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According to MBA’s 2016 second quarter Quarterly Mortgage Bankers Performance Report, Independent Mortgage Bankers income more than doubled over what was earned in the first quarter. Hooray for Brexit, low rates and good old fashioned hard work and ingenuity. Mortgage Bankers did what they do best. Make loans and make money while doing so.
Once again, Independent Mortgage Bankers demonstrated why they continue to survive and strive regardless of the challenges presented by the economy, the housing market and the regulatory agencies. (Profits)
The increase is mainly attributable to higher loan balances, generating more income, coupled with a reduction is origination expense. Those seeing the greater increase also reflect a better economy of scale; doing more loans with the same or fewer people. That is the secret to any manufacturer’s success.
Seems lenders are getting the process, and technology, changes resulting from TRID under control and getting back to the basics of generating good quality, compliant, saleable mortgage loans. Many learned to do so through the increased use of technology to minimize the cost of additional staffing.
If you’re not seeing these types of increases in income, you need to take a long hard look at your operations. Generating more business may not be the answer, if that business just keeps running up your expenses. You need to seek ways to generate more business while tying the variable expenses to the volumes generated.
This can be done in a number of ways. Most notable is to minimize employee expense by concentrating only on the core activities necessary to generate the income. That core activities being originations, processing, underwriting and closing. Other ancillary functions can be outsourced, or handled through better technology, so the expense is incurred only to the extent that it is needed.
Why keep on staff, and pay for full time employees to handle pre and post-closing reviews, and loan deliveries when the work required will continually fluctuate with monthly production? These functions can be handled more efficiently through outsourcing. If handled in-house, the expense can be minimized through the use of specific platforms to address and control these processes making existing staff more productive.
So, while continuing to look for ways to increase your business, also consider ways to decrease your expenses. This combination just may be the ticket you need to boost profits and stay in the game. Your competitors may be doing this already.
It’s not just profit and spreads anymore. Look for more ways to decrease your expenses.
