Here we are, a few months away from 2021 and the pandemic is still going strong. Who
would’ve guessed we’d still be in this situation back in March? As many of us look toward 2021
as a welcome reprieve from the chaos, it’s also an opportunity to reflect on how the industry
adjusted to the curveball that has been 2020. At this point, in some ways, there has been a
collective sigh of relief.
Thanks to historically low rates and renters seeking more space for less money, new mortgage
applications hit a level not seen since 2008. To be specific, purchase applications are up nearly
20 percent from a year ago and refinances up more than 120 percent. Lenders have struggled
to keep up with the demand due to COVID related staffing issues and the need to accommodate
a contact-free purchase model. Gone are the days when we nervously asked ourselves, “could
we be facing another real estate crash?” In addition to tighter borrower standards,
no-documentation loans are non-existent, and borrower credit profiles are stronger. We now
understand that what happened in 2008 and what’s happening as a result of COVID is an
apples to oranges comparison.
Technology Saved the Day
The industry’s ability to adapt to this new normal by incorporating technology, empowered
originators. Whether you’ve embraced technology at the front end with a robust point-of-sale
(POS) or your lender has decided to adjust their rules and offer virtual or hybrid closings, the
message has been clear; you may be driving the car but technology is the engine. Nothing
moves without it.
Elements of a Contact Free Mortgage
Initiating the relationship with the POS sets the stage for the high-tech origination experience
being offered. Consider this, the application is completed when and where the borrower is most
comfortable. Via the POS, they've given you permission to pull credit and they've even used
Verification of Assets to automatically upload their bank statement data. Thereby eliminating the
need to track down paper copies of financials.
Borrowers have come to expect a process without physical contact. For instance, safety
concerns have caused a 200 percent spike in remote online notarizations. A demand that has
been particularly high in Texas and Florida. These new processes have answered buyers' and
sellers' calls for a shorter, less stressful, and less costly sales process. Currently, 37 states
approved remote online notarization, and the remaining 13 offer hybrid options.
Updated guidelines have been implemented to ensure contactless appraisals are possible as
well. They've implemented a combination of techniques like desktop appraisals, virtual
appraisals, or for the more tech-savvy, borrower/appraiser webcam sessions via Skype,
FaceTime, Zoom, or another tool. Another collaborative approach is asking the homeowner to
take photos of the home and send digital copies to the appraiser.
Most of the technology mentioned have existed for years; it was just largely ignored. With all the
heartache that 2020 brought us, it just may have given the industry the technological kick in the
pants it needed.