July 01, 2019
How One Report Suggests Lenders Might Remain Profitable
Stratmore, a data-driven advisory group designed to improve the real estate market for lenders and borrowers alike, released a report in February called Strategies for Mortgage Lenders to Maintain Profitability. In this report, Stratmore’s CEO Lisa Springer examined how today’s lender “needs to effectively shift focus to purchase versus refinance originations all while dealing with another contributing factor to today’s market dilemma—the lack of housing inventory that is keeping both buyers and sellers out of the market.” As interest rates are on the rise, the production levels of originations are expected to decline, and margins are growing tighter, the likelihood of maintaining profitability using the same tactics lenders have used in a low-interest rate, high-inventory market is quite low.
The goal of every lender, she contends, must be to take three necessary steps to remain profitable in this landscape: optimizing the experience for the borrower; renegotiating long term contracts like office leases and software agreements; and evaluating compensation plans in place, such as adding the possibility of working remotely (opening the potential employee pool from local to nationwide), reducing the number of bottom-20 percent producing employees, and providing “non-volume” incentives related instead to aspects such as customer satisfaction, team or company performance, and file quality.
Where optimizing buyer experience is concerned, lenders can take steps such as: giving the borrower an upfront checklist of what types of information they will need to provide the lender as the loan application proceeds; being sure to contact the borrower about when the closing date will be at the earliest possible time, as borrowers hate learning about closing dates at the last possible moment (it can throw their schedules into disarray as it gives them little time to make arrangements); avoiding asking borrowers for documentation they have already provided—this makes it look like the lender is not on the ball and makes borrowers feel both weary and wary; being proactive about letting borrowers know the status of their loan application; closing loans in the expected time-frame; making every effort to resolve problems that arise in the course of origination; and starting the closing on time, showing respect for the borrower’s time.
At Topouzis & Associates, P.C., we are experts at ferreting out defects of title and disposing with them in advance of closing in order to decrease the murkiness of property ownership. We take pride in the great amount and quality of experience we bring to the closing table in Rhode Island, Massachusetts, and Florida. Contact us if you want a partner in your property closing—one who makes everyone involved feel like family.