This piece initially appeared within the August 2022 version of DS News journal, on-line now.
The position of information within the mortgage business just isn’t new, and knowledge has change into extra important to how companies make strategic and operational selections. However, COVID-19 emphasised the worth of information for your complete business, notably relating to servicing.
During the pandemic, servicer knowledge took on new significance because the business labored collectively to assist debtors present process hardship.
The pandemic not solely shook up the housing business, however the way in which we as an business use and worth mortgage portfolio knowledge. With folks spending extra time at dwelling because of working remotely and quarantining, properties turned extra vital than that they had ever been, and demand skyrocketed greater than the business had seen in a while. Understanding methods to get folks into properties and assist preserve them of their properties throughout this unprecedented time was difficult, and knowledge was the lifeline that the business wanted to make selections.
Let’s discover the position that knowledge performed throughout the pandemic and what we are able to be taught from the info now we have now on the opposite aspect of the pandemic.
The Case for Data-Driven Decision-Making
Data helps us measure and monitor sure developments and be taught from them. Good knowledge offers classes on what occurs beneath sure eventualities and helps predict what’s going to occur in comparable eventualities down the road.
Rarely does the identical precise state of affairs happen twice, however by understanding how sure components affect the economic system, and finally, every family, we are able to extrapolate findings from the previous to higher perceive new eventualities sooner or later.
Long earlier than the pandemic, companies had begun to comprehend the wealth of data out there in knowledge and the advantages of utilizing it to make broader enterprise selections. A 2019 examine by PricewaterhouseCooper discovered that extremely data-driven organizations are 3 times extra prone to report vital enhancements in determination making, in comparison with those that rely much less on knowledge.
The advantages of data-driven determination making are measurable and vital. While this was true earlier than the pandemic, our reliance on knowledge throughout COVID-19 was the reinforcement that many companies wanted to really worth the position that knowledge can play for them.
The Unique Nature of Pandemic-Related Data
The problem with the pandemic was that there was completely no precedent that companies may use to information their determination making. Until 2020, our fashionable enterprise atmosphere had hardly ever skilled a sudden shock to the economic system just like the one created by COVID-19.
In the mortgage business particularly, it was extremely uncommon to witness an increase in delinquencies and borrower hardships, whereas additionally seeing a surge in housing demand and mortgage originations on the identical time. Additionally, rates of interest have been low, which additional elevated quantity by encouraging refinances along with new purchases.
With no guideposts, everybody was studying as they went alongside. Nothing like this had occurred to the mortgage business—or any business—in our lifetime, and all anybody may do was make their greatest guesses. However, knowledge evaluation was there to spice up the arrogance of these guesses, and assist the business right its course as wanted. And for the reason that business was present process elevated digitization, we had an enrichment of information that gave us higher knowledge than ever to information our selections.
Lessons Learned
The anomalous nature of COVID-19 doesn’t imply that the info generated throughout the pandemic can’t be extrapolated to additional our understanding of shopper habits associated to particular components. Looking at knowledge over the course of the pandemic illustrated the affect on mortgage efficiency, borrower views and behaviors, and extra. It even helped the business perceive debtors on a extra particular person stage. For instance, the business bought an improved view of how self-employed debtors are impacted by various factors, and methods to use these insights to higher serve this group transferring ahead.
Now that the largest impacts are over, firms are returning to some sense of normalcy. The classes we’ve realized could be utilized outdoors of a pandemic state of affairs and can be utilized to form business technique for months and years to come back.
We now have new developments established that may apply to totally different occasions. For occasion, we now have knowledge to make use of ought to we ever enter one other interval of excessive unemployment because of a sudden, surprising occasion. We even have perception into shifts out there when there’s each a rise in delinquencies and originations. The causes is probably not the identical sooner or later, however we now have knowledge to assist us put together for the results.
The business additionally skilled a collective mindset shift because of the pandemic.
Because nobody had ever been by means of this earlier than, there was nobody individual or group to look to because the chief. The business needed to depend on knowledge alone to know methods to transfer ahead, which bolstered the significance of the position of information in mortgage business and, particularly, servicing.
Now that we’ve seen the facility of what knowledge can do, all of us can apply extra data-driven practices to our enterprise.
Similarly, since there was no singular group or chief to information the business by means of the pandemic, everybody needed to work carefully collectively. The cooperation and collaboration between the government-sponsored enterprises (GSEs), banks, servicers, mortgage insurance coverage suppliers, and different business gamers have been nearer than ever throughout the pandemic. Everyone was sharing knowledge and insights as they regarded to higher perceive what was occurring. This sharing of information amongst these teams helped companies past that which their very own knowledge alone may clarify.
Ultimately, the business unified to grasp the issue and higher serve the borrower. This sharing helped particular person actors perceive the impacts past their sphere of enterprise and allowed the business to create a extra cohesive technique to help debtors.
Continuing this observe of collaboration will solely make the business stronger transferring ahead.
A great instance of what got here out of those collaborative efforts is a greater, optimized strategy to help debtors in want. With a big variety of debtors experiencing comparable hardships, the business leveraged this elevated collaboration to simplify the hardship processes for debtors. We, as an business, started leveraging automation and know-how to streamline the interior processes that help loss mitigation practices. The ensuing course of enhancements made it simpler for debtors to get the help they wanted and get again heading in the right direction, serving not solely the borrower, however your complete business.
The knowledge transparency, accessibility, and resultant optimization of processes now we have now will in the end assist us make faster and extra knowledgeable selections going ahead. What now we have realized from the pandemic expertise can inform knowledge, advertising, pricing, loss mitigation, and borrower help methods to assist each companies and people upfront of the subsequent unanticipated occasion.
Data Usage … Today and Tomorrow
When expertise had little perception to supply, knowledge supplied precisely what we would have liked to make the appropriate selections to higher serve the debtors our business helps. The COVID-19 pandemic was a singular state of affairs, however the classes it taught us should not have to attend for one more unprecedented occasion–they are often utilized within the current day and assist inform our methods going ahead.
Disclaimer: The statements supplied are the opinions of Alex Kudman and Srijan Sareen and don’t replicate the views of Enact or its administration.