How to Recession-Proof Your Mortgage Business
Is a recession on the horizon? According to Bankrate’s quarterly survey of economists, there’s a 64% chance that it is. And if those odds weren’t troubling enough, the survey found that nearly half of the participating economists feel the chances are at 70% or greater.
While this forecast is most certainly unsettling, it isn’t very surprising – especially with the Fed’s continuous rate hikes and the current banking crisis.
The good news? Although it’s challenging to thrive during a downturn, it’s not impossible.
Here are strategies for building resilience, navigating a downturn, and positioning your organization to take advantage of opportunities that emerge, and, ultimately recession-proofing your business.
Start Preparing Now
While it’s impossible to predict how, exactly, the mortgage market will fare in the coming months, the best time to start planning is now. Companies that anticipate the impact a downturn could have on their businesses, implement safeguards, and work to mitigate potential damage will come out on top.
Specific steps will vary based on the individual needs of a business. However, generally speaking, most companies would be wise to prepare by developing a cash management plan, seeking innovative ways to leverage their core competencies, and approaching strategies and processes with flexibility.
It’s also a good idea to pay close attention to the current needs and wants of borrowers. You can use their input to uncover new opportunities. Consider inquiring about borrowers’ interest in products outside of your current offerings. If you don’t already play in the non-QM lending space, for instance, it might be worth considering. According to a recent HousingWire article, these loans are currently in high demand.
Adopt a Forward-Thinking Approach
As mortgage businesses plan, they should do so with a long view in mind. Building longstanding resiliency should be a key priority.
The question is: how can you build a resilient, sustainable business model that can withstand economic downturns and effectively outpace the competition in the long-term?
Tools like these can help you gain fast and easy access to critical information, reduce errors, ensure compliance, and improve turn times, so you can outdo your competitors and drive continuous success. In fact, according to a Harvard Business Review article, companies that invest in technology are likely to emerge stronger and more competitive than peers who do not.
Cut Unnecessary Expenses
Investing in technology can also help mortgage businesses cut costs without hindering operations, which is another key strategy for achieving a recession-proof organization.
A recent report by the Mortgage Bankers Association found that in 2022, mortgage companies and chartered banks lost an average of $301 on every loan they originated. Those losses are unlikely to be reversed if the economy enters a recession.
To prevent further loss, mortgage companies would be wise to trim expenses wherever possible. In addition to implementing technological solutions, outsourcing services, like quality control auditing, can help. Outsourcing allows companies to transition from a fixed cost model to a variable one, which means you can avoid overspending when volumes are low and rest assured that you won’t fall behind when volumes pick back up.
Mortgage lenders who leverage outsourced services greatly improve their financial states. In fact, one lender cut mortgage QC costs by 50% by outsourcing to a trusted partner.
Choose the Right Partner to Help You Recession-Proof Your Business
Choosing a partner you can feel confident in is a critical step in navigating a recession. The top mortgage digital transformation and outsourcing partners can provide you with the solutions and the support you need to weather a downturn.
The trick is finding the right partner for your organization. Here are some key features to look for:
- Unmatched mortgage industry experience
- A wide variety of mortgage solutions, making them a “one-stop shop”
- Expertise that can be proven through both certifications and references
- A dedicated team of mortgage experts with impressive resumes
- A security priority, ensuring your critical business data remains safe
MetaSource Mortgage offers a range of outsourced mortgage help, including servicing, pre-fund and post-close quality control audits, as well as digital tools for ensuring compliance and automating tasks. Our experienced team has guided countless mortgage businesses through uncertain times. We can help you prepare for whatever the economy – or housing market – may bring next.