We’re finally seeing mortgage firms begin to pivot now that we’re all finished grieving the dearly departed refinance boom. Some seem innovative, creative and well planned. Others, we’ve seen before. These include marketing unusual or niche products (reverse mortgages); targeting new markets (Limited English Proficiency borrowers) or elevating typically ancillary products to workhorse status (HELOC).
For the most part, I’m not one to say that any of these strategies is off-target or destined for failure. Far from it. I applaud the mortgage firms accepting the cycle has changed and moving on with a plan. And these approaches have worked in past downturns.
It’s the way some businesses execute these tried-and-true alternative strategies that makes me shake my head sometimes. Often times, it’s in the marketing or positioning. I don’t have to tell you that the definition of insanity is doing the same thing (the same way) over and over again with the expectation of different results.
And yet, we still see businesses which, for example, seem to believe that a comprehensive strategy to target non-English speaking Americans consists of little more than a marketing flyer in another language and the hiring of a multi-lingual LO or two. And sometimes, the non-English translation completely misses a number of cultural nuances. We saw this from 2007 – 2010. And unbelievably, we see it again here and there today, even when we have great, new resources available to help break down the language barrier to the mortgage process.
We still see the attempt—both at the point of contact and in the deepest recesses of the board room—the continuing struggle to ram loan applicants into the “hot” product of the moment. Reverse mortgage, anyone? Never mind the fit. Never mind the applicants’ needs and ability to repay. The sales board is calling, and it’s not very patient.
A HELOC isn’t for everyone, either. And yet, some LOs will be strongly encouraged to press their product de jour as revenue and origination volume remain the prized metrics for success. Whether the loans are sustainable or not is some other portfolio manager’s problem.
This won’t be the first, or last, time I write this here, either. But we still see way too much of the strategy that demands mass hiring in robust markets, then mass layoffs when those market cycles change. Again, there’s plenty of great technology out there that enables businesses in our industry to finally automate the remaining, unnecessarily manual processes. And no, that doesn’t automatically eliminate jobs. Instead, it facilitates increased productivity, improved job satisfaction and better employee retention rates. Yet, regardless of the acceptance by many of this truth, we’ll likely open our favorite trade publication or news email any day now to learn of another round of mass layoffs.
Again, I’m not trying to insinuate that our industry is backwards…or insane. We are scrambling to replace about $2 million in origination volume, or at least our own particular shares of that volume. Business won’t just fall from the sky like it did in 2020 and 2021. However, when I see a plausible strategy being executed thoughtlessly or carelessly—and often, with the consumer bearing the cost of the mistakes—I occasionally wonder if not everybody actually does understand the definition of insanity.
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