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What to Expect from the Originations Market in 2017

John Vella

John Vella is the Chief Revenue Officer with Altisource Portfolio Solutions, where he manages and expands key client relationships for Altisource and grows the firm's revenue by leading the sales force for all of its products and services. Vella has been in the real estate industry for more than 30 years, with positions that include President and CEO of EMC Mortgage Corporation (a subsidiary of JPMorgan Chase), EVP of GMAC Mortgage, CEO of Household Automotive, Chief Sales Officer of Option One Mortgage, and Director at Freddie Mac and FDIC. Vella recently spoke with MReport about expectations for the originations industry in 2017.

What can we expect in the mortgage originations industry heading into next year?

As we go into 2017, we will remain in a favorable interest rate environment with strong housing numbers to provide momentum for loan originators.  It looks like we will end 2016 in the $2 trillion range for total originations with 2017 expected to come in closer to $1.6 trillion. With many of the new regulatory requirements having been consumed by the industry, 2017 will still bring about regulatory change but hopefully at a slower pace.  The lending and vendor communities have created the infrastructure to adapt to regulatory changes in hopes of becoming more nimble to roll out and incorporate upcoming changes.

The industry will still deal with pressure on margins and the cost to originate as compliance, risk and vendor management teams will continue to play a large role in the operations, not to mention competition for production volume.  With an emphasis on efficiencies and cost management, variable expense models with outsourcing will continue to be attractive for certain functions as will the constant refinement of technology.  Automated decisioning, data and analytics are areas where resources and improvements will be applied with the goal to make better decisions, sooner in the process to impact margins and customer satisfaction.

The borrower experience will also evolve with the demand for 24/7 service and access and decisioning becoming table stakes.  Customer transparency in the process with a focus on the user interface including ongoing status updates on every device will also be mandatory in order to meet the ever demanding customer satisfaction requirements.  The competition for new customers and the retention of existing customers will focus on the borrower experience, lead generation capabilities and creative marketing strategies.

Once the customer is engaged and is processed, the need for the lender to have certainty in delivering the loan to the secondary market will become even more critical.  Everyone wants certainty in the manufacturing of the loan and to mitigate the risk of any buy-back ramifications.  Technology, process optimization and insurance products will continue to evolve to allow for better execution and delivery.

It sounds like the forecast is positive.

All-in-all the future looks bright. 2017 will be a year where regulatory changes will be digested much easier, more efficiencies will be built into the process to keep margins manageable, the borrower experience will continue to improve and lenders will expect more certainty in delivering loans into the secondary market.

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
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