That is the big question, right? It’s a question of whether or not we can control what happens. Are we doomed to just ride the swells and succumb to the ebb and flow of the market, or do we get to choose what happens with our business?
That question is why we’re here. Instead of shying away, we want to boldly tackle the hard questions, and you know what? The answer is yes, but it’s up to you to chase it.
We teamed up with Rob Chrisman, APM, Flagstar, Nomis Solutions and Premier Lending to bring you the webinar: Chance Favors Only the Prepared Lender: The Ultimate Preppers Guide. Bringing you a blog series of highlights. But, make sure you catch the full webinar.
“There are clients who believe that not only is it possible, but they are planning to do more volume in 2021,” said Alex Kutsishin. He went on to emphasize that this isn’t wishful thinking but the result of a dedicated plan and a well thought out strategy that will come together to bring the results they need.
It’s a self-fulfilling prophecy, Alex emphasized. The attitude that these teams are using is to keep pushing. They don’t have time to wallow in self-pity because they are too busy pursuing their goals. If the refi business goes down and the purchase business goes up, they are planning for that now. They are putting the infrastructure in place to take advantage. Not only are they not backing away, but they are hoping that their competitors aren’t ready. They are already putting in the hours to swoop in and snatch business away from competitors who aren’t prepared.
These teams are looking inwards and examining their customers to find opportunities. They are constantly on the lookout for an opening. They aren’t looking to see if they can survive. They are taking action to thrive.
These teams are thinking outside the box, exploring new avenues, and taking calculated risks. They are bringing passion to the plate, and they are confident that they will deliver.
Will Mortgage Volume Continue to Increase or Decrease?
Now, this attitude goes both ways. Just like companies are looking to grow next year, there are active clients, at least a dozen who expect to cut their volume in half. They are already shrinking in their minds. They have a cut list already in place of the people they plan to let go of. They think all is lost, and you know what, if that is the mindset they bring to the table, it will be.
Using these turbulent times to grow is all about mindset. It’s about the plan they lay down and the strategies they use to chase their goals.
“Not only is it possible, but it’s expected,” said Kurt Reisig when talking with his team at American Pacific Mortgage. Instead of fearing the change, they are embracing it. They are excited about the plan and the strategy, and the commitment that the entire company has put forth to continue this growth. For them, there is no going back. “ This is our new normal,” he said. “This volume is our new normal.”
Kurt’s team is opening up to get ideas and use those ideas to built their teams and build their business. They know the road ahead won’t be smooth. They are aware of the work that they will have to put in to accomplish that goal, but they are ready to step up and embrace the challenge.
Rob Chrisman took the time to point out some of the opportunities ahead.
“If rates stay here,” he said. “And if mortgage-backed security and treasury yields were to stay here margins could easily compress, opening up a whole new batch of borrowers. And on top of that, with all the appreciation we see out there, don’t count out the cash-out refis in 2021 for really helping volumes. I’ve heard from a few CEOs who are taking a new look at the reverse mortgage channel. They are saying that a lot of people are over 62, and given the appreciation that so many areas of this nation are having and the fact that you need someplace to live, the reverse mortgage channel might just blossom for a lot of companies that are out there.”
What Can Lenders Do to Maintain Margins Amidst Volume Compression
Joe Zeibert shared his views on the margin play for 2021. He’s of the mind that the positions will certainly change. But even though there is a lot of discussion about big lenders versus small lenders and other forms of competition, Joe doesn’t believe that will be what drives the market in this coming year.
“I don’t think that margins will come from a case of big vs. small lenders or of one business case vs. another,” he said. “I really think that it’s innovation vs. non-innovation.” He sees the key insight is that companies will have to pivot, and it will be the companies that are ready to adapt and be flexible to what the market is giving them that will stay competitive in the long run.
These innovators won’t just compress their margins to compete and then blindly charge after volume. That is the kind of reactive thinking that will cause them to lose a step to smarter competitors. Winning companies will be working to take proactive steps. They will be smarter about their strategies and put more thought into who they target. A savvy company will be segmenting everything.
According to Joe: “That means segmenting customers, segmenting their product, and segmenting their innovation.” He envisions that the ability to pick and choose will allow companies to still get those higher margins while maintaining their volume.
When the market gets tough again, that is when the differences between winners and losers will define itself. The last few years have shown how quickly this market can change. Mortgage companies went from the harsh realities of 2019 to one of the best years the industry has ever seen.
The key to keeping the good times rolling is putting yourself in the position of saying, “We saw this coming two or three months ago, what did we do to prepare for this,” said Devin Norales.
Devin focuses on constantly looking to find new opportunities. Whether it is picking off certain volume pockets in particular segments of the country, targeting specific loan amounts, doing spec pay ups, or cutting down on delivery time, you have to see where the opportunities are and take advantage of them before they’re gone.