Production and Profit: Keeping Good News Going

Last year ended on a great note. Independent mortgage banks and mortgage subsidiaries saw 13% increases in the area of loan volume and profit per loan, according to the MBA Annual Mortgage Bankers Performance Report released April 14, 2017. The good news doesn’t stop there for the industry:   

  • U.S. home values increased last year, regaining all value lost between 2006 and 2012 and surpassing the 2007 peak (Zillow, Year-End Housing Analysis 2016).
  • Accessible equity in U.S. homes reached $4.7 trillion dollars – the highest since 2006 (February 2017 Mortgage Monitor, Black Knight Financial Services).
  • February was one of the top three months of the last 11 years for pending sales, with a 5.5% increase over January (National Association of Realtors Pending Home Sales Index).

Companies and MLOs have both likely felt the effects of last year’s jump in profitability and the current market pace bodes well for a solid 2017. While maintaining excellent customer service and ensuring that prospecting doesn’t go by the wayside when in-process demands accelerate are so-called “great problems to have,” it’s important to note some other numbers from the MBA Report that can detract from success and profitability:  

  • The report includes two “study highs” for 2016: Loan balances reached the highest average since the report began in 2008 ($244,945) – and so did loan production expenses ($7,209). 
  • Total loan production expenses rose 2.13%. 
  • Total personnel expenses increased 2.17%. 

Expenses should always be a concern – regardless of past success or current market strength.  Technology is a great way to monitor and contain production costs. Everyone wants to convert more leads and close more loans; however, increasing efficiency is critical to truly capitalize on market momentum. Automating various aspects of the sales cycle and loan process allows you to maximize the bandwidth of your producers and personnel. Allowing technology to manage compliance, archiving and other aspects of the process can also curtail the need to add non-producing staff when volume increases.  

Companies and MLOs should absolutely enjoy the good news and great market conditions today… just don’t forget to look for cost-containment solutions that position you for long-term success and inevitable change.