There are two areas that lenders should focus on in order to lead successfully during the market downturn.
We’re starting to see more reports of mortgage lenders shutting down in the face of lower loan volumes. Most recently, it was First Guaranty Mortgage Corp. that filed for chapter 11 bankruptcy protection.
I’ve worked in that part of the business and I know that leaving a line of business when the market shifts is not the same thing as failing. There will be more tough decisions leaders will have to make in the days ahead. We’ll see more lenders making this decision.
But we’ll also see lenders double down and lead through the downturn. It happens every time we reach this part of the cycle. It will require them to consolidate their resources, motivate their teams and focus on serving the borrower.
If I was still leading a team on the origination side instead of empowering those teams with technology, here’s what I’d be thinking about now.
We spend a lot of time in our industry talking about the technologies required to originate loans. It’s important in a low-margin, high-volume business where compliance errors can kill a company. But what’s even more important are the people using these tools.
Lenders who do the work to attract the right professionals and then act in a manner that makes it easy to retain them will always do better than those that don’t. It’s during a downturn that this becomes critically important.
Personnel management is both an art and a science and experts are always in high demand. But good hiring makes the job easier. That’s where many companies fall short. They allow management to hire people who are similar to themselves.
A diverse team is a stronger team and it’s a lesson our industry is only now learning. It’s natural to find something that works and then attempt to duplicate it. If one loan officer succeeds, hire ten more just like her. That won’t work here, not in the market we’re moving into now.
Not adapting and changing your business priorities from when the market was hot, in a market that’s no longer seeing the activity that is did, is a sure path to failure. When the market changes, companies must change. Management has the option of going back to something that worked in the past or to do the hard work of innovating into the future.
The latter will always win out, but it’s not a simple path. Mortgage Cadence, as an organization, is focused on innovation. We can do that because we have a team of people here who are passionate about creating beneficial change. That can be harder to cultivate inside a lender’s shop.
This is another area where the new insights and perspectives that come from a diverse team can really be an asset. Each person on the team brings their own unique sets of experiences to the table, if they feel safe and secure enough to do so.
This can have an even more powerful influence on a lender’s ability to innovate if team members come from different industries and can bring their own experience with successful innovations into our business.
Lenders who start with the right technology, assemble a strong and diverse team, and then focus those people on innovation will lead through this downturn and on into the future.
By Joe Camerieri, EVP, Sales & Strategy at Mortgage Cadence
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