Published in MBA Newslink, June 19, 2020 – June is Homeownership Month in a year unlike any other. MBA NewsLink asked executives of four lenders to discuss how the coronavirus has affected their business and what they are doing to adapt and succeed.
Participants included:
Brian Gould, Senior Vice President of Operations with Genworth Mortgage Insurance, Raleigh, N.C.;
Jake Carlisle, Regional Vice President of Gateway Mortgage, Jenks. Okla.
Mike Hardwick, President and CEO of Churchill Mortgage, Franklin, Tenn.; and
Michael Rappaport, President of Homespire Mortgage, Gaithersburg, Md.;
MBA NEWSLINK: Homeownership Month is occurring in highly unusual circumstances this year, given the coronavirus pandemic and a volatile economy. You have a lot of employees who have their “feet on the ground.” What are they seeing on the front lines?
BRIAN GOULD, GENWORTH MORTGAGE INSURANCE: COVID-19 is a historically unique event for the mortgage industry as new mortgage originations remain high. However, since more than 40 million Americans have filed for unemployment over the past two months, there are a number of borrowers in forbearance and lenders are expecting to experience higher delinquencies. We’ve seen a few different things play out:
Many mortgage industry analysts expected a sharp decline in families wanting to purchase homes due to COVID-19; however, that is not what we’ve seen so far. Servicers have scrambled to increase their staffing and technology capabilities to assist families with forbearance and other loss mitigation home retention options as mortgage delinquencies had been declining for the past several years, but front-end origination volumes still remain high with historically low interest rates. This presents a volume/capacity planning challenge that our industry has never faced.
There was some initial confusion among consumers that mortgage forbearance meant payment forgiveness. Some borrowers entered into forbearance as an insurance policy in case they needed it in the future, but continued to make their monthly mortgage payments.
While housing inventory remains tight across the country and families are now seeking office space in their homes, it has not deterred the high lender demand for quality underwriters and underwriting services. With most people working from home, borrowers have been quicker to respond to underwriting documentation needs.
Lenders have done a good job of keeping up with the GSE underwriting guideline changes and having to perform more due diligence on the borrower’s employment and income.
JAKE CARLISLE, GATEWAY MORTGAGE: This year’s National Homeownership Month falls during unprecedented times. When the coronavirus pandemic hit, the mortgage industry as a whole did a fantastic job of transitioning to a home-based work environment.
In the midst of our transition, we have seen many buyers back out due to the uncertainty surrounding their jobs and maintaining a steady income. As a result, Gateway employees have seen a great deal of pent-up demand. They are maintaining close communication with pre-approved buyers to keep them informed of all changes to credit guidelines to ensure we keep them approved. Gateway anticipates that the buying activity will mirror the opening of social settings across the country.
MIKE HARDWICK, CHURCHILL MORTGAGE: While we have had to make some adjustments to how we do business, these improvements within the industry are long overdue and necessary to keep pace with the digital world. We are fortunate that our business has not only maintained its momentum; we’re seeing it increase. Every month this year has been record-breaking for us, year over year since we opened in 1992. We have hired more than 50 new employees in the last few months to keep up with volume.
MICHAEL RAPPAPORT, HOMESPIRE MORTGAGE: The spring and early summer purchase market has been robust, surprising many in the industry. With the onset of COVID-19 in February and the global pandemic becoming a reality, a lot of us felt this would mean doom and gloom for purchases. We envisioned a repeat of the Great Recession of 2008 and thus that same fear and panic resurfaced, as well. So far, we have actually seen the opposite in many markets. The purchase market remained – and continues to remain – strong and appears to be on very solid ground for the future, though we’re still not completely sure how or why. Additionally, record low interest rates in early March put many lenders in a position to attempt to control refinance volume.
Thus far, the hardest hit industries have been hospitality, service and travel, with many other parts of the economy still operating as (almost) business as usual (if you consider the increase in remote working as business as usual). Even the trade industries have not been too adversely affected by the pandemic. Unlike the 2008 crisis, only certain areas of the economy have been overtly impacted. One of the key reasons we have not seen a downturn in new home purchases is that people seem to have adapted very quickly to the current “new norm.” How long this will last is hard to tell, and how much of it is temporary versus permanent is also very much still up for debate. While only time will tell, for now, interest rates continue to remain at historic lows, as is the inventory in many markets with demand for homes far exceeding that of available homes on the market. Multiple competitive offers are still very prevalent, making for a boom in the current market to date (a bit of a shocker for many).
This has led to a surprisingly robust purchase market when numerous industry experts feared a rather sharp decline in the wake of the pandemic. Thus, many economists have since changed their opinions and projections going forward.
With interest rates predicted to remain low through 2020 and into 2021, and a limited supply to meet the demand, the housing market should remain strong for the foreseeable future. However, to be frank, these are unprecedented and uncertain times so any predictions could shift quickly once more with little notice.
NEWSLINK: How is your organization adapting under these circumstances to assist homebuyers and promote homeownership?
MIKE HARDWICK, CHURCHILL MORTGAGE: Though many aspects of the home buying process have changed, one thing has stayed consistent for us – our support. Over the past two decades, we have learned the importance of constant and effective communication, both with our employees and our customers.
Purchasing a home is already an emotional and difficult process and coupled with the current environment, it could be even more stressful. We provide constant support and timely communication to our home buyers through the entire process so that the biggest investment in their life is also a positive experience. In analyzing our customer satisfaction surveys, we have found that our customers appreciate the mentorship they receive from our team.
Lastly, our leadership team has thrived during such a unique environment. The team has adapted new modes of communication, supported our operations extremely well and navigated our company wisely during these times, so that we can continue to support our customers.
MICHAEL RAPPAPORT, HOMESPIRE MORTGAGE: Like many businesses, Homespire transitioned most of our staff to remote working beginning in March. Fortunately, we were in a great position to make this adjustment quickly and seamlessly for both our employees and clients. Our staff has done a terrific job and we are operating at a similar, or arguably even increased capability and efficiency. Earlier this year prior to the pandemic, Homespire also made a business decision to automate many of our operational functions, further streamlining many of our processes. These efforts have enabled us to handle more business within our existing platform, ultimately helping more buyers gain access to homeownership during these trying times.
We are constantly adjusting the formats and platforms to address the needs of our referral partners and borrowers, finding new and useful ways to both support and communicate with them effectively. We have shifted many of our long-standing events to a virtual format, like our homebuyer and Realtor seminars. These have remained very popular, with several sessions of our first-time homebuyer and homebuyer credit seminars continuing to be very well attended. Additionally, we are now virtually holding “lunch and learns” for our referral partners, providing them with delivered wine and cheese, and catered lunches (supporting local restaurants) to accompany the learning portion of these presentations. We also offer online educational sessions for discussing the impact and market shifts from COVID-19, including changes to products and programs, updates on market activity and what we could expect next from this rapidly evolving environment.
BRIAN GOULD, GENWORTH: Our mission to assist borrowers getting into homes and staying in their homes has never been more relevant than it is now. We are still highly committed to working with our lending partners to ensure that families can maintain homeownership and still provide opportunities for borrowers entering the market to purchase a home or refinance an existing mortgage. Some of the ways we’ve done so:
To date, we have fully supported the GSE underwriting guideline changes without overlays.
Our underwriting capacity and turn times to assist our lender partners have not been impacted by all underwriters working from home.
We were the first mortgage insurer to provide our lender and servicer partners with master policy and rescission relief clarity related to COVID-19 so lenders could continue to rely on our mortgage insurance for their originations.
We have supported the various loss mitigation home retention programs such as forbearance and payment deferral.
We continue to remind our servicing partners of their broad loss mitigation delegation agreements as well as increase our loss management staffing to assist servicers.
We’ve been very intentional about ensuring all pertinent information for lenders, servicers and borrowers regarding guideline changes, master policy and rescission relief clarity, loss mitigation options and other updates are readily available and easily accessible through a website page dedicated to COVID-19 communication.
We revamped our social media and blog content to include helpful videos on a variety of topics including working from home, appraisals in a drive-by environment, and mortgage insurance education.
JAKE CARLISLE, GATEWAY MORTGAGE: Gateway Mortgage Group, a division of Gateway First Bank, continues to be focused on strengthening families through home ownership. During the COVID-19 crisis, we have transitioned to a completely digital disclosure processes and a hybrid e-closing, which further supports social distancing and makes homebuyers feel more comfortable.
We will continue to educate homebuyers, potential homebuyers, and real estate agents about the wide variety of products that are still available to assist in the buying process. We are still in a historically low rate market, which could pass people by if we don’t continue to educate during these times.
The original article was published in MBA Newslink and can be found here.
About Gateway First Bank
Gateway First Bank is a leading financial institution that provides banking and mortgage services for consumers and commercial customers. Headquartered in Jenks, Oklahoma, Gateway is a $1.9 billion asset sized bank with a strong mortgage operation. Gateway is one of the largest banking and mortgage operations in the United States with six bank branches in Oklahoma, over 160 mortgage centers in 42 states, and almost 1,600 employees. Learn more at www.GatewayFirst.com. Member FDIC, Equal Housing Lender (NMLS 7233)
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