The U.S. economic picture appears to be increasingly
uncertain by the day, with monthly employment reports sending mixed signals as
the housing market continues to move at a healthy pace.
With many observers of the economy anticipating a possible
slowdown, the onus falls on the housing industry to continue the good times if
and when cracks begin to show in the larger picture. To glean some clues for how mortgage lenders can not only stay afloat, but also thrive if the economy sees a retreat,
Scotsman Guide News spoke with Kevin McMahon of Genworth Mortgage Insurance.
Genworth has provided mortgage-insurance services to lenders and borrowers nationwide since 1981. McMahon, the company’s senior vice president of customer solutions, answered questions related to lender tactics in a slowing economics.
As economists increasingly forecast a coming downturn,
how can lenders and mortgage brokers adjust their business models or strategies?
When working with lenders and brokers across the country,
you see the varying levels of ability to adapt to a changing environment. Most
recently, lenders have had the challenge to scale up capacity due to the
decrease in rates bringing many more borrowers into the refinance market. Lenders
who can scale up or down quickly are generally the ones who have embraced new
technology tools in the market, such that scaling doesn’t just mean more or
ebbs and flows, but the right technology and third-party relationships can help
reduce the volatility of headcount in changing [loan] volume environments. In addition
to simply adapting to change, lenders should consider shifting their business
model from a laser focus on volume to a more balanced focus on volume and
package quality. In a slowdown, every loan counts, and the better the quality of
the application and loan package upfront, the better the pull-through rate.
Experts agree the housing market is on a more solid footing than it was the last time the economy dropped off. Are there ways
that mortgage professionals can be poised to be successful (or even take
advantage of) this kind of environment?
Given how the last economic crisis went down, it’s
understandable that people would have a difficult time separating an economic
decline from a housing decline. If that’s where the industry finds itself, lenders
should redouble their efforts in educating the consumer on the accessibility
and benefits of homeownership — even in a down cycle. An educated consumer is a
stronger borrower, and lenders are well positioned to be the trusted adviser
that consumers need.
How do you safeguard your business while putting yourself in a position to succeed in a different economic landscape?
A focus on efficiency can’t only occur once you start seeing
clouds on the horizon. In some cases, you’ll see companies get complacent
during the good times and not hold productivity or cost-per-loan metrics [at] top of
mind. However, that results in a scramble to change processes, reduce costs and
do more with less when the climate starts to shift. That scramble can
jeopardize quality and customer service at a time when every loan matters even
more to your company. A focus on running solid processes — with ongoing
visibility and accountability for a comprehensive set of metrics that include
both performance and quality — will help avoid this scenario.