Tapping into the ‘Power of the Network’
Establishedin2013,TheMortgageCollaborative(TMC),isoneof thelargestmortgagecooperativesinthecountry.Ourlender membersare53%independentmortgagebankersand47%bank orcreditunionlenders.Wehand-selected2,000influential executivesfromcompaniesacrossourlendermembernetwork. Weaskedfortheirfeedbacktogenerateacollectivepulseonthe currentstateofthemortgageindustry. Theexecutivesselectedtocompletethesurveyareallkey decision-makerswithintheirorganizationsandtheyareknownto besomeofthemostforward-thinkingmortgagelendersacross America.
TopIssues:Weaskedsurveyrespondentstoarrangethemost pressingthemesinthemortgageindustryinorderofimportance totheprofitabilityoftheirbusinessmodelin2024.1beingthe greatestamountofrisk,7beingtheleastamountofrisk.
TopGoals:Weaskedournetworkwhatgoalslandatthetopof theprioritylistin2024.Respondentsrankedindustrythemesfrom mostimportanttoleastimportantbutalsohadtheopportunityto writeouttheirtop3objectivesin2024.Wetookthoseresponses andprovidedcommentaryonthetop10.
Weaveragedtheresultsandrankedthemfrommostimportant toleast.Therankedissues,withcommentaryonthetop7issues andtop10goalsfor2024,canbefoundinthisreport.
SurveyRespondentPool
39.3%Bankthatoriginated<$1B
5%Bankthatoriginated>$1B
30.4%IMBthatoriginated<$1B
19%IMBthatoriginated>$1B
2.5%CreditUnionthatoriginated<$1B
38%CreditUnionthatoriginated>$1B
51%CEO,COO,CLO,Owner,PresidentorHead 13%Operations
18%FinanceorCapitalMarkets
4%SalesorBusinessDevelopment
5%Compliance,LegalorServicing
1%Marketing
9%Other
Top5MostCriticallyImportantIssues FacingMortgageLendersin2024
Businessdevelopmentopportunitiestogrowvolume andmarketshare.
Understandably,thisonecameinasthetoppriorityforTMClender members Asquicklyasourmembersembracedworkingfromhome, the#1issuefromour2021PulseofTheNetworksurvey,anevenmore urgenteffortwasmadetogetaheadofvolumechallengesin2023from contributorssuchas:sustainedhigherinterestrates,constrained inventorylevels,andaffordabilitychallenges. Leadersinourindustryareconcentratingtheireffortsonrecruiting strategiesandbuildingnetworksofsustainablereferralpartners-some areevenconsideringMergersand/orAcquisitions
Creativityinrevenueboostingsecondarymarket execution.
Tenacioussecondarymarketexecutionhasgivensometheabilityto holdmargininwhathasbecomeahyper-competitivemarket.Lenders willalsocontinuethetiresomedancewithloanofficerrenegotiation requestswhileminimizingexceptions.
Eartotheground,manylendersareexploringoptionstoexpandtheir productmixwithnon-QMandDPAorlookingatwaystopreparetheir companyforitsfirstornextagencyticket(Fannie,Freddie,andGinnie). Althoughlightisshowingattheendofthetunnel,lenderswillhaveto continuetofocusonhowtosqueezeanextracoupleofbasispointsout oftheirloansalesin2024!
Top5MostCriticallyImportantIssues FacingMortgageLendersin2024
Lackofhousinginventoryandhomeaffordability.
Andthependulumcontinuesitsswing Rightnow885%ofhomeowners haveaninterestratebelow6%,78.7%havearatebelow5%,and59.4% havearatebelow4%-it’sincrediblydifficultforsellerstoseethe advantageinmoving.*(1)Withthecosttoconstructanewhome skyrocketinglongbeforeratesrosein2023,newconstructioncontinues tobeadesperatelyneededsolution However,homebuildersarestill challengedwithfindingskilledlabor,thecostofconstructionmaterials remainshigh,andlocalmunicipalities’impactfeesforgrowth.Ithas becomemoredifficultforthemtobuildanaffordablesolution. Alotofourmemberslookingtothegovernmentforpolicyupdatesthat wouldopeninventoryandincentivizeaffordablesolutionscomingtothe market.ThisisoneareathatTMC’sAdvocacyCommitteeisfocusedon in2024
Risingcostsofservicestiedtotheoriginationofa mortgage.
ThelatestMBAreportshowsthecostoforiginationat$11,044*(2),and lendermembersareevaluatingalltheirprovidersandpartnersto eliminateunnecessaryandunadoptedtechnologyfromtheir businesses.2023specificallysawsignificantincreasesincreditand verificationexpensesandlendersarelookingforsolutionsintheseareas tocontrolexpenses.
Theever-evolvingROIofnewtechnologyislookedatinanewlightas lendershailsolutionslikeAI. Alongasimilarcostsavingsveinto evaluatingservices,lendersarecheckingthatexistingtechnologyis workingtogetherandcreatingefficienciesbetweensystemsorintheir workflowwhereveritispossible
Howareyouinvestinginyourteamtoensureyouare maximizingefficiencyandproductivity?
Top3LenderMemberResponses:
1.Developinternalteamstoputpeopleintherightseattomaximize productivity.
2.Supportinginternalleaderstoimprovetheirskillsetandbemore effectivecoaches.
3.Supportinginternalteamstohandlechangemanagement.
Howareyougoingtoachieveormaintainprofitability?
Top3LenderMemberResponses:
1.Recruitingnewloanofficerswithestablishedrevenuesources.
2.Reimagininginternalworkflowsofoperationsteams.
3.Analyzingexistingtechstackforworkflowefficiencyandcostsavings.
Todigalittledeeper,weaskedourmemberswhetherthey weremoreconcernedwithattainingorretaining profitabilityvs.growingmarketsharein2024. 63.3%Moreconcerned withattainingor retainingprofitability
36.7%Moreconcerned withgrowingmarket share.
Top10ObjectivesLendersare
Focusedonin2024
GrowVolume
TMCLenderMembers’toppriorityin2024istoacceleratevolumegrowth They’relookingatrecruitingprocesses,diversificationofreferralrelationships, andnewmarketingtechnologytoensuretheircompaniesaresettotake advantageofeveryopportunitytheycanin2024.
StreamlineOperationalWorkflowstoCreateEfficiency Gainsand/orReduceCoststoOriginate
Thenetworkhasbiggoalstoeliminateredundancyintheirprocess,add automation,andomitunnecessarypartsoftheirworkflow.Manylenders haveengagedtheiremployeestofinduniquewaystheirprocessescanbe advanced.Sometimesitdoesn’trequirerethinkinganentireworkflowtogain efficiencyandgreaterproductivity,itcanbethesumofmanysmallthings thattogethercanmakeahugedifferenceinproductivityandcapacity levels.
StreamlineBorrowerExperienceThroughTech Enhancements
Technologyinloanmanufacturingprocesseshascomealongwayinafew shortyearsofplayingcatchup.Lendersarelookingateverypieceoftheir technologytostreamlinetheirprocesses,buttheirfocushasshiftedtoa betterborrowerexperience.
Asconsumerexpectationscontinuetoevolve,peopledemandtofindwhat theyarelookingforeasierandfaster.Lendersthatareprioritizingtechnology areansweringthisrequestbypursuingtechthatcommunicatesina commonlanguage,providesfeedbackondocumentationneedsquickly, helpsinformborrowersaboutwheretheyareintheprocess,andeliminates daysorweeksinanapprovaltimeline.Makingefficientuseofnewtechwillbe aworkinprogressforyearstocome.
LORecruitment
Toexpandvolumeandmarketshare,therecruitmentstrategyforLoanOfficers mustinvolvediversifyingthecompany'sreferralsources
ImproveProfitabilitytoGrowth
Lendershavemadeconcertedeffortsin2023toright-sizetheircompaniesand arepoisedtogrowvolumein2024withanxiouslyawaitedraterelief.
Top10ObjectivesLendersare Focusedonin2024
RetainTopProducers
LendersknowthathighperformingLoanOfficersarecriticaltokeeparound Topproducersthathavebeenwithacompanyformorethan12monthsdrive efficienciesandallowthelender’sbrandtobuildapositivereputationintheir marketwithreferralpartners.It’salsomucheasiertorecruitnewLoanOfficers whenyouhaveanestablishedbrandwithanestablishedgoodreputationina market
TMClendersareretainingtopproducersbyinvestingintheirsuccess.Theyare exploringadditionalproducts,technologysolutionsandmarketing opportunitiestohelpthemtogrowvolumeandbuildtheirdatabaseand referralnetwork.
FurtherReduceOperatingExpenses
Lendersaregoinglinebylinedownthebudgettoseewhatcanbeeliminated orrenegotiated.Lendersarelookingatdatatosteertheirdecisionsandare leveragingnetworkresourceslikeTMCBenchmark,CollabLabs,andWorking Groupstoensuretheyarestayingcompetitiveandevolvingasthemarket changes.
RegulatoryComplianceFocus
Whilecomplianceisalwaysastrongfocusforlenders,in2024,lenderswillbe divingdeeperintotheirHMDAdataandfairlendingtesting.The technologicaladvancementsandstaffingadjustmentsmadein2023 necessitatethatlendersprioritizequalitycontrolandcompliancetestingto reducetheriskofrepurchasesinthefuture.
TechStack&WorkflowAutomation
Arock-solidprocessisimportantthisyear Mortgagelenderscontinue“Tech StackTetris”–theevolvingconsolidationchallengetogetridofanythingthey can'tdirectlycorrelatetoapositiveReturnOnInvestment.
BetterTrainedSalesTeams
TopLendersareprioritizingtrainingfornewloanproducts,salesconversion, andbusinessdevelopmentneeds.Theyalsowanttomakesuretheyhavea strongteamthatunderstandstheirculture It'snotuncommontohear“Let's investinoursalesteamwhereitmakessenseandcanhelpthemtogrow volume,createefficiencies,orimproveculture”LenderswithinTMCarelooking atresourceslikeTMCUasacost-effectiveextensionoftheirtraininginitiatives.
References
*(1)Katz,Lily."Nearly9in10USHomeownersHaveMortgageRate below6Percent:Report."RedfinNews,12Jan.2024. https://www.redfin.com/news/mortgage-rate-lock-in-housing-2023/
*(2)2023Q2QuarterlyMortgageBankersPerformanceReport." MortgageBankersAssociation,2023.