Last week, the MBA reported that 2020 has been the best year in the industry since 2003 and that the volume generated to date is already $1 trillion more than in 2019. One of the few positive spots in the economy has been the housing market where there are not enough real estate sellers and affordable housing. For mortgage lenders, this has been a record year due to declining interest rates. Also, 2020 has been a high-income year for originators where earnings have hit mid–six figures for many. This has been the best of times and the worst of times.
Lately, I’ve heard a number of managers say this year is their “swan song.” While it is well-known that a high percentage of mortgage banking professionals are in their late 40s and early 50s, many have reached a point where overwhelming stress is prompting them to leave the industry.
In the past, managers often told me they were leaving and had only another five years to go. For the most part, I felt they were just having a bad day. But, conditions have shifted. Now, when managers tell me that 2021 is their new target date for retiring, I believe it because so many have earned enough money in 2020 to make it a reality. One executive recently confided that the “ice age is coming in 2022” and it will be harder than ever to be successful. This raises the question of how lenders will grow their business after more experienced managers and originators leave the industry when the refinance run ends.
While vendors are pitching digital as the solution to the industry’s impending personnel shortage, automated loan processes aren’t enough to ensure success. Study after study shows that consumers want in-person assistance when making important financial decisions like securing a home loan. A robot or chat box are fine for certain issues but not for all interactions. The golden standard in financial services is still providing a high value in-person interaction.
This presents a challenge for lenders who want to deliver an exceptional customer experience. To be sure, lenders need to consider technological solutions to reduce documentation requirements. But, companies also need to invest in improving sales skills and techniques for originators if they are truly committed to providing the stellar customer experience that generates repeat and referral business.
Even Quicken didn’t become the dominant mortgage player overnight. It took years of restructuring and investments to transform them into the company that they are today. But even Quicken, who has more technology than most lenders can even imagine, could not convince the stock market that it is a technology company. It was valued with other financial services companies. This is a scary thought considering that some lenders don’t yet have a mobile app!
Right now, lenders have a unique opportunity to fund innovation and invest in changing outdated processes that have not been able to handle the boom cycles of mortgage banking. Once again, the large volumes this year show that technology and staffing are still a big problem in mortgage lending. Both issues are not easily fixed. And with large groups of senior sales professionals electing to retire, this is going to remove a whole layer of accumulated business wisdom that will not be easy to replace.
When the lean years inevitably arrive, will lenders have a deep enough bench of sales and managing professionals who will be able to pivot based on previous successful adjustments experienced managers performed? While it is difficult to think about these challenges when business is booming, smart lenders will take the time to plan and invest in the strategies needed to source new customers and forge deeper relationships with them in the future.
The year’s record volume has set the stage for the retirement of some of our most experienced originators and managers. The result will be a sea change in mortgage leadership. Are you prepared for it?