We recently rounded up LBA Ware™ Sales Consultant Chris Gassel, Sales Boomerang CEO Alex Kutsishin, and Homespire CFO Bill Napier to discuss the current market shift away from refi toward purchase lending, focusing on how LBA Ware and Sales Boomerang technology working in concert can both strengthen borrower-readiness intel and keep pipelines full.
Chris and Bill shared their perspectives on how LBA Ware and Sales Boomerang team up to boost productivity under any market condition, with Alex moderating the conversation.
Alex Kutsishin: What are your thoughts regarding the current climate in mortgage lending?
Bill Napier: Our cyclical market is and will always be in a state of change. In terms of the current volume, like everyone else, we've seen a fall-off in refinances. That fall-off has pushed more borrowers into the purchase market. Historically, most of our business is purchase — even last year, 65 to 70% of our volume was purchase money business — so we continue to capitalize on that. That experience has been an advantage to us in today's market, letting us transition easily to a focus on a purchase opportunity.
Alex Kutsishin: How much refi opportunity remains in a market where consumers hold $21 trillion in equity?
Bill Napier: With that much equity left in the market, there is still refinance capacity, but there have been some small increases in rates that change the borrower calculus. Plus, concern about inflation and further rate increases are a factor. Clearly, purchase demand is outweighing supply, a situation further exacerbated by the trend of investment banks buying up residential housing.
Alex Kutsishin: How is business responding to the current market?
Bill Napier: We've traditionally focused on purchase business, and we'll continue to do so. Currently, we are focused on growth and are executing on this by focusing on our recruitment strategy. We're building our business to attract branch managers with great teams of producing loan officers and showing them why Homespire is the best lender to work for. What makes us stand out is how we prioritize technology. We leverage tools for all parts of our business and have been early adopters of technology such as LBA Ware's CompenSafe™ and Sales Boomerang's automated borrower intelligence and retention solution. These applications truly simplify life, and the benefits continue to unfold for us to date. CompenSafe provides numerous reporting figures that have blown us away. Reports that are labor-intensive to create are already right there on the CompenSafe dashboard.
In the current market, lenders need to position for the future, which undeniably involves progress by technology. The billions of dollars invested in digitizing mortgage lending, allowing the industry to slowly transition toward more meaningful operational improvements, are now gaining traction. Staying competitive demands enabling technology. Lenders that can't decrease transaction costs and pass those savings on to their organization and to their borrowers could get priced out of the market.
Chris Gassel: One of the trends I see around recruitment as a growth strategy is being aware of operations data. Real-world data can provide valuable insights. For example, what is the actual cost vs. benefit of onboarding new staff? CompenSafe reports help lenders discover answers to tough questions like: 'Is this person worth what I paid them?" Or 'What market share are they achieving in their markets?'
As Bill mentioned, margin compression is also a consideration. Rates have gone up, not significantly, but everybody is rate sensitive. Millennials are the largest segment of buyers ever, but their access to the market is being affected by the pension fund and investment bank involvement.
We're working with our lender partners and saying, 'Let's understand your market share, and who's bringing the best tools of the trade. Which are your top LOs and how are they performing?' But it's also important to understand how operations staff are performing. Everybody grew their staff last year, but lenders need to ask how many of these people are actually still performing at a level worth paying them. Are their turn times meeting expectations? We get into the nitty-gritty of how lenders can understand how to improve, process by process. At the end of the day, when margin compression rears its ugly head, it's going to be vital to save money by shrinking turn times, getting more efficient, and accelerating deals through that pipeline.
Alex Kutsishin: How do you increase market share?
Bill Napier: We've grown organically over the years by hiring existing branch's loan officers with their own books of business ready to go, including Realtor relationships, and in that way, we've increased volume. We've also expanded geographically by opening more branches. As I mentioned earlier, our focus is recruitment as a growth strategy. We invest in technology and put our resources into attracting top-producing LOs. We provide services and amenities to our LOs to attract top talent.
Chris Gassel: Using LimeGear™ to gain insight, lenders can deepen their understanding of their market competitiveness and analyze market trends, from tracking loan officer performance branch-to-branch to pinpointing where and how branches can improve.
Alex Kutsishin: How do you prepare for the shift to consumer direct?
Bill Napier: Consumer-direct lenders need to be very methodical and precise because consumer-direct is a different animal. Marketing has to be more timely and aggressive; you have to be the first mouse to get the cheese. It's vital to understand your market share and primary areas of operations. Not every loan is going to be ideal for the market. Prioritize the leads that work best for your business. Sales Boomerang helps tremendously with this because it delivers accurate alerts. Borrowers that didn't qualify for a mortgage six months ago do now, and you're going to be one of the first to know. Then, LBA Ware helps identify where you need to put your efforts. For example, let's say FHA loans are the bread and butter in your area, and through LBA Ware you learn that your branch is falling short. That's where you can engage Sales Boomerang to bring in qualified FHA borrower leads to grow your market share.
Chris Gassel: LimeGear allows you to analyze data from separate divisions in many ways to understand where leads come from and how they convert, giving lenders insight into which spending is generating business and which individuals are performing.
If your consumer-direct division is spending $100,000 but only converting 5% of opportunities, you can still utilize those leads through Sales Boomerang and LBA Ware. Without additional spending, a lender can add intelligence to those leads for another opportunity using Sales Boomerang and then through LBA Ware can analyze spending and loan officers' performance.
Utilizing technology is the path to keeping production pipelines full, increasing market share, and maximizing staffing investments' power. With today's integrations, the mortgage process can be painless for all parties involved.