A Mortgage Industry PSA!

If you're in the mortgage industry, it's a ‘look to your left, and look to your right, one of you won't be here by the end of the year’ situation for everyone; companies, originators, and valued teammates.?

Own that, and then have your game plan, followed by your strategic and tactical activities, reflect this survival-of-the-fittest approach.?

Originators, it's time to decide if you're a survivor. It's back to basics time. Many of us need to treat this business as if we were starting out fresh, even if we have 1, 2, 3+ decades doing this. Our activities need to reflect the current marketplace - none of us will find success in trying to mimic ‘20-‘21 behavior - that ship has sailed. No pressure, but your team is depending upon you to take this bull by the horns and figure it out.?

Mortgage Lenders are Hurting

You don't have to look far to see how real it is. Just take a peek at HousingWire , attend a STRATMOR Group video conference, or read through Rob Chrisman 's daily blogs. While many aren't ready to take the topic on the chin, the mortgage industry's challenges are finally making their way to mainstream media outlets such as CNBC and The Wall Street Journal . Q2 results are out for mortgage-centric publicly traded companies, and they are atrocious. I'm no analyst, but companies doing half the volume from a year ago, at lower margins, and selling MSR's to stay afloat aren't projecting a good look for the long haul, and they represent the masses, not the minority.

This industry needs solid players in all capacities in order to function properly. The sad truth is companies of all sizes are taking on water, and it won't get better until some competitors don't make it and give way to those that will. A race to the bottom in pricing won’t cut it. The industry bloated up trying to keep up with demand over the past two years - that was the feast; now, it's famine time.?

Originators - I'll say what your sales leadership probably wants to say, but might be soft-pedaling in their delivery (don't shoot the messenger!):

??The building's on fire, and you're just now starting to hear the alarms and noticing the smoke

??Just like we have an under-supply of homes for sale, and an over-supply of homebuyers, we have an oversupply of mortgage companies, loan origination professionals and supporting teammates in this industry?

??No one cares what you did in 2021 (or even 3 months ago...); it’s time to realize that

??There are still top producers out there, and most are PURCHASE focused

??Most originators are needing to take a serious look at their game plan and origination strategies, and adapt - NOW!

??There is business out there to be had, but it won't come to you anymore - YOU have to find it, just like you did when you started out in the mortgage industry?

??Move past roadblocks that may be ego or otherwise driven, roll up the sleeves and get your hands dirty

??You don't control the market, you control what you do within the market (channeling Todd Duncan and the High Trust | A Todd Duncan Company )

??Something to embrace - Self-Gen originators cost notably more, since they aren't compensated as order-takers, and this is reflected in pricing - it's basic math

??It's dog eat dog - if you're a self-gen originator, it's time to make your mark and grow your market share, even in a down cycle

??No matter the delivery channel you operate within, the creditor and aggregator sides are taking it in the shorts on margins for newly closed loans (margin compression), which won't last for any model long-term - things will once again normalize (not sure when with this one, but there will be fewer of us out there when it does)

??Balanced production is a must, if not for an individual originator, for a branch - a healthy mix of government backed products is likely a necessity for most companies in most markets - bond loan production, and heavy Jumbo (for most self-gen style lenders), is basically a neutral effect to the bottom line and can't be relied upon past moderate levels, unless originator compensation is adjusted to reflect reality (again, basic math)

??It takes a village - pick the right team - surrounding yourself with others who have a similar mindset towards being a survivor is a must

??Survivor’s will outwork, outsmart and outlast their competition - they will do this over the next 6-12 months, + or -, and they will definitely do it through the winter months - yes, Winter is Coming.. Survivors are already preparing for it!?

Some companies have better teams, better cohesion, better strategic placement and are growing into this storm; others aren't. At PacRes, we are growing into this storm. We're adding teams and branches, which is helping moderate the drop in production we're collectively facing. Along with brushing up on our CRM and marketing efforts, we are emphasizing a back-to-basics approach to self-gen mortgage loan origination. We're not alone. There are others in the pack doing this, too, but not most. Most of the herd is running away from the storm. Few are like the buffalo, running into it to get to the other side faster, and stronger.

???Conclusion: treat your mortgage lending practice as if you're in survival mode, show up where others aren't, be willing to outwork others and have a back-to-basics approach in how you conduct your daily, weekly and monthly plans! If you want free advice or an assessment of what's working, and what's not, feel free to reach out - here to help survivors survive the storm.?