Lending Vs Covid

Covid has disrupted every industry but how has the lending industry coped?

This week we speak to Tyler Eaton who is the VP of market retail for Cardinal Financial. He shares with us the challenges the mortgage industry has how to overcome and the technology that has helped them fair through the pandemic. This will be a great episode to gain an insight and to help your clients better understand what the current process is like to get a mortgage. 

 You can listen to all episodes of Agent Vs Lender on Spotify, Apple Podcasts, Stitcher, and Google Play. If you love Agent Vs Lender follow us on YouTube, Facebook, and Instagram for all bonus content. 

Transcript

Ron Pippin: 0:32

Welcome to another episode of Agent Versus Lender. And today we have Tyler Eaton with us, and he is the Vice President of market and retail. I probably said that wrong. I said that say that right. Okay. Vice President worked at retail for Cardinal financial. So if you're a realtor, and your on this podcast, don't jump off right now, because it's another lender, we want to talk about lending and what the process has done to the lending, or sorry, what COVID has done to the lending process. So it's going to be very helpful to you to know what that's what that is looking like right now. Because it can help you, it's going to help your clients for you to understand that. So anyway, well, so we'll dive right in. So hey, Tyler, thanks for thanks for joining me today.

Tyler Eaton: 1:24

Thanks for having me, Ron. Appreciate it.

Ron Pippin: 1:25

Awesome. So let's talk about let's talk about the markets and what has what has the, what has COVID done to lending man, that's what I've, you know, I can see it on my end. That's it's, it's, it's been a little rough. So

Tyler Eaton: 1:40

it's been rough for everybody. It's when COVID hit the first of the year. Fannie and Freddie and Ginnie were struggling to update their guidelines to be able to make the accommodations to make sure that it was good lending and a borrower could pay that loan back and they were in good standing. So the first quarter was really quite rough and into the second quarter, which impacted most is self employed borrowers. For the first time in this industry that I can remember is, we always went off the prior your tax returns to verify a self employed borrower. And then we just verify they were still in business. Well, this year, I have to get income for the current year, but I don't have tax returns. And that's been a frustration for loan officers and for realtors. Because you have a good borrower who's self employed and Ellison, we're making them jump through all these hoops. So those are some of the things that have been difficult to deal with. Also income requirements. You know, if you switch to job, and you're starting a new job, now there's a whole new set of set of requirements to verify that that still is a good job, that you're going to stay in that job that the current company you work for COVID isn't going to go out of cause that business to go out of business and now you just lost your job. But you started it for 60 days. So these are the challenges that the industry has struggled with. I think Fannie Freddie and Ginnie the three agencies have pretty much stabilized this last quarter. I think we know how we're going to have to move into the new year. But I think it's going to be this way for a good into the third quarter for 2021.

Ron Pippin: 3:14

Yeah, I noticed as as COVID hit, and they started coming in with with overlays that that just really changed how we processed and all of us had to had to change with that. We as loan officers, underwriting processors, realtors, borrowers, it's been it's been really challenging, but I'm starting to see a little that pendulum start to swing the other way slightly. It kind of reminds me back in 2007, when we had that crash and, and the pendulum just one so far, one way, they just started, everything went away. And I'm starting to see some of those programs come back. So that pendulum is coming back. And I'm seeing that happen with with COVID a little bit as they're they're lightening up on some of those guidelines. But still, it's still it's not like 2000 you know, 2005 where if you can fog fog a mirror you can get alone, it's definitely not those days.

Tyler Eaton: 4:08

And I don't think we'll ever see those days again,

Ron Pippin: 4:10

I don't think we will either. There were fun times. They were they were so. Okay, so, lending, the lending process has definitely changed. It's It's It's changed our timelines, pre COVID. You know, in my branch, we're closing closing loans. And I think our average timeframe was was 19 days. We were getting some done as quickly as as seven to 10. It's just not happening right now. For a multitude of reasons. And one is one is appraisers. appraisers seem to be taking much longer to get done a any any thoughts on why that's happening? Or

Tyler Eaton: 4:53

I think they, they're overwhelmed. It's just it's like the loan officer who was doing a couple loans a month. And all sudden he's doing 10 to 12. Because of the low rates, I think the same thing has happened with the appraiser. Maybe they're doing 20 appraisers in a month, and now they're doing 50. And I think they're struggling to manage their time and get to it in a timely manner. I think, I think the appraisers have adjusted to that. And I think that will probably get a little bit better. But I don't think we'll see the the day or two turnarounds that we were seeing pre COVID, it might still be a good three to five days before you get an appraisal out. I know some parts of the country, it's 10 to 20 days to get an appraisal. And in some cases, if you're in rural, it's over 30.

Ron Pippin: 5:34

Yeah, we have we have when I was just talking to talking to Tyler just before the podcast and we were talking about appraisals. And and I have one were up in a rural area in a different state than then in Utah. And they want to push us out 60 days. And so we're struggling, we're struggling to find another appraiser that can do it a little quicker. But so there are some appraisal issues. And it's really wreak havoc with our time timelines,

Tyler Eaton: 6:01

it makes it difficult, but I think I think 2020 is going to stabilize a little bit, I think we'll see some improvement there

Ron Pippin: 6:08

that may not be nice to see something. So I I know that Cardinal in full disclosure, I work for Cardinal as well, and, and Tyler, I've known Tyler for years and years. So he's actually a pretty good friend. We do go way back. And so Cardinal has a system called octane. And so tell us a little bit about why octane does so much to help us keep timeframes down. Because it really does, it's really helped us manage our time and get our loans done a little faster. So tell us a little bit about that.

Tyler Eaton: 6:52

There's a lot of things that octane does. But for the sake of this podcast, we're just going to focus on three things, I think will interest your listeners. First of all, octane was designed about 10 years ago. And the main reason it was designed is because the owner of the company realized, with the CFPB, coming with the new guidelines, that one of the ways that we can remain profitable and competitive in the industry was to be able to streamline that process of doing loans through technology, because we know what the guidelines are. So he created a program called octane. And it basically is artificial intelligence. So if I'm a loan officer, and I'm working with a realtor, you give me a purchase. And I'm going to prequalify that borrower for you, as I put that file into octane and start the application and pull a credit report and look at the income octane will begin to underwrite that file for me because it knows the guidelines. So if I'm going to do a conventional purchase 5% down, I pull the credit, look at the income I put the file together, it's going to give me all the conditions that I need on that. So my team can begin to work on that before it even goes into underwriting. So basically, we can address any issues. Obviously, we still need an underwriter to look at the documents to make sure they're proper. But that really cuts probably five to seven days out of the typical lending process. The other thing that octane does great that helps streamline is the system is automatic. In many of the compliance issues. For example, I have to disclose a file within three days I take the application, if there's a change in circumstances, the underwriter or if I change the lock, I have to disclose again. And if I missed that, I can lose up to three days in London, I'm sure everybody listens podcast is experienced that before where someone forgot to do a compliance, and you last three to four days. Well, if I forget to do that, as a loan officer octane in the middle of the night, we'll run through the process and realize there has been a change of circumstance, this needs to get disclosed, and it will disclose in the middle of the night. So that way, you never lose that three days or four days for someone missed a compliance.

Ron Pippin: 9:00

I've loved that, actually. So that when when that system automatically desktop, it's just like you're taking that human error factor out. And as as good as my team is, and we usually do a very good job at keeping up on those things. There are some times when that that automatic thing kicks in. And the next day, we get these notifications as Hey, this has been sent out. And then we're calling the borrower to say hey, this is what you have. So it's really nice to have that fail, that fell proof that failsafe system in place that's really helped us.

Tyler Eaton: 9:34

That's been a huge advantage for a lot of our loan officers for using that system. It's given us a really unique competitive advantage in the market. So and then the third thing I wanted to touch on today is just the communication with the borrower. So octane automatically creates a dashboard for every borrower. And that borrower can sign into that dashboard anytime they want, and they can see what conditions need to be cleared, what documents they need to send to us. The ello can get on with a phone call with a borrower, they pull up their dashboard, they go through everything, it tells them their lock date, the rate, everything is on that dashboard. The great thing about that, too, is if the borrower wants, they can share that with their real estate agent. So the real estate agent can be involved with that process with their borrower.

Ron Pippin: 10:19

So that's, I've loved that dashboard, because it just makes us very transparent to the borrower. So the borrower basically logs on and, and they can see everything. Well, not everything, but pretty close everything that we can see everything is relative for them. Sure. So they can see they can see the conditions, they can see what the lock date is. So it's not like say, you can call up your loan officer and say, Hey, did you lock? Oh, yeah. Oh, yeah, I locked yesterday. And they can log in the dashboard. Oh, no, you didn't. They they see it. So we have to watch really transparent. So they see exactly when things are happening, and what conditions like you said, and you said that they can give access to the, to the borrower, or the borrower can give access to the agent. So that doesn't need to happen. With our team in our branch, we, we make phone calls, at least weekly, and sometimes more often, not only to the borrower to give updates, but also to the agent, both on the buyer, buyer's agent and the end the listing side, just because we feel like the listing agent seems to be left out of the process often so. So we, we, we want everybody to be up on the file and know that things are moving forward. So it's, it's it's been, but we've loved the octane and have that transparency with our borrowers.

Tyler Eaton: 11:45

We'll run you're one of the unusual branches that makes those phone calls like that. I think a lot of people rely on the dashboard themselves. But yeah, those three things, I think, if you're a real estate agent, and you're looking for some ways you can be more competitive in the market and working with yellows. Those are some things that can give you some great tools to help in this competitive market that we're in right now. So

Ron Pippin: 12:14

yes, we do if you if you heard that there was a ambulance that was going right behind us. And I don't know if that picked it up on the podcast. So Tyler as a branch, we, what I like is that corporate has given us a lot of a lot of privileges. Well, we can, we can adjust loans, we can adjust pricing, we can adjust all kinds of stuff. So tell us a little bit about about what corporate is, has allowed us as a branch so that we don't have to make phone calls. To to adjust moans and to into compete. What have they given us?

Tyler Eaton: 12:53

Well, to go back to one of the advantages of octane as a loan officer is it's all done within the system. So if you were to work here, the branch manager has a lot of leeway to set his pricing for his region or maybe his his city that he works in. But from that point, he has the ability to do low level pricing adjustments within octane to accommodate a certain particular market, or a niche he's going after, for example, if you were to compete in the jumbo, which is highly competitive, terribly competitive, you're a branch manager can specifically set loan level price adjustments for jumbo loans that make you competitive. And it's done within octane. So it's not like you have to call the lock desk, work with accounting, and then work with the compliance department to make all that happen. You can do it right there with octane.

Ron Pippin: 13:40

Yeah, so I've enjoyed that. Because other companies that have worked at whenever we had some really competitive bids that come in, it was almost, I'm not gonna say impossible to compete, but it was very cumbersome because we had to, we had to make so many phone calls. And it's all handled right here in the branch. So so we can we can compete right here at the branch without making any calls or, or asking for permission.

Tyler Eaton: 14:06

Absolutely. And it's a huge competitive advantage for a loan officer. Particularly when rates are so low. Sometimes we get into these bidding wars, and it really gives the loan officer an advantage to go out and be profitable, get good pay, and also win that deal. Yeah.

Ron Pippin: 14:24

Well, that has given I hope that's helped. realtors understand that there are some differences first, this lending in this environment has been a little challenging not only for the realtor, but it's been challenging for us as loan officers where we're, we are right there with you. Trying to make a difference, and the rules keep continually changing or we're having to keep up on guidelines. And and so far we've been able to do that but octane makes it so much easier for us. octane has been able to sell if I have some questions on, Hey, can I even do this? I just put that scenario in octane. And I can tell me whether I can do it.

Tyler Eaton: 15:10

Yeah, it's that's the great thing of octane. And what it really does is it helps cement that relationship between the agent and the loan officer. So you can build a long term synergy, by being would be competitive, offer the products to your borrowers, and be able to get quick answers and make that turnaround go fast for them.

Ron Pippin: 15:30

Yeah, that trust, you know, your team. And, and having that trust is just really important.

Tyler Eaton: 15:36

When I started 20 years ago, in this industry, like you did, Ron, it was like loan officers against agents. I mean, that's how it felt 20 some odd years ago. And then when the CFPB came out, 2010 and we got the Dodd Frank act, and we got all those different changes, all of a sudden, it changed. It was like LO's, and agents now have to work together. And so then we struggle to find people we like to work with. That was a big struggle. And now I think at this point, we really know who we like to work with. And now it's like, how do we make that relationship better? How do we improve it? And I think that's where octane has been that missing piece to give that new advantage in these challenging times.

Ron Pippin: 16:18

Yeah. Well, appreciate that. Tyler. I don't know what else to say, to realtors, or to loan officers having to be listened to this. There's just the market hard, we have low inventory, we're not going to go into that I think everybody knows low inventory. We have, we have changing guidelines that change weekly, sometimes daily, we have pricing loans, that's interest rates that just are all over the place, they're really low. And the next day they come up and the next day, they go back down and and so it's just really it's a really challenging time to be in the real estate is. So if you guys have any questions, I usually ask ask how to get hold of Tyler how to get hold of my guests that are on here. I'm not going to ask him that. Because if you want to, if you have questions for Tyler, just shoot them over to me and I can I can get him to him. But so anyway, I appreciate you being here. Tyler, that's it's been really informative to help help people understand that, that there is a here's a way to make the process a little bit easier. It's

Tyler Eaton: 17:27

my pleasure, Ron, thank you for having me. Awesome.

Ron Pippin: 17:29

So if you ever need to get hold of me or my team, you can get hold of us at 801-628-7667. And we'll catch you again on another episode of agent versus lender.