Fannie Mae survey asks lenders to name biggest COVID-19 challenges

Fannie Mae’s most recent Mortgage Lender Sentiment Survey found a significant amount of common ground among the nation’s lenders when it comes to describing the biggest hurdles the COVID-19 pandemic placed in their way during the second quarter of 2020.

Based on the insight of 254 senior executives from 229 lending institutions, Fannie Mae’s survey found that the most severe challenge to both loan origination and mortgage servicing was a lack of clarity. Regarding origination, 36 percent of respondents complained of a lack of clarity from secondary-market investors around loan eligibility guidelines.

“There is so much information to review and convey to employees,” said an unnamed respondent from a mid-sized institution quoted in the report. “Policies need to be changed daily to keep up.”

When it comes to servicing, 44 percent of those polled said their biggest challenge was understanding and navigating post-forbearance options for distressed borrowers. Another 33 percent said their primary stumbling block was getting clarification around forbearance programs.

“The new forbearance policies are making it extremely easy for a borrower to request forbearance,” said a representative from another mid-sized institution. “That is a good thing since many people are impacted directly or indirectly by COVID-19. However, how a customer exits forbearance will not be easy for the customer and will be complicated for servicers. There needs to be an easy exit approach for consumers to re-establish their loan with no downstream impacts.”

Other reps quoted in the survey explained that a lack of clarity around forbearance created problems in building workflows, using new forms and ensuring accurate reporting when partnering with sub-servicers.

The Fannie Mae survey also asked lenders about their top business priorities for 2020. As was the case in the second quarter surveys from 2017, 2018, and 2019, business process streamlining (a top priority for 39 percent of respondents) and consumer-facing technology (33 percent) remain front of mind concerns for lenders.

Respondents’ business process streamlining plans run the gamut, from improving online applications and verifications to reducing the cost of originating and delivering loans by 25 percent. Other respondents hope to improve loss mitigation and forbearance programs, while some are more concerned with repurchases, margin calls and compliance. Lenders who plan to upgrade their consumer-facing technology mentioned enhanced customer portals, remote processing work and implementing tech that syncs better with certain loan origination systems as priorities.

Of the 15 percent of lenders who said cost-cutting is their most pressing concern, 62 percent said they would most likely cut back on the amount spent on general/administrative expenses such as facilities and equipment. 40 percent said they would lose back-office staff. Another 25 percent said they would potentially cut loose some of their loan officers.