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Some now believe that independent mortgage lenders cannot survive strictly by originating mortgage loans. They believe such lenders need to expand their business lines to include other financial products desired and needed by consumers. (Survival)
For years, large Banks have moved in and out of mortgage lending depending on rates and risks, developing and offering other financial products and services to generate needed revenues and profits. Will the non-bank mortgage lenders need to the same?
Some lenders have already headed in this direction by returning to loan servicing to generate an income annuity stream. However, that may not be enough. With the consumer contact and information realized through mortgage originations and servicing, lenders can develop a solid customer base for the offering of other services.
Things like financial planning, retirement strategies, investment options, to go along with related products like title insurance, home inspections, moving and storage, relocation services and more. The consumer is the key. Capture and service the consumer, do it right, and the rest can fall into place rather easily.
This requires the non-bank lender to expand knowledge and staff to be in a position to offer and service such products. It will require a growth strategy to determine what services will be offered and through what channels. How can they prepare to compete with banks and other financial service providers?
The ability for the non-bank lenders to offer these additional services will trigger mergers and acquisitions. A survival of the fittest. How will this affect existing small to mid-size non-bank lenders and Mortgage Brokers?
The Broker may continue to survive by providing origination services, and a pipeline of consumers, for the larger lenders. The smaller lenders need to decide to grow, merge, or restructure their operations to become a Mortgage Broker.
Mortgage Brokers may need to pare down their operations to become a lean, mean, origination machine. Originating the products offered through their aggregators. However, they, like all originators, will be impacted by do-it-yourself online applications made available directly to consumers.
If you’re a non-bank mortgage lender or a broker, what’s your take on these predictions? Do you believe you can survive by originating and selling mortgage loans alone? If not, what’s your plan for expanding your product offerings?
Make a decision. Don’t put it off. Things can change quickly and the future may become the present before you know it.
Or, do you believe this is all hogwash and you’ll continue to do just fine doing business as you do it now?
