Offshore Partnerships Prove Vital as US Mortgage Lending Dwindles

MBA reports that the current and continuous slump in mortgage lending results from rising operational costs inflated real estate valuation, and difficulties maintaining a workforce with the technical know-how required to stay relevant and thrive.

Reviewing some of the highlights in the MBA’s latest report, let’s discuss what companies have done and are doing to address declining business performance.

Is the US Mortgage Lending Business in Peril?

The Mortgage Bankers Association reports, “The average production volume per company decreased to $436 million in the fourth quarter from $578 million in the preceding quarter. In the final quarter, production by count per company averaged 1,395 loans, a decrease from 1,819 loans in the third quarter.”

According to HousingWire’s study, today, mortgage lenders and brokers face innumerable challenges in a market where borrowers have many choices.

Some of the challenges observed by the mortgage industry in recent years are:

• Locating competitive-priced lenders that can fund and close emerging business prospects.
• An increasing chance of borrowers holding off investments in real estate as they expect a drop in future prices and interest rates on home financing.
• Lower rate of loan closures as the human capital required to handle large-scale operations is downsized due to loss.
• Legacy mortgage loan processing and loan closure processes make it difficult for real estate agents demands of closing a loan in 30 days (about four and a half weeks)
• Sellers of real estate are not as likely to close a deal on time as they could ten years ago
• The COVID-19 pandemic-related pandemic-related economies have strung up doubt and uneasiness among investors and lenders alike.

Further studying data from 2022, the MBA reports that an average of 390 production employees per company were employed in the fourth quarter, down from 443 in the third quarter. (On a repeater company basis).

The need for more awareness about sustainable technology and a narrowing demography of qualified underwriters in nearby regions is affecting the stability of mortgage lending companies in 2023. With the proper process and correct onboarding, mortgage lenders can still experience better turnaround times, efficient data management, and efficient customer service.

Regarding the 2022 market vulnerabilities, Marina Walsh, CMB, MBA Vice President of Industry Analysis, said, “Fourth-quarter results were abysmal. Basis-point revenues dropped to levels not seen since the fourth quarter of 2011. Production costs reached their highest levels since the inception of MBA’s report, and production volume has now declined for eight consecutive quarters.”

How did Mortgage Lenders Tackle a Meltdown in the Past?

Outstanding mortgage debt decreased following the 2008 mortgage crisis. However, it later rose again starting in 2013, owing to the increasing number of yearly loan requests, as more efficient loan origination and debt collection processes became the critical focus of lenders. Additionally, increased investments in offshore partnerships contributed to reviving the mortgage lending business.

Hiring, training, and deploying human capital and technology to maximize conversions in the mortgage lending process was challenging but instrumental to the business’s longevity. Thus, the adoption of mobility solutions pushed mortgage lenders to refactor the influence of digitalization and leverage smaller strategic teams for productivity.

What is Being Done to Restore America’s Mortgage Industry to its Former Glory?

Fast forward to today, we see leaders in the Mortgage industry and credit unions relying on outsourcing mortgage processes to third-party service providers to leverage the flexibility of resources and simultaneously reduce operational costs.

Instead of depleting resources to hire, train, and deploy in-house teams with supporting infrastructure, mortgage providers said they would rather outsource mortgage processes to a third-party service provider.

Further, the use of automation to speed up mortgage processing and reduce cost was another factor that prompted lenders to seek out investing in third part mortgage support vendors.

Getting a skilled team to handle complex mortgage back-office processes without investing in infrastructure is another reason lenders today lean more toward outsourcing. Engaging with external experts complements the need to stay relevant without customer experiences being lost.

If you find yourself investing more than what you’re getting in maintaining your mortgage processes, maybe it’s time you consider outsourcing to Expert Mortgage Assistance too.

Manual processes can be eliminated through automation, saving you cost and increasing productivity. And there’s also the advantage of flexibility when scaling your resources up or down without commitment.

Let us help you thrive despite the current mortgage market, contact an expert to customize a plan for your company.