2021 is off to a roaring start.
In the mortgage industry, national and world events can wreak havoc with our market. If you’ve been in our business for more than a minute, you’ve survived the boom-to-bust 2008-2009 cycle and numerous other smaller-but-impactful volume rises and falls. There’s a lot of hard-knock experience among the veterans of this industry.
In this month’s InFocus article, one of these industry veterans offers his astute insight into preparing for the next down cycle. Retiring STRATMOR Senior Partner Jeff Babcock, who has worked through more than 20 mortgage origination cycles, speaks to the realities: there hasn’t been a single “soft landing” where the origination market conditions gradually normalize such that lender management has time to develop an effective response. In “Bottle the Magic: Three Lessons for Mortgage Lenders to Help Soften the Landing,” Jeff shares strategic management practices that can help mitigate the inevitable downturn. This is a “don’t miss it” article for all of us.
Also this month, MortgageSAT Director Mike Seminari suggests three ways originators can have a profitable 2021, especially as the MBA’s forecasts show refinances tapering off possibly as early as the third quarter. Be sure to read our Borrower Experience story, “How Can Originators Ensure a Profitable 2021?”
Thank you for joining us for this first Insights Report issue of 2021. If you need assistance with the performance challenges the market serves up, don’t hesitate to contact STRATMOR. We can help you with your strategic contingency plans.
By Jeff Babcock January 2021
For mortgage bankers, 2020 was the “party for the ages.” National origination volume expanded by somewhere between 60 and 90 percent, depending upon how you keep score.
Of greater significance, production profit margins (excluding loan servicing net income and valuation adjustments) will come in at a four-to-five-times improvement over 2019 — which was, in itself, a very good year during which our industry enjoyed solid performance. At the extreme, STRATMOR has been working with an extraordinary midsize Independent Mortgage Banker (IMB) client whose production net income increased by over 10 times in 2020 versus 2019. Such examples of remarkable accomplishments are widespread across the mortgage banking spectrum.
After 40+ years in this industry, I’ve been through many mortgage cycles and have witnessed firsthand the booms, which are invariably followed by a significant and unprofitable downturn. In this article, I offer some candid and straightforward advice to help lenders prepare for the inevitable downturn bound to follow last year’s record-breaking origination volumes. After all, this is my last article before I retire, so I might as well be frank!
MortgageSAT Director Mike Seminari offers three ideas originators can implement now to ensure that their pipelines remain full through all of 2021.
STRATMOR Senior Partner Jim Cameron summarize the three immutable laws of economics in the context of mortgage industry events and the coronavirus pandemic in 2020.
Using MortgageSAT Borrower Satisfaction Program data, we’ve pinpointed some relatively easy tactics that provide substantial improvements in overall borrower satisfaction.
Garth Graham discusses four facts any mortgage lender, whether buying or selling their business, needs to know in the current mortgage environment.