Volume finally started to tail off in July for the members of The Mortgage Collaborative that use our valuable network data benchmarking tool. Closed loan units dropped by 20% from June to July as the impacts of a saturated refinance market and an inventory starved purchase market finally started to reveal themselves in the production figures. This was the lowest production month for our members since March of 2020, a month that will always be synonymous with the start of the spread of the COVID-19 pandemic. It's very rare in this industry to see July as the low water mark for closings for the year, but little has been normal in our industry since the pandemic hit.
The 20% drop in closings unsurprisingly mirrored the roughly 20% fall off in applications taken as we moved from the surprisingly busy first quarter. The mix of products stayed the same (74% conventional, 20% govie, 6% other) but business continues to trend more purchase-heavy, with closings increasing from 65% in June to 67% in July. We've seen the purchase share of closed loan units rise five months in a row now:
February 2021: 40%
March 2021: 45%
April 2021: 56%
May 2021: 62%
June 2021: 65%
July 2021: 67%
July new applications taken also fell by 14% from June's totals, but remember, June new app totals jumped up a bit from April & May.
Operational efficiency figures waned in July for the TMC network and we've seen these figures bounce around in the same general range this spring and summer. The number of closed loan units closed per full-time processor dropped to 10.7 in July versus the 11.6 June total. Closed loan units per full-time underwriter fell to 33.6 from 37.1 the month prior. Closed loan units per full-time closer decreased to 35.9 from 41.6. The average loan originator closed 5.8 units in July, down from 6.6 in June. LO comp came in at an average of 93.8, up 1.6 bps from last month's 92.2 total. Average LO comp has been in the low 90's all spring after averaging in the high 90's all of last year and into the early part of this year.
After peaking in the summer, subsiding in the fall, and plummeting in April ... average annual compensation paid to operational staff bounced around in July. On average, processors in our network were paid an average of $53,900 annually in July while underwriters spiked up to $90,500, with closers at $52,600.
The average "app date to clear to close date" bumped up to 43.2 days in July from 41.8 days in June. Let's take a look at how this number has trended throughout the course of the last year:
The average cost per closed loan unit our members paid for their loan origination system came in at $126 in July, spiking $9 from the month prior. The average cost per closed loan unit for our members point-of-sale (POS) system was $54 in July and $86 for their CRM, unchanged from the month prior.
56% of this month's participants in TMC Benchmark were depositories and 44% were IMB's. 40% originate under $500M a year in annual volume, 25% originate between $500M-$1B, and 35% originate over $1 billion per year in annual production.
President & Chief Operating Officer
The Mortgage Collaborative
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BY RICH SWERBINSKY, PRESIDENT & COO OF THE MORTGAGE COLLABORATIVE
Established in 2013, The Mortgage Collaborative (TMC) is a national cooperative network comprised of 241 best-in-class mortgage lending institutions across America. 59% of our member companies are independent mortgage bankers, 41% are banks or credit unions. We hand-selected 598 key leaders from our lender member network and asked them to let us take their collective pulse on the current state of the mortgage lending industry.
We took what we felt were the 40 most relevant pressing issues facing mortgage lenders and asked the survey respondents to tell us how important each issue was to them in their role with their company. Not very important, somewhat important, very important, or critically important.
“Retention of existing staff” came in as the #1 overall most critical issue and #2 was “enhancing customer experience at the point of sale”. A staggering 85.9% of TMC’s key leaders nationally classified the issue as either “very important” or “critically important”.
The term “point of sale” (POS) was non-existent in the mortgage industry a decade ago but now the acronym POS is as familiar to lenders as DTI, LTV, PMI, and CD. If you asked five mortgage lenders to give you the definition of point of sale, you’d likely get five different definitions. Let’s turn to the always reliable Investopedia for their definition:
Point of sale (POS), a critical piece of a point of purchase, refers to the place where a customer executes the payment for goods or services and where sales taxes may become payable. It can be in a physical store, where POS terminals and systems are used to process card payments or a virtual sales point such as a computer or mobile electronic device.
The point of sale for mortgage lenders used to be a desk in a bank branch or the office of a mortgage company, but boy has that changed. 61% of applications taken in 2020 were completely digital. Most in the industry point to Rocket Mortgage’s 2016 Super Bowl ad as the seminal moment for the digitization of the mortgage application. The commercial famously started with the line “Here’s what we were thinking: what if we did for mortgages what the internet did for buying music, plane tickets, and shoes?” and ended with the words “PUSH BUTTON GET MORTGAGE” strewn across viewers' TV screens.
Rocket Mortgage's 2016 Super Bowl ad was one of the tipping points in shifting the national conversation about digital mortgage applications.
While the immediate impact of that commercial is easy for industry veterans to remember, what’s harder to remember is the controversy that column sparked, causing many inside and outside the industry to associate it with the mortgage meltdown of 2007 and the financial crisis that followed.
No such crisis occurred. And less than two years later in January 2018, Rocket Mortgage became the largest mortgage lender in all of America.
In the mortgage industry, point of sale software allows customers to apply for a mortgage loan from their computer or mobile device, upload documents, track their loan progress, and communicate with their loan officer. Good POS platforms help reduce application fallout, the people that start an app online before giving up. They provide efficiencies for lenders by collecting all the documentation needed to start to process the loan towards an underwriting decision and speed up closing times, boosting customer and realtor satisfaction and reducing hedge costs.
All lenders have some sort of POS platform for customers to apply online and to submit up-front documentation, but our survey results clearly show that upgrading their current offering is top of mind with nearly all lenders across America. Many lenders are still using the POS that is a part of their loan origination system (LOS). Others may have made the wrong bet/decision on which POS platform they went to when they started to become prevalent 6-8 years ago. Some may be happy with their POS but want to provide a superior customer experience through more robust integrations with the LOS and other systems they use and institutions that pull in financial documentation for borrowers. Others may be happy with the computer interface of their POS but not the mobile.
Deciding on POS providers is even more critical is the belief of many leaders in the industry that the top POS platforms of today will become the best LOS systems of tomorrow. Some POS providers are now starting to move into the closing and settlement services space, making it hard to fathom that they don’t have designs on “filling in the middle” by developing a full end-to-end operating system. Leading POS provider Blend recently went public to the tune of a $4.2 BILLION valuation, meaning Wall Street is betting on Blend fulfilling more than just the front end of the digital mortgage process.
We’ve seen mortgage customers go from thinking “PUSH BUTTON GET MORTGAGE” was reckless to demanding the experience in just a few short years. The percentage of home buyers that will transact 100% digitally and demand a slick interface continues to rise each year.
And for mortgage lenders, the cost of being wrong in their decision on a POS provider is very high. Especially if you’ve already been wrong once. The time, money, and institutional bandwidth required to implement a POS are significant. And the criticality of the decision also does not allow for extreme patience, as most lenders view upgrading their tech stack as a race against time, with their larger competitors sitting on piles of cash from what’s likely to be back-to-back record origination years for the industry. And considerably greater internal resources to assess and develop emerging borrower-facing tools and technology.
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Last week, our exclusive media partners at HousingWire released their 2021 Women of Influence awards, recognizing top female leaders in housing finance that continue to shatter glass ceilings. TMC is proud to recognize a total of 20 in-network recipients from eight Lender Members and eight Preferred Partner companies.
Join us in congratulating these industry leaders!
Mortgage Banker Magazine selected 2021's most Powerful Women of Mortgage Banking and asked each leader about the future of the industry, the importance of having women in leadership, and what they consider to be their greatest success. Among this collection of bad-ass ladies are several of our most influential Members and Partners, representing the best of what the Power of the Network has to offer. Congratulations to everyone that was recognized!
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