In recent years, the mortgage industry has faced an onslaught of what can only be described as "WTF" moments. From the chaotic demands of 3% rates to the enduring strains of an inflationary "hangover" rate boom, operational staff have found themselves stretched thin, grappling with unprecedented challenges.
As someone with over two decades of experience in the industry, I've weathered my fair share of "Why the Face" moments. Yet, the daily hurdles that lenders have confronted over the past five years have reached new heights of complexity. According to a sobering analysis by the Mortgage Bankers Association, independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a pre-tax net loss of $1,015 on each loan originated in the third quarter of 2023.
Traditionally, these scenarios have been attributed to the roller coaster nature of the mortgage industry. The highs and lows create a whirlwind of WTF moments, leaving many in the industry struggling to keep pace. The highs pose challenges in planning and often result in overworked staff, while the lows bring the stark reality of financial strains and staff reductions.
However, amidst the chaos, there is a beacon of hope—a way to smooth out the roller coaster ride and transform those WTF moments into "Wow! That's Fabulous!" experiences. It lies in the power of data automation, data warehousing, and analytics to provide transparency into the business model.
Sounds simple, right? Well, it's far from it. This model encompasses a complex interplay of processes, people, technology, and strategy—a puzzle akin to solving a Rubik's cube with the lights off. Navigating the nuances of business intelligence (BI) and analytics in the mortgage industry requires a deeper understanding of the “colors” at play and lenders often find themselves where they can’t pay the power bill or break away from day-to-day operations to turn the lights on.
This creates a real bind. They either can't afford to foot the bill for a robust analytics staff or simply can't spare the time to “flip the switch” on data-driven solutions. The cost of assembling a competent analytics team can run into hundreds of thousands of dollars, not to mention the additional investment required to bridge the gap between IT expertise and mortgage process sophistication.
During boom periods, time becomes a precious commodity. Yet, ramping up for an effective data and analysis platform is a time-consuming endeavor, often taking six months to a year—a luxury that few can afford when the need for transparency is most pressing.
But fear not, for there are alternatives that won't force you to sacrifice the core aspects of your business or break the bank. Solutions like nCino Mortgage Analytics or Black Knight’s Mortgage Business Intelligence can help. Of course I would recommend our very own GlassStack offering for a turn-key yet customizable option that seamlessly integrates with the Microsoft tools you already use.
Let's make 2024 the year of WTF (Wow! That's Fabulous!). Together, let's navigate the challenges of the mortgage industry with clarity, confidence, and resilience.
More detail regarding the MBA analysis can be found here.