Like riding a roller coaster, the mortgage business has always had its ups and downs. Mortgage originators experienced the ups in the industry during the wild ride of the refinance boom of 2020-21, followed by the downs as interest rates more than doubled and the market cooled in 2022. To hang on for dear life, originators must produce significant and consistent volume in this type of market.
Moving forward into a new year, loan originators will face an assortment of changes and challenges they haven’t seen in some time. Among those will be:
- Company contraction. Mergers, buyouts, sell-offs and closures began happening several months ago and will likely continue (if not accelerate) throughout 2023. Many mortgage lenders will not be capable of weathering the slowdown in the market, and as a result, they will put themselves up for sale or simply cease to exist.
- Originator exodus. Shrinking loan opportunities will force a sizable number of originators to exit the industry, either because they no longer are making money or their firms will terminate their employment for lack of loan production. Major mortgage companies cut thousands of jobs in 2022. Expect more.
- Online lending. This trend has gathered speed in recent years as more online lenders have entered the industry. Using do-it-yourself mortgage technology, relentless consumer-direct advertising and lower operating costs, an ever-expanding array of internet-based lenders are successfully luring a significant number of consumers away from traditional loan originators. Online lenders are here to stay and will present a competitive challenge to everyone who is battling for control of the business.
So, where does all this leave the loan originator who intends to remain in the business and hopefully do well in 2023? The bottom line is that mortgage lending is and always has been a volume game. If you are one of the individuals who intends to succeed (let alone survive) over the next 12 months, seriously consider these suggestions.
“You hit what you aim for,” as the old saying goes. If you aim to originate one or two loans a month, that’s likely what will happen. Even though closing one or two loans a month may keep you buoyant, it may not earn you an impressive income or be sufficient enough for your company to keep you on board.
Although times are leaner than in the recent past, there still are many loan originators out there posting impressive numbers month after month. You might not be able to replicate the stellar success you had during the two years of refinance mania when interest rates were in the 2% to 3% range, but you can make a solid living this year. Be sure your goals are realistic, but at the same time, challenge yourself to do a little more than you think you’re capable of.
Some originators frequently cite factors outside their control to justify their lack of results. “Rates are too high,” they say, or “there’s not enough housing inventory on the market.” Excuses are nothing more than escape routes for underperformers to fall back on. Resolve right now that you will not lower yourself to use excuses as an alibi. In this business, you are either making loans or you are making excuses. Those who make loans don’t make a lot of excuses, and those who make excuses don’t make a lot of loans.
Whether you realize it or not, you are a reflection of the people with whom you associate. Hanging around struggling originators who want to wallow in their own self-pity or calling on real estate agents who incessantly complain about how bad things are is no way to keep your outlook sunny. Make it a point this year to spend your time with positive, successful people.
In this business, you are either making loans or you are making excuses. Those who make loans don’t make a lot of excuses, and those who make excuses don’t make a lot of loans.
Associate with the winners and hang out with more “movers and shakers” in the industry. These types are not daunted by the decline in business — they are doing something about it. Their positive attitudes and actions are contagious, and if you follow in their footsteps, you’ll appreciably increase your own chances for success.
Stop chasing rainbows. In times like these, the mortgage industry becomes inundated with every manner of snake oil salesman promoting all kinds of get-rich-quick schemes. Their miracle marketing platforms, superstar sales coaching programs and lead-generation systems that profess to provide you with more clients than you can handle are all nothing more than smoke with no substance.
These firms prey on frightened loan originators who desperately need more business, and they persuade them to hand over their credit card in return for so-called guaranteed riches. Their promises all sound too good to be true because they are. Don’t be a target for this trap. Stop searching for the easy way out and never think you can “buy” your way to success in this business, because you can’t.
There is an old axiom in the world of sales: The more time you spend looking for opportunities, the more opportunities you will find. In a predominately purchase loan market like the one the industry is currently experiencing, the business isn’t coming to you — you have to go out and find it.
Sitting in your office staring at a computer screen, babysitting your loans in process or waiting for the phone to ring is no way to attract new clients. Put yourself out there — a lot. Set up regular coffee or lunch appointments with your referral partners. Make consistent outbound sales calls. Attend business networking, industry and community events at least one a week. Show up as a sponsor at home shows, bridal fairs and street festivals. It’s time to get selling again because, as always, the bulk of the business goes to the originators who are actively going after it.
It’s highly likely you’re not as crazy busy now as you have been over the past few years. One of the big benefits of having more time on your hands is the chance to brush up on your knowledge and skill set. Pick up and read a few books on sales, marketing or relationship building.
Search for helpful online articles on prospecting, time management or how to effectively use social media to promote yourself. Attend a few good workshops, webinars or seminars offered by your local mortgage lender association, a mortgage insurance company or an industry sales training expert. The business has changed and what you did a few years ago to be successful may no longer apply. Stay sharp in your skills and relevant in your knowledge base. In the end, the smarter loan originator usually wins.
Many originators have a limited amount of loans they can do because they work with a limited scope of business sources. They have only two or three Realtor relationships, or only one builder, or they expect their company to drive all of their leads. As a result, these same originators have seen their volumes drop off dramatically in the past few months and their paychecks reflect a fraction of the income they used to earn.
This is the year of the “expanding originator.” This is the year to branch out into new, more and different sources of business. Have two Realtor partnerships now? Make it six. Got one good builder who recommends you right now? Go for three. Doing little to market to your database of past clients and referral sources? Begin a structured monthly database marketing campaign and stay with it throughout the year. You’ll learn that when you cast a wider net, you’ll catch more fish.
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As of this past November, the Mortgage Bankers Association forecast $1.98 trillion in residential originations in 2023. While that’s a large volume, it’s less than half of what it was in 2021. Resolve that you will not become a casualty of this market and that, for you, failure is not an option.
Decide right now that while other originators may do poorly or even quit the business this year, you will not fall victim next to them. Know that 2023 will test you as a mortgage professional in ways you have not been tested for some time. Pass the test and you’ll get safely to the end of this nerve-wracking ride. ●