Editor's note: This interview previously appeared in an episode of DS5: Inside the Industry.
LendingHome is one of the nation’s largest financial lenders to real estate investors. In her role at LendingHome, Stephanie Casper leads a team devoted to new business development. She is also a key member of the cross-functional leadership team responsible for developing new products to meet the evolving needs of real estate investors.
Prior to joining LendingHome, Casper spent nearly five years at CoreVest Finance, where she held several roles including Head of Bridge Lending and VP of Originations. She is also an investor herself, managing a small portfolio of single-family rentals.
With real estate investors facing many new challenges in 2020, are there any areas of technology that have the potential to be game changers, whether during the COVID-19 or beyond?
The real estate industry has historically been the slowest to adopt and adapt to technology. We all still have to sign mortgage docs in person, for example. I think that lack of technology adoption is a big part of what drove the founders of LendingHome to start our company, in fact, and to leverage technology to provide a smoother, more seamless process.
What we’ve seen in terms of current tech advancements, changes, and needs have been brought to the forefront by the COVID-19 social distancing protocols. Some of the interesting developments we’ve seen are around inspections and leveraging technology to do virtual inspections. For the purposes of establishing a value where an appraiser can’t get into a home or won’t go into a home, for example—getting photos and tours and so forth. Borrowers are using virtual inspections in the process of getting reimbursed for their rehab draws or providing evidence to a lender of completed construction components.
There have been a few others that we’re seeing in terms of more use of eSignatures or potentially even electronic notaries, including using technology to verify an ID. That’s always been a big part of the custody of documents, making sure the person that signed is the person who’s supposed to be signing. So, we’re seeing some advancements in that. I think, over time, we’ll see more and more adoption. And, of course, all of us have seen realtors using technology for virtual tours and virtual open houses during this time to continue the business of real estate and real estate lending.
You have a background as an investor yourself and manage a small portfolio of single-family rentals. What are some of the changes the single-family rental landscape has experienced this year?
As a lender, it’s important for us to understand, to learn, and to hear what our customers are experiencing. We took a survey of our existing, past, and prospective customers in June to get a pulse for how COVID-19 was impacting them and their views on the business. The survey results were actually much more optimistic coming from our customer base than we anticipated.
Most of the respondents indicated that they expected short impacts or disruption—call it zero to six months of impact on the real estate investment space. And overall, the levels of optimism around returning to “business as usual.” Demand is good; our tenants are still performing. There are some concerns. Rental owners like me have some concerns around, are tenants going to be able to continue paying? We’re looking at factors such as unemployment issues, the winding down of the government assistance that’s been out there for those that have been unemployed, as well as eviction moratoriums in many jurisdictions handcuffing landlords’ ability to enforce leases.
But overall, the market, from what I’m hearing from large investors at various conferences, panels, and in industry news articles … the big owners of rental SFR in the space who also own traditional stacked multifamily have reported increased demand for their single-family rentals. They’ve reported strong rent collections in their single-family rental properties, possibly even outpacing the collections they’re seeing in their traditional stacked multifamily.
How has LendingHome updated or changed its internal processes to adapt to this year’s challenges?
Look, it was a big shock. None of us have dealt with a global pandemic where we can’t leave our houses. All of us are doing our best to assess what the risk is in the marketplace because things have been so volatile. Of course, the entire private lending space, and I would suggest even the public lending space, made adjustments to lending criteria in terms of maybe scaling back leverage, increased pricing, better creditworthiness in terms of the credit box as far as who could qualify for those loans in order to address market volatility and a vast amount of uncertainty.
Some lenders, based on how they’re capitalized, even had to pause lending altogether for a period of time, LendingHome was not in that camp, fortunately; we continued lending throughout. Many of the policy adjustments that we made then have been unwound back to pre-COVID levels. We continue to adjust to the market demand, and demand has rebounded much more quickly than we anticipated. We have more loans in processing and more applicants than ever before. So, we’re seeing a quick balance, and that’s exciting, but we definitely had to make those adjustments related to managing risk initially.