CURRENT STANDING OF THE MORTGAGE ORIGINATORS (PART 3)


PANDEMIC BECOMES THEIR BID TO IMPROVE AND EVOLVE

This is the third and last part of our blog series in which we are trying to assess anticipatory measures and risk assessment avenues the Mortgage Originators can look into for enabling smooth operation of their businesses even amid the COVID 19 pandemic.

(Please click on Part 1 and Part 2 in case you haven’t gone through the previous ones yet).

For those who are not willing to get into the details of the parts published earlier or who have gone through but are not being able to recollect the minutes at the very moment, here’s a Quick Refresher. Some of the verticals that we have already covered include Profitability and Capital Adequacy, Credit Access, Credit Risk Profiling, Service Efficiencies and Digitalization.

In this part, we will try to evaluate how Delinquency and Risk Management can also become a deciding factor for the current as well as future standing of the Mortgage Originators.

Delinquency and Risk Management:

Since the moratoriums are going to continue for the next few months, this vertical will not pose an immediate challenge. However, some segments of borrowers are likely to get stressed if this phase of uncertainty gets prolonged.

It’s going to be a learning curve for the entire Mortgage Industry in terms of how the ongoing event dynamics are going to impact these models and how lenders correlate default profiles with specific sectors, transaction patterns and property locations in order to develop an efficient collection portfolio. Quite evidently, the scopes of Digital Partnership, as well as Collaboration with Experienced Outsourcing Associates, will also increase especially in the space of default servicing to work out alternative plans such as Refinancing and allied modifications.

What’s next?

Despite the crisis making its way all across the industry, Mortgage Originators do have the resources necessary to deal with the various sections that we have discussed up to this point. However, this was not the case during the 2008-2009 recession; this time lenders are better prepared to tackle the uncertainty with enhanced capitalization capacity (at least for the time being). In fact, there is a chance of improvement in the service delivery if the large and medium-sized banks consolidate with each other going forward.

Originators are expected to come up with new ways of connecting with their customers actively for providing them with customized solutions; this will make the upcoming journey of the lenders and their otherwise strained customers easier to some extent. Cost is surely going to be an issue which will give banks more opportunities to merge service vendors, even if the digitalization ratio upsurges.

While the Mortgage Industry has started experimenting with technological intervention much before the pandemic, Risk Managers are getting more inclined to explore predictive tools backed by ML (Machine Learning) and AI (Artificial Intelligence) to strike a balance between the existing workload and new challenges brought in by the COVID situation.

COVID 19 has undoubtedly dragged the entire industry on the doorstep of a long-term transformation, the successful survival of which depends much on the strategic use of two aspects – Outsourcing and Technology. The key is to get an effective plan at place where lenders can use these options to their best benefits.

 

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