With loan production costs on the rise resulting in margin compression, lenders should be on the lookout to reduce costs wherever possible in the origination process. We hope you enjoyed last week’s edition where we talked about The Originations Landscape Is Shifting ā Is Your Business Ready?Ā This week we’re bringing you:
What does the future hold for appraisal tech?*
Between a pandemic and record-breaking origination volume, the appraisal industry has never had to be as nimble as it is now. In an effort to keep homeowners safe while also still providing quality valuations, appraisers have been leaning heavily on technology for the past year and a half. HW+ Managing Editor Brena Nath had the opportunity to catch up with Global DMS President and CEO Vladimir Bien-Aime at MBA Annual to talk more about whatās next for the appraisal industry in terms of technology.
āWell, in the appraisal space, a lot of things have changed,ā said Bien-Aime. āThere are fewer appraisers and theyāre retiring in record numbers. So the most important part of it is being able to do more with less, and technology really gives that kind of gift to our lenders.ā
In 2019, the appraisal workforce was already in decline. In addition to appraisers retiring, new appraisers have entered the workforce at a lower rate in the past two years. And while many across the industry have confirmed that human touch will always be necessary to appraisals, technology has played a key role in offsetting the struggles that accompanied labor shortages.
Refinance Volume at 21 Month Low*
Applications for purchase mortgages recovered from a 5 percent drop the prior week to drive a small increase in overall volume during the week ended October 22. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage application volume, increased 0.3 percent on a seasonally adjusted basis and was 0.2 percent higher unadjusted compared to the previous week.
The seasonally adjusted Purchase Index rose 4.0 percent from the previous week and was 3 percent higher before adjustment but remained down 9.0 percent year-over-year.
The Refinance Index decreased 2 percent from the previous week and was 26 percent lower than the same week one year ago. The refinance share of mortgage activity decreased to 62.2 percent of total applications from 63.3 percent the previous week.
“Mortgage rates increased again last week, as the 30-year fixed rate reached 3.30 percent and the 15-year fixed rate rose to 2.59 percent – the highest for both in eight months,” according to Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The increase in rates triggered the fifth straight decrease in refinance activity to the slowest weekly pace since January 2020. Higher rates continue to reduce borrowers’ incentive to refinance.
“Purchase applications picked up slightly, and the average [purchase] loan size rose to its highest level in three weeks, as growth in the higher price segments continues to dominate purchase activity. Both new and existing-home sales last month were at their strongest sales pace since early 2021, but first-time home buyers are accounting for a declining share of activity. Home prices are still growing at a rapid clip, even if monthly growth rates are showing signs of moderation, and this is constraining sales in many markets, and particularly for first-timers.”
How much could wire and title fraud cost lenders?*
Wire and title fraud recovery can cost as much as $900,000 per event, FundingShield estimates
With loan production costs on the rise resulting in margin compression, lenders should be on the lookout to reduce costs wherever possible in the origination process.
In addition to the increased cost of production, loans are also at increased risk of wire and title fraud risk, with almost half of transactions appearing to be high-risk, according to a Q3 analysis by MISMO-certified wire and prevention fintech FundingShield.
Of all loans reviewed by the fintech company, 47% had at least one risk finding, FundingShield CEO Ike Suri said. Loans with at least one risk finding had an average of 2.1 risk findings per loan, across risk metrics such as licensed parties, wires, CPL data accuracy and CPL validity with title insurers.
Additionally, FundingShield found that 14.3% of transactions had wire-related issues, a number that remains alarmingly high.
āThis growth comes on the back of all-time high values from the first & second quarter of this year. eClosings and other automation technologies continue to gain traction and simultaneously with new technology new fraud schemes and vulnerabilities have emerged,ā Suri said.
āThe real estate title and settlement arena continue to be a hot target for cybercriminals and fraudsters within and outside the U.S. borders.ā
Increased costs related to wire and title fraud recovery
Wire and title fraud recovery can be expensive. FundingShield reports that in addition to lost funds from a single closing-related wire fraud event, the total cost of related reporting, audit, attorneys, compliance reviews and disclosures, investigation, engagement with law enforcement, and process to instate insurance has come to an all-time high. The company estimates the total cost to be more than $900,000 per event.
Finding highly affordable leads to keep sales coming in
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