Some thoughts on moving forward through this challenging time

For mortgage lenders who survived the Great Recession, the current challenges posed by the coronavirus pandemic have a different origin but are certainly not unfamiliar.

And just as we learned from the 2008-2009 financial crisis, the path forward lies in the strategic implementation of innovative policies and programs coupled with transformational technology.

I believe we will look back at this difficult period and recognize that it served as a springboard to the mortgage industry’s future, accelerating the pace of change and resulting in a fully digital mortgage. This will give lenders and consumers alike the tools to a fast, frictionless, and — especially important during the deadly pandemic — safer homebuying experience.

A surge in refinancings and requests for mortgage relief

Since March 2020, when the Federal Reserve lowered interest rates to essentially zero amid the public health crisis and global economic contraction, lenders have been inundated by an unexpected surge in demand for refinancings.

In addition, as the ranks of the unemployed in America swelled throughout April and May, so did the requests for mortgage relief options, including forbearance and loan modifications. Millions of U.S. homeowners have already taken advantage of the CARES Act Mortgage Forbearance program for government-back loans.

While these tools are incredibly important for keeping Amercians in their homes, all this activity has put an enormous strain on banks, credit unions and independent mortgage companies, which entered the year having adjusted their staffing levels to handle an expected decline in both refinancing and origination volume compared with 2019 levels.

Studying the data, working towards more digital solutions

As we study the data that our customers share with us, we are seeing measurable evidence of the enormous pressure on them. And we are working together in close partnership to help them roll out more digital solutions.

In early March when interest rates first dropped, we were seeing refinance volumes across our customer base that were up 2,000% year-over-year.

During that time, we were also seeing mortgage purchase application volume that on most days was about double what it had been the previous years.

We’ve since seen these numbers level off a bit, with most days up 400%-600% for refis year-over-year, and up 50%-75% for home purchases during the same period.

Right now our customers are overwhelmed with this volume. So we're encouraging them to think about this in two phases. One, how do you deal with the immediate issue? Two, how do you evolve towards a scalable, fully digital mortgage experience in a post-pandemic world? 

Accelerating the pace of change

We are focusing on three key areas to help our customers now and in the future. 

• We are quickening the pace of automation to help our customers manage the surge in demand for refinancings.
• We are accelerating Blend Close so consumers can complete a mortgage application safely, securely, and seamlessly. Borrowers and others are afraid, and in many places prohibited, to meet in person at a closing table now. In tandem with Blend Close, we need Congress to enact the bipartisan SECURE Notarization Act, which will permit online notarization.
• We are working with our customers to determine the best way technology can help manage the big jump in requests for mortgage forbearance under the CARES Act, as well as loan modifications.

There is still much work ahead of us, but we are starting to see the positive effects of transformational technology on our customers in concrete ways.

“Because of our partnership with Blend, we’ve been able to better manage a truly remarkable time in home lending,” says Randy Hopper, Senior Vice President of Mortgage Lending at Navy Federal Credit Union.

“We appreciate everything you have done and continue to do in support of our business, especially during these unprecedented times.”

Added Steve Shoemaker, Director of Residential Mortgage Production at Synovus: “In the first year, our Blend loans closed an average of 6 days faster than non-Blend loans.”

No one knows how long this public health crisis and challenging time for mortgage lenders will continue.

But everything in financial services, including the mortgage industry, is moving towards a fully digital future. People want to be able to do things remotely, safely, and securely, and this difficult period will only accelerate the progress toward that future.