Going Down with the Ship
“Businessmen go down with their businesses because they like the old way so well they cannot bring themselves to change.” —Henry Ford
I feel like Henry Ford was prophetically talking about our industry with this quote. It seems like every week there is a new announcement of a mortgage company merger/acquisition or a company tapping out. In 2023 alone the mortgage industry saw 62 M&A deals or lender exits and the first quarter numbers seem on pace to be bettering that trend. Even the top lender in the country (Rocket) reported a $390 million loss in 2023. Ironically Varun Krishna, CEO, and director of Rocket Companies, touted this as “strong results against the backdrop of extreme market challenges” to the Detroit News.
I was at an industry event this week, and I noticed that there was a lot of focus on interest rates and when things would be going back to normal. It seems as though many are waiting for Powell to drop rates so that the industry can go back to making money. But I think that’s missing the bigger issue. We need to stop holding on to the old way of doing business. Clinging to the past is killing our ability to progress forward. We as an industry need to figure out how to operate efficiently in feast and famine. We need to lower our cost to originate, improve our efficiencies and be able to scale without all the industry drama and income whiplash we create.
Like with anything it starts in the mirror first. How can we adapt and improve from our own chair? What do you need to do differently as a participant or leader of the team? With 51% less loan originators in the business the opportunity is just on the other side of the change.
Here are a few areas I think we need to focus on creating radical change to progress forward.
8 areas to create radical change:
Digital/Social prospecting and marketing
Dramatically reduce the cost to per loan (know your numbers and eliminate duplications and waste)
Eliminate unnecessary layers, unearned overrides, and fluff
Efficiency, efficiency, efficiency
AI and automation
Divide up the profit differently
Ignore the shiny (if it doesn’t advance your metrics let it go)
Become a wizard at mining your database
Need help with change? Try this framework. https://www.temullife.com/archive/2w243o3h9vyw8znqy3g07964tkcuqu
Notes that Resonated
Culture is a 50-day moving average of your actions and your team’s actions (Jason Frieda)
Aways start in the mirror first
A master sword smith will always have some serious burns
#Reframing Your thinking: It’s with our minds we create the world - Buda
We don’t respond to what happens we respond to the perception of what happens
We don’t respond to the present moment we respond to the past… (what is in your mind or in your past that is creating your present moment?)
Those that seek greatness must take the hardest path
If you wait for Circumstances to change, you will be waiting your whole life
If you can’t overcome your circumstance, then it will overcome you
The biggest challenge, the most energy spent, the most courage is to begin
“Do one thing that scares you” Eleanor Roosevelt (wash, rinse, repeat = greatness)
“Opportunities come and go, but if you do nothing about them so will you”- Richie Norton
Things to read
Switch- How to create change when change is hard
Videos to watch
60 minutes interview with Jerome Powell
https://youtu.be/ImrKxlLJCEY?si=yk_XyYGmRRL-BVwq
Top Quotes
If change doesn’t hurt a little, it isn’t change - Aliza Licht (DKNY girl) (on brand book
Exodus 14:14 “The Lord will fight for you; you need only to be still.”
If at first the idea is not absurd, then there is no hope for it. - Albert Einstein
Mortgage/Rate Forecast Update
All signs point to no rate cut in March. Barring any dramatic changes to the economy, most experts are anticipating 3 rate cuts totaling 75bps this year. The current predictions reflect one cut anticipated in July (maybe June), one in November (after the election) and one in December. This would keep rates in the mid to low 6% range by the end of the year.
The road to the decline will be bumpy and filled with volatility.
If rates drop below 6%, then this should loosen the low rate “lock-in” effect for most potential move-up buyers.
Food & Drink
I am super late to the sourdough band wagon, but I recently inherited a batch of starter. I have no idea what I’m doing but it’s an interesting journey so far. If you are also starting the sourdough journey or want to start here are a few resources to help you get going.
Weekend bread making schedule: Weekend Bread Baking Schedule | The Perfect Loaf
Sourdough mistakes: Why is my sourdough so sticky? | Alexandra's Kitchen
Health benefits of eating sourdough discard in your baked goods: The Problem With Discard – Abigail's Oven Store