Last year saw a record-breaking $3.83 trillion in mortgage originations, according to the Mortgage Bankers Association (MBA), as interest rates plunged, and COVID-19 accelerated an ongoing exodus from cities to the suburbs. While 2021 volume is expected to slow somewhat, the purchase market appears to be on pace to surpass refinances, the MBA said.

HousingWire recently spoke with Jon Gerretsen, SitusAMC Managing Director of Residential New Originations and Fulfillment Services, about the home buying boom and how lenders can gain market share and drive profitability in a white-hot purchase mortgage market.

HousingWire: How has the shift from a refi to a purchase market changed the dynamics for lenders?

Jon Gerretsen: Lenders have already had to compete for market share in an era of increasing costs, greater regulatory demands and volatile interest rates, while quickly adapting to new remote-work protocols sparked by the pandemic.

As the market shifts from a refinance-driven market to a purchase-driven market, lenders have had to adapt again due to the difference in sourcing leads and the intricacies of financing purchase transactions.

The underlying dynamics, timing and skill sets required to support purchase transactions are much more complex than a refinance, in which the primary focus is on the interest rate and associated closing costs.

In a purchase market, there are multiple stakeholders who have vested interests in the transaction – buyers, sellers, Realtors – and originators, all working under time-driven constraints including rate-lock commitments, mortgage-based contingencies and move-in/move out dates which all rely on timely and accurate decisions.

All of this translates into the purchase borrower requiring increased touch points and service levels to fulfill these expectations. Additionally, homebuyers demand a fast and simple mortgage lending experience, similar to the other types of technology-driven solutions they enjoy in other aspects of their lives.

Given all the stakeholders involved, the purchase market is about providing product expertise and service excellence while maintaining timelines. It’s very easy to have a negative customer experience that can impair your brand.

HW: What’s top of mind for large originators?

JG: We work with numerous top 50 lenders and originators in the country, which provides us with solid insight into market trends. For most of our clients, the current focus is on profitability and finding the right operating model for today’s market; however, no one wants to compromise on customer experience either.  

Over the last 18 months, it’s been very difficult for mortgage industry participants to recruit and retain skilled employees due to the volatile environment and poaching that has been rampant. The talent situation has in turn made maintaining service levels a difficult and extremely costly endeavor. Lenders haven’t been able to hire and train fast enough.

While everyone expects volumes to fall in 2022, we haven’t seen that material decline yet through the third quarter of 2021, which has allowed competitive pressures to persist as lenders were willing to cut margins to keep volumes.

Heading into 2022, we are seeing lenders start to focus on what they need their organizations to look like in what is promising to be a market that features lower originations, a mix shift to purchase, which is more expensive to produce, and a more active regulatory regime, which is also likely to increase costs. Maintaining productivity and quality in this environment is extremely challenging.

HW: How can SitusAMC help lenders address these issues?

JG: At the end of the day, it is all about providing value to your clients. That is our daily focus. To achieve that goal, at SitusAMC we provide origination support services and partner with lenders to provide cost-effective, regulatory-compliant, scalable solutions to help them meet changing market demands while streamlining their operating models.

We have built a global delivery system of technology-enabled underwriting, offering both expertise and scale throughout the origination life cycle for both licensed and non-licensed activities. Our global workforce enables us to operate around the clock to constantly exceed expectations and help our lender partners achieve a competitive advantage in the marketplace.