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  • Vaultedge newsletter - Issue #14 - Mortgage servicers, don't neglect your lending business.

Vaultedge newsletter - Issue #14 - Mortgage servicers, don't neglect your lending business.

February 08, 2021

The Buccaneers won the Super Bowl last night. It was a one sided game, with Tom Brady helming the underdog Tampa Bay Buccaneers to a 31-9 rout of the defending champion Kansas City Chiefs. I am sure many of you would still have found the game interesting. But what I always find more interesting are the ads that they show during the Super Bowl season. Brands spend big money during the Super Bowl and this year is no different. If you also dig the ads like I do, then you can catch them all here. Check the Alexa ad, it is particularly beautiful. And if you are wondering - Yes, Rocket Mortgage did air a 'Certain is Better' ad and you will enjoy that too.

It has been just over a month into 2021 and I would say, things are looking good. US administered 39 million doses of Covid vaccinations as of yesterday; that is more than any other country. Though if you take it on a Per Capita basis, then Israel beat the hell out of every one having given 63 vaccinations for 100 people compare to 12 for the US. If you are a numbers guy and want to know what is happening to the vaccine rollouts across the world, check the site down below.

2020 generally has been a great year for the mortgage industry. Thanks to work from home, shift to suburbs and low interest rates loan production volume is expected to hit an all time high of $ 3.9 Trillion for 2020. It is definitely something to celebrate, but consider this. The last time we hit a number near that (~$3.8 Tn) was in 2003. The next year, volume fell down to about $2.7 Tn, a 30% drop. So the question is, would your business survive if volumes fall by 30% in 2021. This is something you want to discuss in your board meetings and your operating plan meetings. One of the best ways to manage a volatile situation is to keep your fixed costs as low as possible. If you built your team to handle the peak volume of 2020, what will you do if the volume falls in 2021. Fire them all? Not a good idea. Time to use automation, outsourcing to time your operations costs more closely to your volume and make them variable. Check our white paper on Intelligent Automation in Mortgage Origination, Boarding and Servicing for ideas on how to get started.

Some of our customers on the Servicing side ask us, how important it is to have a reasonable lending portfolio (typically through Refis) in the mix. Consider this: Lenders made a net income of $5,535 per loan originated in Q3 2020. Compared to this, Servicers lost $30 per loan serviced in Q3 2020. Need we say more?

Have a great week.

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Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a net gain of $5,535 on each loan they originated in the third quarter of 2020, up from a reported gain of $4,548 per loan in the second quarter of 2020. Servicing net financial income for the third quarter was at a loss of $30 per loan, compared to a loss of $68 per loan in the second quarter.