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Pandemic ‘Heavily Influenced’ State of the Origination Industry

Among a battery of revelations, 41% of origination professionals reported “burgeoning outsourcing for core services,” as well as regulatory and technology challenges, in Altisource's annual industry survey, “The State of the Originations Industry.”

According to Altisource, the pandemic heavily influenced some of the results of this survey. Regulatory constraints, for example, is a challenge the industry faces directly as a result of COVID-19. Likewise, consider that while technology is the second-biggest challenge, they also selected technology enhancements, like automation and e-closing options, as the most important factors for differentiating organizations in a competitive market.

An excerpt from the report's executive summary:

"COVID-19 has altered the industry and the world significantly and will continue to do so into 2021. Though the pandemic continues to affect health and the economy, people and industries have quickly adapted to the new and evolving normal. Mortgage companies and vendors banded together to adjust processes so they can continue serving customers. At the same time, historically low interest rates led to an all-time high in mortgage lending for new loans and refinancing. While that was great news, many lenders have been unable to meet the massive demand due to capacity issues, which is why they are outsourcing and working with third-party service providers." 

Other significant survey findings showed that 38% of respondents felt their organizations need to focus more on the “customer experience” while 29% tabbed “home equity” loans as the most promising market opportunity. Meantime, 27% pointed at “regulatory constraints” as the biggest challenge in today’s mortgage market.

Twenty-one percent cited “technology enhancements,” such as automation and e-closing options, as the most important factors for differentiating organizations in a competitive market. Looking ahead 84% predicted that “growing costs will drive out smaller lenders or they will be acquired”.

“Based on the survey results, now is the time to utilize technology, improve customer experience, and, most of all, implement outsourcing to help your company stand apart,” said Brian Simon, CMB, president of Altisource’s Trelix, CastleLine, and Lenders One. “While the road ahead remains unclear, as always, mortgage companies that are ready for whatever comes will have the best chance of thriving in the market. This report highlights ways you can prepare.”

The purpose of the report is to help lenders optimize their operational and marketing strategies by giving them a look at elements shaping the industry today and how other originators are planning to increase growth and efficiency this year.

As MReport has reported, amid the economic havoc created during the coronavirus pandemic, the residential mortgage industry emerged as one of the relatively few bright spots in an otherwise dismal environment. That is not to say the industry didn’t face its share of challenges – rapidly changing federal regulations, the impact of social distancing protocols on a traditionally person-to-person business and the abrupt migration from offices to working from home were among the most pressing obstacles that the industry faced and, for the most, successfully overcame.

If 2020 was the most unusual year for the origination space, what does 2021 hold? Can we expect a continuation of last year’s difficulties or is a rollback to pre-pandemic normalcy on the horizon? And what new trends will dominate how the industry operates?

Industry leaders queried on what the near-future holds are forecasting both tests and trials that need to be addressed, along with new opportunities that could emerge when the tumult has finally subsided. But if there is one theme that is consistent across the origination space, it is the sense of optimism that 2021 will be a good year for the industry.

About Author: Chuck Green

Chuck Green has contributed to the Wall Street Journal, Washington Post, Los Angeles Times, San Francisco Chronicle, Chicago Tribune and others covering various industries, including real estate, business and banking, technology, and sports

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