This story originally appeared in the July edition of MReport.
Michael Oursler over-sees NewDay’s loan origination operations, NewDay University, and secondary marketing efforts. He joined NewDay USA in 2012 and has held multiple positions in processing, credit underwriting, and secondary marketing. Michael is the architect of the Accelerated Underwriting Program, a series of fast-track career training courses that is a cornerstone of NewDay University.
Oursler spoke with MReport on if purchases can continue their climb for the remainder of the year, and how COVID-19 might alter business and work culture for mortgage originators.
Can rising purchase applications continue?
I do think it is a trend that is going to continue. I think with everything going on right now, demand to purchase a home and move is unchanged. A lot has gone on and a lot has changed, but the demand to move has not. There is a couple of reasons for that. One, with quarantine, you have families spending a lot more time in their homes, and they’re starting to realize they need to move, need more space, or why their current home doesn’t meet their needs. You have the same people looking to move up and move out of apartments that are looking to buy homes.
All of those factors still apply, and they are being brought to light quicker because people are spending more time in their homes right now. The other aspect to look out for is an increase in home repair and renovations. When you’re sitting at home all day just looking at all the imperfections of the house, people will be more ready to make that investment. A lot of this is regional so I think by the state it varies dramatically depending on how that state is locked down, or able to move, able to look at houses.
All of those things are playing a big factor in the state and local levels. The last thing is the interesting competition that is out there. The market is extremely competitive to buy a house right now. All of the demand being unchanged is true, but all of the supply is compressed, which is going to create an appreciation and higher home values. You’re seeing homes in multiple markets that go on the market and sell within hours with multiple offers above list price. Those factors are going to continue to push home prices upward.
You’ll see appreciation. You’ll see a lot of inflated pricing on the market, and it is going to speak to the importance of home-buyers getting preapproved and doing their due diligence before they go fall in love with a house because they have to be ready to act quickly.
How could COVID-19 cause mortgage originators to reevaluate business processes?
Mortgage originators, first of all, have been forced to innovate. A couple of things we’ve seen an increase in the industry has been in the closing solution and settlement process. Things like hybrid closings, eClosings, and remote online notarization. There has been a big push to improve those processes and get them more widespread to improve the borrower experience but also to allow them access to products that aren’t available nationwide. The other thing we have seen is the streamlining of the appraisal process.
Asking ourselves, what types of information is available online or through other data sources that will free up the appraiser from actually going into the home and making a determination of value. I think you’ve seen a lot of mortgage lenders streamlining their internal processes to allow their human capital to work well with technology. In terms of specific business models, I think two things are feeling the pressure.
The branch model has struggled. Without branches being open it’s really difficult for them to operate. Depending on how much you out-source and where you outsource, companies have felt the pain of other countries being locked down or unable to work from home due to infrastructure issues and forcing the mortgage companies to pivot their business models to account for some of these challenges Going forward, there is really going to be a question of what is the value of office space and when does it make sense to have employees in the office, when does it make sense to allow employees to work from home. If you don’t have a strong culture if you don’t have a strong training program, is it worth paying rent to have all your employees in the same building?