Deeper Thoughts
Industry I.P.O.s Another Indicator Change is Coming – February 2nd, 2021


Issue #59:Industry I.P.O.s Another Indicator Change is Coming

2021 has picked up where 2020 left off for the mortgage industry, and especially for non-bank lending companies. Congratulations to Rocket Companies (Quicken); United Wholesale and all of the other lenders who have or soon will be cashing in. You’ve earned it.  We’re also hearing about other companies getting or seeking injections of private capital. So it seems we’ve entered a cycle of advanced M&A activity.

To me, this is another indicator that we’re about to see some consolidation in our space. We’ve talked at length here recently about the coming purchase market. It’s also not hard to read the tea leaves as Non-QM marketing begins to ramp up and just about everyone seeks ways to supplement revenue as refinance (eventually) begins to fade. 

It’s just another reminder that the mortgage business is a competitive place. Last year was an historic aberration. I’ll never say “never” again after 2020, but the likelihood of another year like it in terms of overall volume? Not high.

I am, again, curious to see what changes firms have made in their production processes, lender and vendor alike. There will be fewer lenders, working harder to earn business in the purchase market (or others, for the counter cycle firms anticipating a mild spike on the default side). We’ve all had a couple of years to get our purchase process in order—even as we worked at a break-neck pace to process the refi’s and purchase loans coming through the door. But with the easier-to-produce refinances beginning to abate, now will be the time when we find out who did the little things to streamline their processes, and who did not.

I’m excited for the coming year. We’ve been planning for this. And, of course, we make our living at LodeStar helping other companies speed up and slim down their production cycles. And although refinance markets are fun for everyone, there’s a lot to be said for cycles like the one upcoming. I’m looking forward to seeing how things shake out, and to learning how we can make a difference as well.

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