Impact of COVID-19 on the U.S. Mortgage Brokers and Lenders
A new RealEstateBees.com survey of over 2,000 active mortgage companies found that despite the negative impact on their business caused by the COVID-19, 95% are seeing new opportunities opened by the pandemic.
The following segmented report provides results of a large scale survey—Impact of the Coronavirus on the U.S. Real Estate Businesses—conducted by the Real Estate Bees research team, leading real estate platform for real estate professionals.
The following statistics reflect the situation among the US real estate mortgage brokers and lenders. We reached out to over 2,000 active real estate mortgage professionals from all the 50 U.S. states and Washington D.C. to collect their insight on the impact of the COVID-19 pandemic on the industry in general and their businesses in particular.
The report is divided into the following two parts.
1. Multiple choice questions where the professionals had to choose one of the suggested answers to each question:
1.1 Is there a negative impact the pandemic is having on mortgage brokers and lenders?
1.2 Has the pandemic opened any unexpected opportunities for mortgage brokers and lenders?
1.3 How are you adjusting your marketing budget?
1.4 Are you transferring your business to a “work from home” basis?
1.5 Have you noticed any benefits of transferring your business processes to a “work from home” basis?
1.6 Have you noticed any drawbacks of transferring your business to a “work from home” basis?
1.7 Will you keep your business processes transferred to a “work from home” basis after the pandemic is over?
2. Open questions that allowed the experts to share their insights on various aspects of the impact of the coronavirus pandemic on the U.S. mortgage brokers and lenders:
2.1 What are the specific negative impacts the pandemic is having on mortgage brokers and lenders?
2.2 What unexpected opportunities have the pandemic opened for mortgage brokers and lenders?
2.3 If you knew the impact of this situation on your business in advance, how would you prepare your business to mitigate your losses or even profit from it?
2.4 What marketing channels do you prefer to use during the pandemic over the rest and why?
Is there a negative impact the pandemic is having on mortgage brokers and lenders?
Has the pandemic opened any unexpected opportunities for mortgage brokers and lenders?
How are you adjusting your marketing budget?
Are you transferring your business to a “work from home” basis?
Have you noticed any benefits of transferring your business processes to a “work from home” basis?
Have you noticed any drawbacks of transferring your business to a “work from home” basis?
Will you keep your business processes transferred to a “work from home” basis after the pandemic is over?
What are the specific negative impacts the pandemic is having on mortgage brokers and lenders?
Key takeaways from the mortgage brokers’ and lenders’ answers:
- Borrowers were putting on hold buying a home due to unemployment and uncertainties surrounding the economy. As most borrowers were being laid off, mortgage brokers and lenders weren’t able to provide any assistance to them.
- As borrowers were unemployed, their credit scores dropped enormously, as they were no longer capable of paying financial obligations on time.
- Unpredictable variables in the mortgage industry have come into play causing volatile interest rates and irregular loan level pricing adjustments. This has affected consumer pricing, caused inconsistencies in underwriting turn times that raised concerns between all the players engaged in a mortgage transaction, and created blockages and lender overlays that increased the workload of loan processors.
- Unstable interest rates were making mortgage lenders and brokers uncertain of what to offer their borrowers. The slight change in rates creates a shift in the entire pipeline and loans.
- Most of the time, mortgage rates are at an all-time low, yet most borrowers aren’t able to take advantage of them as they have no income.
- With interest rates dropping at a record low, this resulted in increased demand for refinancing and an even higher demand for purchasing homes. With workload piling up, mortgage lenders were facing manpower shortages and pressure from clients in terms of faster mortgage approval.
- Lower mortgage rates also meant lower inventory and more buyers. Agents are having a hard time convincing sellers to accept their buyer offers.
- Residential mortgage loan originators who are new in the industry are having a hard time dealing with extended underwriting and appraisal timelines and transaction concerns due to their limited experience and network, compared to more established ones that have wider and more solid client bases.
- Due to nationwide curfews, working hours were shortened. Safety concerns have also limited face-to-face interactions with clients and field work for most loan officers. Closings had to be held outside instead of inside an office, which could be an inconvenience for both loan officers and clients.
- With the pandemic shifting most work to a home-based setup, technologically challenged mortgage lenders were having difficulty adapting to the new norm of working digitally.
- Overall, mortgage loans take a little longer to complete, and the real estate market has become more competitive than ever.
Sharon Mistowski, Owner at Horizon Lending Services, LLC
Some of our borrowers and potentials were laid off, working hours were also cut, and/or most clients were having an overall uneasiness about the economy. This resulted in putting off buying a home.
Additionally, we were not able to assist in refinances, as most borrowers are now unemployed. It’s ironic that when rates hit bottom, people were not able to take advantage of them, as they have no income and credit scores have dropped due to not being able to pay bills on time.
We are just now able to see an improvement in the economy. I believe people are tired of the fear and trying to get back to a sense of normalcy.
Jon Bodan, President at The Perpetual Financial Group, Inc.
In true 2020 form, what was widely expected to be a very strong year for real estate – due to a red-hot economy and historically near-record low interest rates – was turned on its ear by the pandemic.
As a result of the Fed’s purchases of mortgage-backed securities, mortgage rates were pushed to all-time record lows. This created massive refinance demand, along with strong purchase demand that was only temporarily delayed by the shelter-in-place requirements.
Our industry is dealing with a very real manpower shortage, extended turn times, and unrealistic expectations from some agents/buyers/sellers as to when things can realistically be done.
Pete Fajkowski, Managing Member at Mortgage Portfolio Services
Newer residential mortgage loan originators (RMLOs) with a limited network are absorbing the shock of COVID-19 with more difficulty than established RMLOs who have broad and deep client bases.
This is because all RMLOs are experiencing extended underwriting and appraisal timelines, transaction issues with regard to unexpected unemployment of borrowers, and the public’s focus on enormous national problems.
The public isn’t also focused on the fact that interest rates have fallen lower than they were in the last three years, when most thought they could never go lower and that they would never refinance again or have another opportunity of high housing affordability.
LeeAnn Reynolds, Director of Operations at RateZip
I’d say the impact is only moderately negative because on one hand, the extremely low rates and push to move away from urban areas have caused a lot of borrowers to purchase new homes or refinance on their existing mortgages.
On the other hand, the multitude of changes in the mortgage industry has been difficult for some loan originators to adjust to, and not everyone has been successful in this climate, especially with the increase of unemployment, as well as stress and health concerns.
Ben Vogler, President/Broker Owner at Vogler Mortgage, LLC
Face-to-face interaction is still an important part for loan officer’s business generation. Whether meeting a borrower in person to consult and take a loan application, visit referral partners such as realtors at luncheons and open houses, or simply attending the closing, it is important for loan officers to be in the field.
The pandemic has shut that down. Loan officers have had to rely on technology to stay competitive and drive new business. Some who have been in the industry for 20+ years have had a longer learning curve adapting to new technologies.
Kelvin Caiati, Owner at Versatile Lending
Interest rates have dropped significantly since the start of the pandemic and has created a refinance boom which is a great thing for mortgage lenders. However, inventory is at an all-time low, and the real estate market is more competitive than ever.
Due to low inventory (low supply) and tons of buyers (high demand), it is very difficult for realtors to get their buyer’s offers accepted.
Raul Hernandez, Mortgage Loan Officer at Competitive Home Lending
The pandemic has caused unknown variables in the mortgage industry that have led to irregular loan level pricing adjustments that impact consumer pricing, inconsistent underwriting turn times that cause concern to all parties involved in the mortgage transaction, and obstacles with lender overlays that add to the workload of loan processors.
Jenna Holtz, Mortgage Loan Originator at Sovereign Lending Group
The pandemic has taken loan officers on a wild, roller-coaster ride. The rates have been extremely volatile. One day, the rates will be at all-time lows and then the next morning, they jump one percent which is a lot! It makes us, as loan officers, uneasy and unsure of what we can offer. If rates jump up one percent, that will most likely kill the entire pipeline and all the loans.
Glenn Cameron, CEO/Owner at Mortgage Lending Associates
Anything that occurs in person requires masks, social distancing, and sanitizers. So, we practiced all of the previous items at closings. Most closings were held outside in the parking lots, in front of the title companies.
Matthew Tran, President and CEO at Mortgage Matters
It is taking a little longer to complete a mortgage loan, compared to before the pandemic.
What unexpected opportunities has the pandemic opened for mortgage brokers and lenders?
Key takeaways from the mortgage brokers’ and lenders’ answers:
- Loan officers are able to look at their companies in a new light to see if their respective goals align with how their companies respond to changes in the industry. Loan officers who are employed with companies that are able to adjust quickly to the changes have more confidence in the organization they work for. They feel more secure in their position in the industry.
- Clients who refinance their homes are at a record high, as borrowers are taking advantage of the lower interest rates.
- Mortgage companies don’t experience any shortages in terms of acquiring clients, as more borrowers are obtaining loans that don’t need any employment, income, or asset requirements.
- Mortgage lenders and brokers who are already used to working remotely are able to do their jobs faster than those who are just adjusting to working from home. Using the latest technologies has also allowed them to do virtual closings, which kept them and their clients safe from the virus.
- Working remotely using the latest technologies has allowed mortgage lenders and brokers to generate more leads and reconnect with previous clients. Because clients were staying at home, they were more responsive as well, as they had more time to talk about loan options and were able to revert quickly for any document requests made by loan officers.
- Working from home has helped mortgage lenders and brokers to be more involved in the community, while allowing them to spend more time with their families.
Elaine Holman, Senior Branch Manager at 1st Alliance Mortgage LLC
Overall, the pandemic has had a positive impact on our industry. It has created a substantial refinance boom; the reason being, COVID-19’s negative impact on the economy has resulted in lower interest rates.
Since the industry has been paperless and, for the most part, remote for some years now, we didn’t see the adjustment period many other industries suffered when adjusting to remote business. However, we have seen an increase in the time it takes appraisers to complete their work. This is because they are swamped, as well as some have actually had COVID-19.
Brian Blanchard, Mortgage Broker/Compliance Officer at Central Mortgage Services, Inc. of LA
With interest rates at a record low, no one is having a hard time. Everyone from the West Coast to the East Coast is busier than they ever have been. As for this impact of the pandemic on loan officers, unless they actually contracted the virus, there is no impact.
The entire mortgage industry moved into a paperless environment years before this pandemic. Almost everyone is using electronic signatures on loan disclosures and in some states, we can even do virtual closings.
Jenna Holtz, Mortgage Loan Originator at Sovereign Lending Group
When the pandemic first happened, none of the investors wanted to lend money which is understandable. People lost their jobs, which means the ability to repay the loan was no longer there.
Then after a few months, rates dropped a half of percent and the phone was ringing off the hook, more so than the year prior. The last half of 2020 was the busiest it’s ever been in the mortgage industry.
Raul Hernandez, Mortgage Loan Officer at Competitive Home Lending
Several opportunities were created for loan officers. The biggest opportunity was realizing the type of company loan officers worked for. Based on the rapid changes in the industry, loan officers got a better understanding of how nimble their company was and whether their company’s reactions to market changes aligned with the loan officer’s career goals.
Working with a company that can sustain and excel during the pandemic created a great opportunity for loan officers to feel confident about their future in the mortgage industry.
Pete Fajkowski, Managing Member at Mortgage Portfolio Services
Capital is somewhat easier to obtain, loans that do not require any employment, income, or assets are popular, rates are great, so even those who refinanced in the last few years can save a lot or pay the same and eliminate years of mortgage payments.
Additionally, Mortgage Portfolio Services has the only 0% down construction loan in the U.S., so people are building custom homes without having to sacrifice cash or savings.
LeeAnn Reynolds, Director of Operations at RateZip
As a mortgage lead generator, we have seen some of our smaller clients pause their campaigns entirely, while our other clients are gaining more volume than ever.
It’s a positive impact on some and a negative on others, but it’s impossible to say that COVID-19 has no impact on the mortgage business.
Dan Chapman, Mortgage Advisor at Fairway Independent Mortgage
2020 was a record year for mortgage lenders, as the pandemic made interest drop to all-time lows in the history of U.S. mortgages. Refinance volumes were massive!
If you worked hard, you had a record year. Of course, we worked remotely, which for some, like myself, was an easy transition, as most of our business is on the phone, Zoom calls, or email.
Jon Irvine, Chief Strategy Officer at Sovereign Lending Group
The pandemic has led to a dramatic reduction in mortgage interest rates, which has fueled a wave of refinances across the country. This has led to a significant increase in mortgage production that was previously unexpected for this year.
Matthew Tran, President and CEO at Mortgage Matters
Interest rates are at historic lows which create an opportunity for people to upgrade their current home while potentially keeping their payment the same. There’s also a virtually endless amount of refinance opportunities.
Mike Hammel, Owner/Broker at Integrity Home Loans, LLC
It has opened up an opportunity for refinances that haven’t been there for many years. It has also flooded the market with buyers due to low interest rates. The issue that we’re dealing with right now is the lack of inventory and multiple offers on every home.
Ben Vogler, President/Broker Owner at Vogler Mortgage, LLC
The pandemic has forced loan officers to embrace new technology, and much of that new technology allows us to target more leads and stay in front of our past clients via social media, CRMs, and Zoom videos.
Ben Robinson, President at SunnyHill Financial Inc.
With rates at all-time lows, and my company originally structured to encourage remote working, we did not miss a beat when COVID-19 hit. Like most mortgage companies, we have had a record year.
Sharon Mistowski, Owner at Horizon Lending Services, LLC
With rates being low, it does create an opportunity to refinance, assuming the borrower’s credit has remained in good status.
Glenn Cameron, CEO/Owner at Mortgage Lending Associates
I think people have a bit more time to respond to our requests for docs, and they have more time to discuss options on home loans.
Nick Simington, President/Loan Officer at Premier Family Mortgage
It has provided an opportunity to work from home and be more involved in the community, while spending more time with family. Also, it has allowed us to help clients at all hours of the day.
If you knew the impact of this situation on your business in advance, how would you prepare your business to mitigate your losses or even profit from it?
Key takeaways from the mortgage brokers’ and lenders’ answers:
- Working with smaller clients before the pandemic hit could have helped mortgage companies adjust to the rapid changes in the industry that would have kept them from pausing their campaigns.
- Marketing aggressively, such as utilizing SEO sooner and advertising on lower-rate refinancing schemes, could have kept delays in mortgage business at bay.
- Coming up with a solid game plan in anticipation of the increase in work volume could have helped mortgage lenders and brokers deal with the changes swiftly and effectively.
- Hiring more people could have addressed the rise in business opportunities. Recruiting and training new people could have been done aggressively pre-pandemic to lessen the time it took to train them.
- To help build a stronger community, it would have been prudent to do business the right way and not profit from clients who are already facing financial difficulties due to the impact of the pandemic.
- Learning digital technology could have been done earlier to make the transition to working from home smoother.
LeeAnn Reynolds, Director of Operations at RateZip
If we had known the extent of the impact that COVID-19 would have on the mortgage industry, we would have worked in advance with our smaller clients in order to help them prepare for these changes, so that they would not have had to pause their campaigns.
Jenna Holtz, Mortgage Loan Originator at Sovereign Lending Group
If we knew we would be booming during the pandemic, we would have hired more people in advance and have everyone trained well. We had to bring in a lot of employees in the midst of this, which caused some delays because they were learning the ropes.
Raul Hernandez, Mortgage Loan Officer at Competitive Home Lending
While the pandemic caused a change in net margins, I would not try and profit from that sort of situation. There are times that companies should do the right thing for all stakeholders and take a business loss with the intent of building a stronger community.
Sharon Mistowski, Owner at Horizon Lending Services, LLC
I would have started more marketing SEO sooner. I would also have let borrowers know they can refinance if they can keep up with their mortgage payments.
Jon Irvine, Chief Strategy Officer at Sovereign Lending Group
If we had a crystal ball to predict the change in industry outlook related to the pandemic, we would have staffed up earlier in anticipation of the significant market opportunity.
Dan Chapman, Mortgage Advisor at Fairway Independent Mortgage
I would have had a game plan to make sure we were ready for the massive amount of volumes that increased. We handled it well but could always do better.
Nick Simington, President/Loan Officer at Premier Family Mortgage
I would have prepared for marketing and would have a full work-at-home setup for each teammate.
Matthew Tran, President and CEO at Mortgage Matters
If I could foresee the increase in our sales, I would have proactively staffed up.
Ben Vogler, President/Broker Owner at Vogler Mortgage, LLC
I would have focused on learning new technology sooner than on the fly.
What marketing channels do you prefer to use during the pandemic over the rest and why?
Key takeaways from the mortgage brokers’ and lenders’ answers:
- Turning to SEO as a means to market can capture more clients who are spending more time online.
- In-person marketing can be replaced by calling clients via traditional tools like telephone. However, visiting realtors and making sure to talk business within a safe distance remains effective in winning new clients.
- Marketing via referrals remains an effective tool to bring more clients to the business.
Sharon Mistowski, Owner at Horizon Lending Services, LLC
We are paperless and do all things online. We have put more money into SEO more than before, as we understand people are spending more time at home and looking to improve their surroundings.
Pete Fajkowski, Managing Member at Mortgage Portfolio Services
We have been a 100% referral-only brokerage for 22 years. We have never spent a penny on marketing.
Raul Hernandez, Mortgage Loan Officer at Competitive Home Lending
It is clear that the pandemic caused a shift from in person to online. We have focused on all digital aspects of marketing.
Matthew Tran, President and CEO at Mortgage Matters
Currently, we are almost 100% referral, and that keeps us busy enough to not have to market for new business.
LeeAnn Reynolds, Director of Operations at RateZip
As a company that does its entire business either online or via the telephone, all aspects of our business could be transferred to a remote basis if necessary.
Glenn Cameron, CEO/Owner at Mortgage Lending Associates
Marketing in person from a distance to new clients can be accomplished by calling up and standing outside the new partner’s home door. i.e., go visit a realtor at home!
Dan Chapman, Mortgage Advisor at Fairway Independent Mortgage
We pretty much 100% work fine from home, as our business is all web-based. So, as long as we have a good, high-speed internet connection, we are good!
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