Unchartered Waters for Many – Sink or Swim- Treading Water Is Not an Option!
By Bill Dolan, CMB, AMP
Many of you mortgage lenders and mortgage bankers are far younger than I am. That is both good and bad because a large majority of you haven’t experienced times like the present previously. Nor will you be familiar with the next 12-24 months in which the prospect of entering a recession is not far-fetched whatsoever.
For oh so many years, your MLO’s just had to place the bait (historically low interest rates) on the hook, drop the line into the water (the unlimited pool of borrowers looking to refi/purchase) and land a fish (closed loan application) each, and every time. Let’s face it, how difficult was it? There was so much volume then, it really didn’t take much to fill the boat (your institution’s bottom-line profits). Today, however, the business of mortgage lending has totally changed and many of you have not fished in these types of unchartered waters before. It therefore requires a totally different set of navigational skills (strategic planning) to stay afloat. And you must be the voice of reason addressing all the noise that is out there today. It’s back to the fundamentals, gang.
So, tell me, what is Plan A and Plan B for making your numbers and closing out 2022’ while gearing up and addressing 2023’ and beyond? If you believe you can just tread water (taking a step back) and float until the pendulum swings back in your favor, you are sadly mistaken, because the days of interest rates in the 3.00% or 4.00% range are OVER!!!! Take a reality pill (rates are near historic lows) and you need to provide your borrowers and realtors with the facts, which takes using data to enhance your sales presentations and sales calls. Banks and Credit Unions do know how to right-size and navigate this industry. And if you are waiting on the housing market to crash…. don’t, because most experts say that this market today is far different from the Great Recession housing bubble, for it is the Millennials demand that will drive home prices up for years and help stoke the housing boom.
So, what can, and should you be doing NOW?
Look for every wasteful expense and be vigilant
Track and measure profitability by branch, market area, department, and sales teams
Drive sales behavior and push for sales activities
Invest in Technology and Training
Shed dead weight and those who do not contribute
MLOs should fight like hell to keep the deal
Differentiate yourself by bringing ideas to help realtors and builders sell more homes
Use that phone and practice optimism every day, with borrowers, clients, and realtors
And ask yourself:
How can I increase asset size without loan volume coming through the door?
How am I using digital offerings to lower costs and reduce cycle times?
What additional mortgage programs/products can I offer (doctors, lawyers, fire and police, high net worth customers, first-time homebuyer, etc.) that I’m not offering today?
How am I taking advantage of home prices decreasing and bidding wars stabilizing?
Consumers became quite acclimated to technological efficiencies created during the pandemic. What am I as a lender providing to meet their higher expectations? Am I creating the strategic consulting and technology partnerships that are not only necessary but essential in the customer experience? Am I partnering with the right vendors who have not only built and implemented the technology necessary, but also have the specialization and expertise to bring this all together?
How strong is my servicing department to service and handle new products or programs and know how to handle ARM resets? Do I have the talent and know-how necessary to address and tackle these and other servicing related challenges that we have not had to face for quite some time. Are those employees still around? Are you in balance with your GSEs, their reports and custodial accounts? Do you even know? Isn’t it time somebody looked under the hood to address these issues before your next GSE audit? When production is down, mortgage servicing becomes the focal point for the GSEs.
Need an ear to listen or a hand to throw you a life preserver?
At Spillane Consulting Associates, Inc. our mortgage consultants will provide you with the straightforward and trusted explanations and answers that your organization is looking for. Whether requiring the necessary technology experience and expertise to implement the latest POS, LOS, or PPE systems and platforms, addressing compliance issues prior to the next upcoming regulatory examination, or resolving those critical data fields associated with HMDA and the next LAR remittance being uploaded to CFPB……. SCA stands ready. and there is no better time to confront, tackle and resolve these issues than NOW!
Risks are always out there and will always exist so ask yourself how do you intend on responding? Resolve to be different …. And be the one who swims and prevails in this current environment.
For a free consultation, reach out and contact Bill Dolan, Director at (617) 694-2617 or email Bill at Wdolan@scapartnering.com. Visit SCA’s website at www.scapartnering.com to learn more about SCA and what other consulting and mortgage banking services we provide.
