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Closing times rising

Full pipelines, borrower frustration, new hires, and evolving documentation requirements engulf the industry as Q2 2020 goes down as the largest quarterly volume in history.

CURTIS KNUTH | October 7, 2020

Loan officers, junior processors, underwriters, and many industry participants are hard-pressed to keep up with internal processing and time quotas as they push through ballooning pipelines. Q4 originations show limited indices pointing towards declining or leveling off as rates and a seller’s home market continue to trash and burn records.

As discussed in this newsletter throughout 2020, income and employment documentation requirements continue to permeate our conversations with lenders. Income stability, employment stability, training new staff, and managing appraisals are top tier challenges for underwriters and processors who in 2018 were individually averaging 20 loans per month.

According to Ellie Mae, closing times are continuing to rise across refinance and purchase originations (Figure 1). 120-day closings are not uncommon. A colleague at Service 1st is more than 110 days out for his streamline refinance with a major national mortgage banker. He’s not self-employed, has a single source of income, and should be a simple loan to process.

Time to close : Refi v. Purchase
Source: August 2020 Ellie Mae Origination Insight Report

Consider this -- if closing times continue to rise, and lenders persist in hiring green recruits plus volume doesn’t tail off – what will this mean for your investor relationships, repeat business, online and social reputation, etc.? Most staffs have been waylaid over the many months, and many vendors are in the same boat.

10-day credit supplements from your credit vendor?! 2-week VOEs and canceled VOEs after two unanswered calls to the employer! How does this vendor performance help your pipeline or your team? This is where Service 1st’s technology, solutions, and our manufacturing processes are well matched for current pipeline challenges.

Income+ is a solution suite leveraging borrower provided & verified income and employment data for the determination of borrower qualifying monthly income.

Take a look: Service 1st’s Income+ solution is a simple report that’s easily ordered through Encompass and S1’s additional interfaces and API.

For your seasoned underwriters, processors, and LOs, Income+ is a good income analysis training tool for your new hires. Income+ contains a full income analysis, alerts, and messaging accompanied by the source tax transcripts and VOE data. Seasoned employees can reference the source data and analyze results, while new employees can visualize the rules applied for each case file.

Service 1st’s VOE solution provides written and verbal verification of employment results within 18 business hours on average. Your team can further focus on high-value tasks over tracking down the HR staff from your borrower’s employer.

And lastly, S1’s solutions are simple to implement and easy to pilot. In most instances, S1 solutions consist of simple reports that easily translate into pilots consisting of a few processors for a 1 - 2 week period.

By the way, you can find the MBA's 2021 forecast here and Fannie Mae's outlook here. Keep in mind, Q2 showed serious delinquencies up 20%; 50% of mortgage prepays emanate from mortgages originated in the last three years. According to Black Knight, servicers only retained 18% of borrowers who refinanced in Q2. Clearly, there’s work to be done on servicing portfolios.

We’re here to help!



Curtis Knuth

CEO, Service 1st


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