As the mortgage industry moves into April 2023, a lot of things have already changed. The era of super-affordable mortgages is over, and new strategies are required to stand out in a competitive market. Margins are tight (or negative), and mortgage demand has cratered for many lenders. At the same time, consumers expect a high-tech, high-touch experience which has the potential of driving up costs.
Technology seems to be the answer everyone offers – but despite the push for automation, the importance of interpersonal relationships and soft skills remains high.
MSR purchases will continue to be widespread so servicers must work harder to control costs and to communicate and serve their customers. Combine this with increased regulatory oversight and it is easy to see why so many lenders are struggling to be profitable.
Top Insights for Mortgage Originators and Servicers in 2023
New tactics are needed to stand out as the era of the super-affordable mortgage is gone.
The era of super-affordable mortgages and the refi boom has passed, and lenders must adopt new strategies to stand out in a saturated market. Lenders must focus on creating a value proposition that sets them apart from their competitors.
Strategies include focusing on niche markets or products, or simply building sales capacity and being the very best lender possible in traditional mortgage channels. Many lenders have become exceptionally proficient working with first time home buyers, construction lending, non-QM borrowers or have become expert in-home equity lending. Others have chosen to buy up their competitors and even though margins are slim, they are making it up in volume and preparing for the future.
Regardless of strategy, delivering an exceptional customer experience must be part of every strategy. By creating a personalized experience for each customer, lenders can build brand loyalty and trust, which will lead to repeat business and positive referrals.
Lenders Must Embrace Mortgage Automation
Many lenders have been losing money over the last couple of quarters, or at a minimum, their margins have been extremely tight. Lenders must continue to focus on controlling costs and streamlining operations. One way to accomplish this is through automation.
Automation can assist lenders in reducing the time and costs associated with originating or servicing loans. It can also aid lenders in identifying and mitigating risks, reducing turn-times and improving overall quality.
However, automation isn’t a cure-all. Lenders must select new technology carefully and be committed to planning and training, and have a commitment to fully utilizing new solutions or they will have limited success.
Exceptional Customer Experiences and an A+ Reputation are Essential
Lenders must focus on consistently delivering an exceptional customer experience from the initial application through closing and servicing. Today, happy customers must be the norm. Lenders need to implement automation and processes that monitor the entire borrower experience so that they know, precisely, where processes are breaking, where training is needed, and where staff do not consistently deliver to customers.
Communication and feedback from the customer throughout the loan process are essential to making this a reality. Waiting on a post-close survey to measure customer satisfaction is too late. At that point, an unhappy customer has already damaged the lender’s reputation through word-of-mouth and social media posts. Negative reviews are incredibly damaging and are very difficult to remove from social media.
MSR Purchases Will Remain Widespread
MSR purchases will continue to be widespread in 2023, so servicers must work to alleviate the administrative challenges and costs associated with these transactions. Servicers must understand the regulatory environment and the complexities of servicing new loans, as well as the communication challenges of working with new customers.
Lenders can leverage third-party service providers to support these efforts and ensure that their loans are serviced efficiently and compliantly.
The Bottom Line
Lenders must adapt to changing market conditions. Avenues to success in this competitive market include becoming the very best at specific products and channels, lowering costs through automation and labor outsourcing, improving customer experience, and partnering with trusted third-party service providers.
Dave Demster is executive vice president of sales and marketing at PrivoCorp. He is a mortgage industry veteran with more than 25 years of executive management experience.