Problem or Solution?

Every year around this time we see post after post listing that for which people are thankful. I'm thankful that people will always need homes and will need to borrow the funds to purchase those homes. I'm thankful for the opportunity to help solve housing problems for others - as an originator, an employer and an industry advocate. 

In '20/'21 we mortgage people were all part of the solution when the government needed to keep people indoors in their homes, stimulate economy and distribute cash. So the Fed opened the floodgates full. Mortgage originations, through QE and SOMA, were the backbone of the largest public cash distribution initiative since Roosevelt's New Deal. Many in the industry (owners and workers, originators and vendors, sales and ops) profited from the situation. But circumstances have now changed. The mighty flow is now but a trickle and everyone is thirsty.

Today we have a new problem to solve: mortgages simply cost too much to manufacture and there just aren't enough right now to support everyone. This will change. But in the meantime, many in Mortgageland are angry and scared. Each day people post their frustrations online - blaming the Fed for raising rates to fight inflation, blaming mortgage companies for cutting costs, and blaming leaders for not being better prepared. So far the only people I haven't seen blamed are the borrowers who stopped borrowing or that stranger in the mirror. None of that blaming does anyone any good - and I would argue it causes more harm. 

Today it costs way too much to manufacture a mortgage. Technology was supposed to solve the problem but has only served to increase the expense. We've watched the closed loans per FTE (processor, underwriter, closer) steadily decrease since 2000 while we've simultaneously watched technology investment and expense increase exponentially. Wage and commission rates have doubled or more. And we've layered on more expense related to regulatory issues and risk management. Even the government is overcharging borrowers for their required insurance premiums for "Blue Water" expenses and a 5x over-funded FHA insurance fund. It seems everybody is trying to drink from a very dry well.

 Every penny of these expenses ultimately flows backward as an expense to the borrower. It increases their rates and makes housing more expensive. For some, it pushes the American dream just out of reach and results in even fewer loans. We must find ways to become more efficient and less expensive.

But pointing out problems isn't the same as solving them. Solving problems takes hard work, it takes risk, and often it takes personal sacrifice. I had a manager and mentor who taught me never to bring her a problem without also bringing a solution. Then she showed me that when you become a problem solver you become indispensable because you are part of the solution.

Today, right now, there is great opportunity to demonstrate value. Problems big and small abound in Mortgageland in need of solutions. So ask yourself: are you part of the problem or part of the solution?