Deeper Thoughts
A Numbers-Driven Industry?

We’re going to start adding a new dimension to Deeper Thoughts soon. Until this point, we’ve been mostly about thoughts and observations. The very name “Deeper Thoughts” probably implies that anyway. You might agree that the mortgage industry is a numbers-driven industry, with a lot of moving parts. We spend a lot of time reading about basis points and interest rates, days-to-closing and origination volume. Some of these numbers drive business strategy, operating plans—basically they drive the industry.

And yet…

The numbers we don’t see

The mortgage industry, especially the subsets such as the title or valuation spaces, isn’t necessarily awash in granular data. Sure, we know and scrutinize the key Fed rates. We know (during every waking second, it seems) how the industry as a whole is doing. We know what the origination volume has been. We have a feel for the average profit per loan or time to close.

But we don’t often really know how well most of the market participants are performing. Although some of the largest businesses (mostly publicly traded) duly share their numbers, it’s certainly not in real time. In fact, many of the numbers we rely on come to us weeks or even months after they’re generated. As a result, we spend a lot of time at conferences, on podcasts and, yes, in blog postings discussing what we think the numbers are or will be or were while we await their release.

We also don’t really always know the depth of ROI for various processes, investments or services. In other words, there isn’t a lot of easily accessible data out there to indicate just how many hours the industry saves by, say, using an LOS or closing cost calculator. We don’t know how much mortgage-related businesses allocate in their budgets, on average, for new technology. We don’t know the actual breakout of investment in front end (LOS, POS) technology versus investment in closing or “back end” solutions. There are a lot of data points missing from the overall view of the industry, by the numbers.

The numbers we can see.

The numbers we do get are valuable to us. Organizations like the MBA, NAR or ALTA do a great service by showing us the numbers, and forecasts, that they can. Other private or non-profit firms like Urban Institute also provide data and analysis that can be helpful to those attempting to plan at a market level. Increasingly, however, we notice a wonderful trend. More and more mortgage-related businesses are sharing with us the numbers they have. No, they’re not sharing their own profit margins or revenue if they don’t have to. But any number of firms in this business have access to a sizable amount of raw data, simply by the number of transactions their technologies or services touch. The data they share is very useful in supplementing what the trade associations and others are able to show us. As a result, increasingly, we’re getting more science and less voodoo in the way we plan ahead.

An act of clarity

Clarity is the quality of transparency or purity. You could also define it as the quality of being coherent and intelligible. Either way, it’s a core value to us here at LodeStar.  Clarity doesn’t exist when one doesn’t have the entire picture or view point, and that includes data. We’re very fortunate to have quite a bit of data from real estate transactions over the past few years, and that amount (and our access to it) is increasing at an accelerating rate.

So, dear readers, friends, clients and peers, we’re planning to start sharing some of that data in the coming weeks and months. We don’t have all of the pieces to the puzzle, but we are inspired by those who are willing to share what they know. It’s a great example of the industry collaborating for a greater good. It’s time for us to do our part, and that we will.



Read our CEO Jim Paolino’s Deeper Thoughts and get the latest mortgage industry news.