Deeper Thoughts
Let’s Get Back to Basics

I talk here quite a bit about automation,  digital transformation and our own industry’s stop-and-go journey towards optimizing the process. After all, LodeStar produces a digital closing cost calculator. It’s what we do. So it probably shouldn’t be stunning when I discuss the ways technology can improve the mortgage process.

That being said, good tech is not the only thing a mortgage business needs to succeed—especially when we enter a competitive market cycle. A well-implemented technology strategy is mostly about optimizing your processes. But process isn’t the only element of a well-run business.

Chasing the referral

The referral is a bit of a unicorn in the mortgage industry. We pay homage to it all the time. We try to improve our closing processes and our CX, in large part, to win referral (and return) business. It’s a poorly-kept secret that more than a few LOs still believe that it’s all about the rate, the rate and the rate—nothing more—when it comes to winning a loan application. And yet, somehow, the best LOs manage to produce whether it’s raining refinance applications from the heavens or default management and servicing companies are having their best years. Why is that?

Because good relationships, along with great performance, beget referrals and repeat business

A relationship-based industry

It’s been said time after time that ours is a relationship-based industry. At no time does that become more evident than during a purchase market, such as the one we’re entering now. I recently came across a thoughtful newsletter article the author of which observed the contrast between the race to shave costs by lenders and ballooning signing bonuses for high-producing LOs. This is a shining example of one of the ultimate truths to the real estate industry. Just about anyone can turn a profit when there’s close to $4 trillion available in annual origination volume, and most of it is refinance. But when things get competitive, it’s the depth and quality of relationships that brings in business. While they could be lender to REALTOR, wholesaler to mortgage broker or LO to prior client; relationships tend to trump everything else when a borrower has a choice in this market. 

A very real opportunity

With all the discussion about the decline in overall revenue, we can’t forget that even the forecasts that have been revised downward are calling for well over $2 trillion in origination volume this year. No, that’s not great news for an industry with a capacity that ballooned in 2021 to absorb more than twice that number in originations. And the corrections to capacity are happening in droves as you read this. 

But there is ample opportunity for the lenders and businesses that are best prepared to capture their share this year, in spite of the apocalyptic hyperbole. There are emerging markets. There are still plenty of Millennials who haven’t yet purchased their first homes. There are innovative products. And there is the guarantee that people will always need homes. 

I’ll go so far as to say more than a few businesses, armed with good technology, well-informed strategy and even a bit of qualified risk-taking, will grow in 2022 and 2023. And the odds are that they’ll be leaning on their relationship networks when they do.


We at LodeStar are grateful to all of our clients, friends and colleagues who take the time to view Deeper Thoughts. Please consider having a look as well at some of our other great content, including our podcast, “LodeStar’s Lending Leaders,” and our new graphic-oriented series, “A Tale of Two Mortgages.”

As always, your feedback is welcomed and appreciated!