A rough economic terrain, disgruntled workforce due to mobility restrictions, the looming contagion, frequent changes in regulation, depreciating financial capacities of borrowers have set quite an eventful year for mortgage processing companies. While they are on a war footing to overhaul their operational strategy to battle such incidents, here’s shedding light on the 2021 trends that are expected to bring major disruption in the normal operations of mortgage processing companies.
Proliferation of digital currency- Fannie Mae had recently clarified its stand on using cryptocurrency in mortgage qualification process stating that Bitcoin can be used to qualify for a mortgage loan if backed with credible paper documentation. This will bring Bitcoin to the forefront in 2021 as loans are expected to be sold as Bitcoin addresses.
Entry of new players- Speculations over Amazon entering the mortgage market can create an extremely competitive arena for mortgage processing companies. Even though regulatory complications may delay the entry of the e-commerce giant, the possibility of them cracking customer’s expectations for digital mortgage experience will lay passage for their entry in the mortgage market.
Importance of housing counselors- Following the expiry of mortgage forbearance period, homeowners will be caught in the confusion as whether to repay the past dues in a lumpsum amount or to add the due at the end of the mortgage. This confusion will further create unnecessary delays in loan payoffs. Mortgage processing companies will face the need to recruit counselors on who borrowers can place their faith and get their confusion cleared in time.
Transition to LIBOR– The cessation of LIBOR will reach its closure at the conclusion of 2021. This will necessitate mortgage processing companies to adopt the necessary means to update the existing LIBOR-linked mortgage portfolios that includes the legal mechanism to drive this transition. It will be essential for lenders to fix an alternative interest rate to do the transition and strategize the communication channel that will be important to generate favorable customer outcomes. Mortgage processing companies are expected to aid in the initiation of communication between lenders and portfolio-holders with borrowers to let them know about the implications of a LIBOR transition.
Migration to suburbs- The closedown of office spaces and adoption of remote working owing to the raging pandemic have resulted in almost a mass-migration of the population from cities to the suburban areas. Consumers are looking at it as a strategy to save money as well as to ensure distance from the contagion to move away from the high-cost and congested citylife. This will result in a record spike in mortgage application rates in the suburban areas than the cities. This makes it critical for lenders to coordinate with mortgage processing companies to strategize their business plans that considers retargeting their customer base.
Understandably, while 2020 was a rough terrain that mortgage processing companies had to traverse to stay afloat, there is no denying the fact that such extraordinary situations allowed them the opportunity to strategize and rebuild their mode of operation. This will work in their favor as it will help them to be future ready for any other instance of epidemic, natural or man-made disasters.