The magic carpet rideCarol A. Napolitop producers, choices, expansion of services, branching concept
Taking the survival step
The past several years have been a magic carpet ride for the
mortgage industry. Then, as the calendar pages turned to a new
year, the carpet ride no longer seemed magical, but very turbulent
and challenging. Let's review the rides.
Top producers
Many top-producing loan officers had jumped on the bandwagon and
started their own mortgage firms. Most of these recently started
firms had built their business around the past refinance and/or
sub-prime marketplaces. As we all knew, the refi environment would
not last forever, and the sub-prime tsunami has left us with a much
smaller playing field. The mortgage industry is very cyclical both
refinances and sub-prime guidelines will eventually level off. New
and proposed guidelines for sub-prime lending will have a
definitive effect on our industry and lead us to some very
challenging times. Only the strong will survive. The key element is
to plan for survivorship and thus secure the future for financial
success. Those newly created mortgage firms that will beat the odds
are those that developed a well thought out business strategy.
Those companies with business plans that had implemented their
strategies before the playing field started to shrink will continue
to thrive. Choices
It is vital to be prepared for the current and upcoming changes in
the marketplace. Now is the time to strategize and implement a plan
focusing on how one's company is going to sustain, as well as
increase, its business. There are many options to choose from. Some
brokers will convert to lenders, while others will feel that
banking no longer has the same appeal as it had in the past and
will convert back to a brokerage shop. Many mortgage companies will
expand through multi-state licensing, challenged by all of the
recent changes. Some companies will opt for acquisitions, and
others will start or join branch affiliate programs.
Expansion of services
There is a variety of reasons why a brokerage would convert to a
banking firm. When using its warehouse line, it can close in its
own name, have non-disclosure of its yield-spread premiums,
maintain control of its loan process and have the ability to earn
additional revenues. This transition will set the company apart
from other brokers in the area. The newfound prosperities of being
a lender can be utilized to attract more seasoned loan originators.
This results in more advantages to the company and its employees
and an increase of its closed loan volume. Re-engineering
your focus
Since there has been a decrease in the supply for sub-prime
lending, think about shifting gears toward a newer lending option
reverse mortgages. While reverse mortgages might not yield as much
revenue per loan, they offer tax-free income, which does not affect
Social Security payments, to a countless number of aging Americans.
This is a great example of "less is more." Reverse mortgages
provide less revenue per loan, but offer you the ability to
quadruple your closed units. The branching
concept
Expanding one's marketplace is another ideal way to increase
business. The initial step would be to expand within one's own
state. Having offices strategically located in different
marketplaces will increase the overall business of the company. The
next step would be targeting other states and applying for multiple
licenses. These can be targeted by loan types (e.g., government,
sub-prime, home equity, etc.) or geographic locations. Either
strategy will result in an increased market share. Branching
strategies can be rolled out on a face-to-face, telephone or
Internet basis. If a company is looking to expand and be recognized
as a regional or national player, it can integrate into one or
several of the options previously discussed. When considering a
branch affiliate network, you will need a well planned program, a
comprehensive risk management plan, good benefits and a competitive
compensation structure. Done correctly, it is a guaranteed way to
optimize the figures of any bottom line. A branch network will
increase the visibility of the company, increase its market share,
enhance its revenues and reduce some of its costs through its
buying power. What a great way to grow! And, if a company combines
one of the previous steps together with its branch program, it will
hit a home run! Some corporate restructuring may be required, but
will be well worth the investment on a long-term basis. Is the
magic still in your carpet? Will you be a survivor? Are you
strategizing a new business plan? To be a survivor, you need to
take the next step! Carol A. Napoli is the owner and founder of
BranchCare Consultants LLC,
based in Laurel, N.J. She can be reached at (856) 778-9164 or
e-mail
[email protected].
