solutions that fit - ibath-state-of-the-mortgage-industry... · source: wells fargo securities...

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SOLUTIONS THAT FIT

2016 State of the Mortgage Industry: What is your Opportunity?

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Today’s Agenda

• Welcome • State of the Industry• Industry Threats• Lender Response • Looking Ahead• Q & A• Closing Remarks

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State of the IndustryStrategic Lender ObjectivesIndustry ThreatsKey StrategiesMortgage Opportunities

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State of the Industry2016 Economy Fuels Higher Purchase Loan Demand

• A higher volume of purchase mortgages • A higher purchase mortgage share of total

mortgages• MBA forecast:

– 20.5% rise in 2015 total originations to $1.35 trillion– Fueled by 25.5% purchase and 13.8% refinance

loan increase vs. 2014

Source: Wells Fargo Securities Economic Group, October 2015, National Mortgage News, MBA

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Deliver The Products Your Customers Need, When And How They Need Them

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State of the Industry2016 Economy Fuels Higher Purchase Loan Demand (continued)

• More residential construction due to:– A better economy and housing market—most likely

the best since the great recession – Lower unemployment (4.7% vs. 5.3%)– A slightly improved GDP– Measured, data dependent Fed rate hikes for the

first half of 2016– Interest rates that will likely rise slowly producing a

flatter yield curve (short term rates will increase more than long term rates)

– Interest rate hike will boost mortgage credit availability

Source: Wells Fargo Securities Economic Group, October 2015, National Mortgage News, MBA

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The Competitive Stakes Have Changed

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Strategic Lender Objectives

• Increase originations, grow market share, achieve budget (73% report higher 2015 budgets vs. 2014)

• Compete more effectively in purchase market

• Improve efficiencies, build production capacity, reduce operating costs

• Add new and improve existing points-of-sale technology (online, loan officer, branch)

• Replace LOS for efficiency gains• Successfully absorb TRID impact and

originate compliant mortgages, consistently

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Threat #1: Increasing Regulatory Demand

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Threat #1: Increasing Regulatory DemandInescapable regulatory demands are a significant compliance toll, reshaping the industry

• Major areas of Dodd-Frank focus: – Consumer protection– Mortgage reform – Banking and risk

• Correct interpretation required• Frequent, complex updates• Consistent strategy needed across all

delivery channels

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Threat #1: Increasing Regulatory DemandThe impact of TRID alone – impacting ALL participants in the real estate mortgage lending industry, including consumers:• New model forms• New rules• New terms• New tolerances• New timelines• New deadlines• New liability

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Threat #1: Increasing Regulatory DemandFinancial institutions are facing a regulatory world where new rules and requirements—and even new agencies—seem to be emerging constantly.

Which policies will have the greatest impact on your organization now and down the road?

Regulators are raising their expectations—as they put institutions under an even brighter spotlight.

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Key Strategy

Lenders are lowering their compliance risks by:• Enhancing compliance capabilities, making staff

members more efficient• Streamlining applications to enable better quality and

accessibility• Choosing the best technology partners

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Financial institutions are harnessing robust compliance automation:• Initial disclosures • Borrower ID notification during application/closing

process (Patriot Act)• Accurate rate, fee, APR quotes• Borrower permission retrieval for ordering credit

report• Government monitoring info. collected (doesn’t ask

when not required)• Intent to proceed collected after initial disclosures

are presented

Key Strategy

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Threat #2: Shifting Customer Expectations

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Threat #2: Shifting Customer Expectations

Digital banking is an emerging and disruptive change occurring today, reshaping how lenders serve customers:• Mobile, digital explosion• Self-serve Internet options• Anytime, anywhere• Pressured by time• Demand speed, convenience

“I could shoot a cannon off in the lobby and I’m pretty sure it wouldn’t hit anyone.”-Prospective Mortgagebot client considering a new strategy for appealing to today’s customers

• Transparent communication• Involvement in the process• Real-time, instant results• Recreating the new loyalty

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Financial institutions are:• Moving from product-centric to consumer-centric• Ensuring a consistent, high-touch service

experience: today’s new “personal service”• Mobile equipping front-end office staff• Enhancing branches with modern technology

But at the end of the day, acquiring new customers, providing good customer service, and retaining those customers is still the most important thing lenders do every day. -CEB TowerGroup

Key Strategy

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Threat #3: Intensifying Competition

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Threat #3: Intensifying Competition

• CEB Tower Group: Shift to purchase market requires lenders to “change their strategies” and appeal to this type of customer through:– Product, Service, Channel

• Emergence of non-traditional options (“alternative lenders”): consumers frustrated with their primary bank:– 80% of U.S. consumers would consider

a mortgage from a non-bank • 1 in 3 would consider Walmart• 48% would consider PayPal

Banks are missing an opportunity to increase their mortgage business by 79% with their current customers.-Carlisle & Gallagher Consulting

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Financial institutions are:• Harnessing new channels to attract and capture

more borrowers• Adding purchase mortgage LOs• Growing market share by leveling the playing

field with scalable technology• Capturing walk-in business when loan officers

are busy• Delivering exceptional service

Key Strategy

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Next Steps: What’s Your Opportunity?

• Grow Revenue

• Deliver Better Borrower Experience

• Compete More Effectively

• Reduce Costs

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Next Steps: What’s Your Opportunity?

Choose a partner who will help you:• Protect your critical mortgage volume• Capture more business by opening new channels -

relentlessly optimized to increase conversion rates• Simplify compliance across your enterprise• Maximize the return on your investment • Level the playing field – affordably -

equipping you with tools typically available to large lenders

• Seamlessly integrate with your other technology providers (LOS, AU, Credit)

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Looking Ahead to Mortgage Trends

• More online lending• An expanding purchase market and a lagging refinance market• Millennials become more active home buyers• Lender and service provider consolidations• Greater competition • More process automation• Community banks remain committed to mortgage business• Gradual move to market interest rates• LOs remain essential to business, roles may change somewhat• Fewer settlement agents (TRID)

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Questions

“We existto help our clients grow. Every day.”

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