increased use of Remote Online Notarization (RON) as well as the industry’s growing comfort level with remote communications using tools like Zoom and BombBomb as examples.

In a second article, “Efficiency and Happy Borrowers: Digital Tools Bring Both,” MortgageSAT Director Mike Seminari notes that while having too many loans to close is a good problem to have, many lenders are struggling to maintain high customer service levels. “With capacity issues squeezing every drop out of existing resources, originators and fulfillment staff have less time for personal, proactive loan updates for borrowers,” he writes.

Seminari recommends that lenders make greater use of digital tools such as text messaging, mobile apps and borrower-facing web portals to bridge the gap between originator efficiency and borrower satisfaction.