Genworth SVP offers downturn success tips

The U.S. economic picture appears to be increasingly uncertain by the day, with monthly employment reports sending mixed signals as the housing market continues to move at a healthy pace.

With many observers of the economy anticipating a possible slowdown, the onus falls on the housing industry to continue the good times if and when cracks begin to show in the larger picture. To glean some clues for how mortgage lenders can not only stay afloat, but also thrive if the economy sees a retreat, Scotsman Guide News spoke with Kevin McMahon of Genworth Mortgage Insurance.

Genworth has provided mortgage-insurance services to lenders and borrowers nationwide since 1981. McMahon, the company’s senior vice president of customer solutions, answered questions related to lender tactics in a slowing economics.

As economists increasingly forecast a coming downturn, how can lenders and mortgage brokers adjust their business models or strategies?

When working with lenders and brokers across the country, you see the varying levels of ability to adapt to a changing environment. Most recently, lenders have had the challenge to scale up capacity due to the decrease in rates bringing many more borrowers into the refinance market. Lenders who can scale up or down quickly are generally the ones who have embraced new technology tools in the market, such that scaling doesn’t just mean more or fewer people.

[The] mortgage [industry] is known for wide shifts in headcount as the market ebbs and flows, but the right technology and third-party relationships can help reduce the volatility of headcount in changing [loan] volume environments. In addition to simply adapting to change, lenders should consider shifting their business model from a laser focus on volume to a more balanced focus on volume and package quality. In a slowdown, every loan counts, and the better the quality of the application and loan package upfront, the better the pull-through rate.

Experts agree the housing market is on a more solid footing than it was the last time the economy dropped off. Are there ways that mortgage professionals can be poised to be successful (or even take advantage of) this kind of environment?

Given how the last economic crisis went down, it’s understandable that people would have a difficult time separating an economic decline from a housing decline. If that’s where the industry finds itself, lenders should redouble their efforts in educating the consumer on the accessibility and benefits of homeownership — even in a down cycle. An educated consumer is a stronger borrower, and lenders are well positioned to be the trusted adviser that consumers need.

How do you safeguard your business while putting yourself in a position to succeed in a different economic landscape?

A focus on efficiency can’t only occur once you start seeing clouds on the horizon. In some cases, you’ll see companies get complacent during the good times and not hold productivity or cost-per-loan metrics [at] top of mind. However, that results in a scramble to change processes, reduce costs and do more with less when the climate starts to shift. That scramble can jeopardize quality and customer service at a time when every loan matters even more to your company. A focus on running solid processes — with ongoing visibility and accountability for a comprehensive set of metrics that include both performance and quality — will help avoid this scenario.


More Headlines