The new year frequently begins with a great deal of motivation and determination; but reality sets in fairly soon after the short holiday weeks are over and predictions start flooding in. Forecasts - positive, negative and everything in between - should be taken with at least a small grain of salt because there are always companies and people who succeed during tough times and those who fail in favorable conditions. The lending industry could easily find cause for concern in light of the following prognoses:
Fannie Mae (FNMA) predicts origination volume will be $1.731 trillion dollars in 2018 - down $81 billion from 2017 and a whopping $240 billion less than 2016's final total. Growth becomes trickier when opportunity contracts.
Entry-level homes will see price increases of 10.5-11% in 2018 according to the American Enterprise Institute's (AEI) Center on Housing Markets and Finance Co-director Edward Pinto. Wage growth isn't likely to keep pace, effectively shrinking the pool of first-time home buyers.
At the very least, predictions that the number of mortgages originated will drop along with the number of borrowers who can afford them can dampen spirits. But left unaddressed, they can provide excuses for lackluster performance and unmet goals. The FNMA and AEI forecasts are just two in what will be a continuous parade of predictions that will remain heavy throughout third quarter. How will your company pivot in response to unwelcome market changes to grow your share of a "pie" that predictions say is getting smaller?
Companies and marketing departments need to support producers in focusing on higher-margin purchase loans - whether or not the number of originations does in fact decrease this year. Purchase business is more lucrative, but it's also more time-consuming. Mortgage loan officers (MLOs) need to be removed from the mundane, repetitive tasks to spend more time with Realtors, nurturing leads and reaching out to past clients and their sphere of influence to mine for referrals.
In addition to the time required to build and maintain relationships to develop business, an American Bankers Association survey says MLOs need to be available to conduct it in person. The study revealed that 60% of American consumers in all age groups say they still prefer to apply for a mortgage in person versus online. While 17% preferred online application, another 23% were unsure, so these numbers indicate loan officers need to be available to meet with customers. Surround MLOs with adequate support staff to manage details that don't require their personal attention.
Consider implementing a Hub & Spoke model of business to power teams or regions of originators. Properly-trained marketing and sales support are the "hub" and your MLOs are the "spokes" extending out into the community. This structure will allow your people - support and sales - to do what they do best, to benefit your customers and bottom line.
If the AEI prediction is right, and rising prices make it more difficult for first-time home buyers to enter the market, the sales cycle gets significantly longer. It's impossible to nurture leads over the long haul if they're not organized and managed consistently. MLOs often find themselves working across multiple platforms with leads in various phases scattered about - and money left on the table. Companies should provide a centralized system that organizes leads and contacts and keeps them enrolled in various forms of marketing and communication.
Past clients and sphere of influence should get regular touches that reinforce your brand and add value, while leads need to be placed on appropriate drip campaigns. It's important for people to see your name pop up in their inbox frequently, even if every email doesn't get read. Establishing and maintaining basic lead management and follow-up is great, so be sure to expand your efforts into multiple channels via social media, texts and other ways that create awareness.
One reason many salespeople have lead leakage and leave money on the table is because they don't have a solid plan backed up by tools to execute it. A lead can't make its way from the "top of the funnel" to becoming a closed transaction if it never makes it into the funnel in the first place. Research and commit to a reliable CRM that allows MLOs and teams to schedule and be accountable for executing follow-up tasks for all opportunities.
Expect more predictions - good and bad - as first quarter unfolds. Delegation and automation can help you tackle all sorts of obstacles, and honing your best practices can insulate you from conditions that would otherwise disable your progress and keep you from reaching your goals. It's a good idea to examine your overall plan for this year along with provisions you've made to deal with market and other variables that may arise. Ultimately, forecasters won't determine whether or not "opportunity shrinks" in 2018, you will.