After years of increasing origination volume, the mortgage market is finally starting to lose some steam. True, the U.S. economy is still doing well. But higher interest rates have taken the air out of the refi market, and wages have not kept pace with rising home prices, which is keeping the purchase market in check.
Earlier this month, the MBA announced it expects overall mortgage originations to drop from $1.64 trillion to $1.63 trillion in 2019. A big reason for the decrease is rising interest rates, which the group expects to lead to a 12.4 percent fall in refinance activity.
Of course, many lenders did not wait for the MBA’s latest numbers, having already seen the writing on the wall. Some companies have cited their business has fallen 20 to 30 percent year to date, and Chase, Wells Fargo and many non-banks are laying off loan officers, processors and underwriters.
However, not everyone is doing poorly. Some are actually growing. In fact, we are. Our year-to-date volume is 25 percent higher than it was in 2017. And we can share the three primary reasons why we believe lenders and companies like ours continue to grow.
Loan production costs are at an all-time high, according to the most recent MBA figures. But instead of retracting and trying to save money, the companies that are growing are investing in technology. In fact, the mortgage companies that have aggressively pursued technology, such as LoanDepot, Quicken Loans, PennyMac and Stearns, are doing better than others.
Some companies have leveraged technology to reach online borrowers more quickly and provide them with a faster, more convenient application and approval process. Others have used technology on the back end to streamline underwriting and secondary marketing processes. Either way, technology is really the key to improving efficiency and keeping loan costs down.
In our own case at Valuation Partners, our technical agility has allowed us to easily accommodate any client’s needs, no matter how specific they are. As just one example, our proprietary order management system is extremely flexible and ensures maximum order flow efficiency and compliance, which ultimately saves our clients time and money.
When the most recent Inc. 5000 list came out, we found dozens of mortgage lenders and mortgage-related businesses on the list. Of course, the Inc. 5000 measures the growth rate of companies based on the past three years of returns, so it may not say much about what the future holds for the companies on the list. However, every mortgage lender on the list has a solid reputation for great customer service. But what does “great customer service” entail these days?
In our industry, transparency should be at the top of the list. This is created through proactive communication with all parties to keep everyone informed so there are no surprises. With Valuation Partners, transparency takes place from the moment an order is placed until the report is delivered. Automated notifications let clients know what is taking place through every step of the appraisal process. So, for example, if an inspection is delayed, the lender is immediately notified with the reason for the delay. Notifications like this enable lenders to provide high-level proactive customer service to their own customers, so borrowers know exactly where things stand. Offering transparency with real-time updates builds a better borrower experience which, in turn, helps lenders achieve better customer service and growth.
Excellent customer service has always been Valuation Partners’ calling card, and it has definitely helped us grow. There are more than a few AMCs in the market. However, we have always seen ourselves as a vendor partner, not just another AMC. We reinforce this identity by building a culture that reinforces “ownership of the problem.” When there’s a problem – whether it involves the client relationship or in our back-office support – we don’t hide from it. We identify it, determine how and why it happened, then fix the problem so it doesn’t happen again. Most successful companies do the same.
The third reason why companies succeed when volumes decline is trust. When your clients and partners know that you’re there for the long term and can adhere to the demands of any market, it’s easier for them to count on you. In our case as a privately held valuation firm, we have more than 35 years of experience providing valuation services. Of course, our valuation expertise, our technology and our attention to delivering best of class performance are key reasons for our longevity, as well.
To gain this level of trust means consistently producing quality and having the ability to evolve with an ever changing market. If the regulatory era has taught us anything, it’s that quality control (QC) should never be taken lightly. If you rely on vendor partners for QC needs, make sure they provide QC tools and services that can adapt with regulatory and business changes to ensure compliance and accuracy. Our own QC system is used internally to ensure the quality of every appraisal we perform. In fact, our QC processes deliver more one-touch reports than most of our competitors and can easily adapt to any changes.
Not every company can be successful all of the time. The current downturn in the market is bound to affect more companies, and many businesses in our industry won’t survive without taking cost cutting measures. But companies that are dedicated to technological innovation and customer care are almost certain to do better than those that fail to make either a priority.
If you want to find out how we can help you become more successful, drop us a note at firstname.lastname@example.org or give us a call at (281) 313-1571. We would love to help you find your own success.