Loan Servicing and the Impacts of a Post Pandemic Society
The landscape of our society and how we conduct business has undergone significant changes over the last 12 months. The lending and infrastructure industry has had overwhelming changes and many challenges with the pandemic. As our nation shifts and businesses begin to open up, many of the challenges still exist. Let’s turn our attention to loan servicing and the general effect of the pandemic on the various areas of the lending industry. To help us do so, we will address each of these questions in turn:
What Is Loan Origination Software?
When we talk about loan origination software, we refer to a platform that manages and automates various stages in the loan servicing cycle. Some of these stages include loan application, credit approval, and automated underwriting.
What Is Loan Servicing?
Loan servicing and loan origination software go hand in hand. We could describe loan servicing as the background processes that keep the loan in play. It includes sending out monthly payment statements, collecting monthly payments, collecting and payment of relevant taxes and escrow, maintaining records of payments and balances, delinquencies, and so forth.
How Has The Pandemic Impacted Loans In General?
The current global pandemic has affected our lives in many ways, far too many to list here. When it comes to loans, the impact has been significant. Many Americans are unemployed or no longer have a stable income. Our nation continues to struggle as a global community due to the effects of COVID-19. We see economies moving into recession, and even though economists tell us reasons for optimism, many of us are still waiting for hard evidence.
The pandemic has also affected the application and approval process of loans for businesses and families. Before the pandemic, a face-to-face approach was more prevalent for loans. Online mortgage applications have increased, and new challenges have arisen for loan providers. Adopting a digital means of doing business has become crucial for lenders to meet the needs of their clients in this ever-changing climate.
How Has The Pandemic Affected Loan Servicing, Lending, And Loan Origination Software?
The pandemic has dealt a swift blow to many industries and processes while significantly boosting others. When it comes to loans and related services, the need for digital processes has never been more critical. As the pandemic continues, we are likely to see an acceleration in adopting digital abilities within the borrowing industry in general.
Before we entered the pandemic, businesses were not as keen on the idea of virtual experiences and digital tools. With many companies not allowing in-person visits, digital interactions are much more prevalent.
Indeed, lenders find these challenges more significant when it comes to mortgage servicing and requires much planning to resolve issues effectively. Some institutions are voicing frustration with changes in the industry related to the disruption of the flow of credit. Others talk about the colossal amount of information and significant changes to guidelines that have made it very difficult to manage. Let’s list some of those challenges in more detail now:
As well as the challenges that we have noted above, two key challenges lenders have relates to understanding and navigating post-forbearance options for distressed borrowers and gaining clarification on forbearance programs. Many lenders see the essential need to focus on business loan process streamlining and consumer-facing technology. They are placing these needs as their top priorities as we continue to learn and adapt through this ever-changing financial world that the pandemic is having such a considerable impact on each day.
What Is The Impact On The Mortgage Industry?
There is no doubt that the pandemic has had a significant impact on the mortgage industry. Tighter lending criteria, reduced available properties, and various restrictions that fluctuate have made some homeowners reluctant to sell and homebuyers unwilling to buy.
Couple these facts with how lenders have had to offer higher LTV products and generally have tightened their belt, and it is easy to see why the industry has taken a blow.
As we move out of the pandemic, the mortgage industry can undoubtedly expect to regain its stability. We can expect to see people who have been waiting to sell their properties listing their homes. And individuals that have held off on buying a property ready to book viewings and get on the property ladder. However, there will need to be efficient, robust, and advanced loan origination software and mortgage loan servicing in place. Since the world post-pandemic will be different in many ways from a year ago, lenders must have the correct loan software to fully satisfy their clients and continue to provide a competitive service attractive to potential customers.
What Is The Impact On Construction Loans And Business Loans?
The construction industry is just one of the many industries that have been severely affected by the coronavirus pandemic. Some construction companies have had to take out emergency loans to keep them in business and continue when things start to settle down.
As construction starts to get moving again and restrictions begin to lessen, we can expect a need for the construction and business loan industry to be readily available. A streamlined loan process that will allow business owners to quickly and easily secure the finances they need to provide their essential service will play a significant role.
What Is The Impact On Cloud Infrastructure And Cybersecurity?
With so many businesses going online, even those far from the digital realm before the pandemic hit, cloud infrastructure has undoubtedly been affected. In general, organizations that already had a broad adoption of public cloud computing can transition easier to the new remote way of working than businesses that have not fully adopted cloud computing.
There has been a more significant risk for organizations without remote access infrastructure in place before the pandemic. Indeed, cybersecurity may not have been a critical topic to some businesses before the pandemic. However, businesses now realize significant risks involved as their general business processes and work become more digital. Working remotely has resulted in businesses needing to provide the additional budget for cybersecurity and researching options to keep their business safe.
The Bottom Line Loan Servicing As We Move Out Of The Pandemic
We will all be glad to see the back of this terrible pandemic. However, the world will be a different place when we do. Some of the key goals and priorities for businesses as we move to a brighter future will be the following:
As the loan industry works to meet these goals, it will be crucial to work with the right loan origination software provider. Indeed, engagement and communication are essential elements; however, ensuring that a platform is comprehensive, customizable, and complete is just as important. At Liquid Logics, we have a single solution to reduce the number of integrations and touchpoints for lenders. At Liquid Logics, we provide the most comprehensive, complete, and customizable loan servicing software on the market. For more information or to schedule a demo, contact Liquid Logics today.