Mortgage loan origination is a competitive business.
There are close to 500,000 mortgage loan officers and brokers in the U.S. at this time.
Banks
One threat to the business is banks.
There is an ongoing improvement in the automation of the mortgage process by large banks, as well as the technology tools that work to streamline the loan process.
The big banks are doing everything they can to put mortgage brokers out of business because these brokers are dipping into banks’ profits.
On top of that, new banking regulations have put a lot of pressure on independent brokerages to reduce standardize fees while coping with monster paper work.
Also, mortgage brokers are now personally liable for certain loses from bad underwriting.
Zillow
Zillow is now buying and selling houses in certain areas and are looking to expand.
Their goal is to buy, sell and finance real estate transactions and cut out external realtors and lenders completely.
Those loan officers and mortgage brokers who purchase Zillow leads are, in essence, giving Zillow the money this monolith needs to put the said MLO out of business.
Saturation
500 thousand mortgage brokers are chasing 7–9 millions transactions per year.
This means there is an average of 1.5 loans per Broker per month.
There is an old adage that 80% of the business is done by 20% of the people.
This is true in regard to mortgage brokers and loan officers, although it is probably closer to 90–10.
The 10% who succeed are the ones serious about doing the work and diligent learners who apply the fundamentals.
Industry Advantages
After the credit crunch, people now seek out mortgage brokers more often than going to the bank first.
As a mortgage broker or loan officer, you have the ability to compare mortgage rates with numerous banks and mortgage lenders simultaneously to find the lowest rate or the best loan program with the fewest costs.
You offer the human connection, and in a sense, can be compared to financial advisors within the mortgage realm.
This is the reason why the mortgage business will always be a great industry to be in.
Even with all the automation coming in the future, the human aspect will keep MLOs in business for years to come.
Marketing
113 million leads were purchased last year in the mortgage industry last year and only 5 million loans were funded.
Most marketing efforts end up losing money and the waste is enormous.
A lot in the industry is underprepared for the challenges of internet marketing.
This happens as a result of targeting the wrong audience as value propositions fall on deaf ears.
It eventually leads to spending thousands on unqualified leads or no leads at all.
People-Based Marketing
Marketing is daunting, but as you utilize intelligent systems that are laser-focused on specific behavioral patterns, you will generate high-quality leads.
The pre-qualification process becomes a lot easier if the advertising specifically targets those with 401K plans and are in certain industries in which they are likely to have good credit.
You also want to make sure that your marketing is getting in front of people who are actively searching for the service you provide.
It’s all about relevancy. You don’t want to bother those who are not ready to buy.
You acquire business because you have done the work to find prospects, develop referral sources and persuade borrowers to do business with you.
What if you could have a more reliable source than referral partners that could yield you results on a monthly bases?
Beating the banks, Zillow, and other automation threats calls for forward thinking.
Marketing technology is always developing.
Leverage experienced advertising service providers and find a proven system that utilizes people-behavioral targeting technology.
This entails utilizing new technology and data while testing the waters in the marketing realm.
It is a time of exploration and pivot in this industry.