STRATMOR was out in force at the recent MBA event. This year’s IMB conversations reinforced that the industry’s next phase is about selective growth, operational depth, vertical integration and smarter use of data and technology tools, not just broad expansion.
Small and mid-size lenders are considering the economics of retaining loan servicing as the most obvious vertical integration (and diversified revenue source) opportunity. Future recapture opportunities may be more difficult for these lenders, given deployment of next-gen tools by large lenders and the recent trigger lead changes. Sub-servicers are clearly leaning into value-added offerings to differentiate and compete for their business.
The convergence of real estate and mortgage continues, but with more realism. Not everyone can do what Rocket recently did, but everyone is thinking they should consider something, albeit on a smaller scale, to fit their needs and budgets. Several opportunities exist to help mortgage lenders gain access to relationships with real estate agencies/networks as well as title, whether preferred relationships, joint ventures, or even vertical integrations.
M&A remains active but disciplined. Buyers and sellers are choosing to prioritize model/cultural fit, leadership strength/fit, and post transaction synergies/execution over the typical sheer volume growth goals. Multiple discussions (with both buyers and sellers) surfaced a few of the same pressure points: compressed margins, thin leadership benches in key areas and retirement desires of key individuals and owners, all leading to an openness for solution opportunity discussions.
Small to mid-sized IMBs need to more clearly define their organizational structures and strategic plans to prepare and position them for the next phase. Many leaders have made it to a certain level of success from sheer boot-strap efforts over the last decades but are beginning to recognize they need help getting to the next level. This can include organizational design, leadership development, compensation planning, performance management, accountability/operational excellence frameworks, and/or succession planning.
Technology strategies remain top-of-mind. Lenders are trying to achieve the right balance of capital investment, with the right set of expectations around results: adoption, productivity rewards, timing, competitive leverage, customer and user experience and longevity. One lender referred to this challenge as the “Goldie Locks Tech Syndrome: not too little, not too much, just right.”
Contact David Hrobon or Amanda Gibson at STRATMOR if you would like to confidentially discuss any of these topics in further detail.
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