This is where seasoned LOs see the biggest opportunity

Survey reveals trends and challenges impacting mortgage origination

Most mortgage originators are worried that loan production expenses will increase while volume will decline, and they’ve pinpointed five areas of the market they think present the most opportunity in the year ahead.

According to a recent survey by Altisource Portfolio Solutions, 28% of LOs with 10 or more years of experience think that construction loans present the most opportunity, followed by non-QM, not jumbo loans (21%), renovation loans (19%), jumbo loans (16%) and FHA loans (15%).

Altisource’s survey polled 202 decision-makers working in mortgage origination. It also asked respondents to share the biggest challenges impacting their work right now.

Increased purchase business competition topped the list as the No. 1 concern for 29% of participants, followed by margin compression due to regulatory mandates (25%), rising interest rates (24%), an aging workforce resistant to change (13%) and a dip in refinances (10%).

More than 75% of those surveyed said they were concerned about the increasing costs of origination and a decline in volume, with 76% saying they were currently paying $7,000 or more to produce a loan.

These are the measures they said they were taking to adjust production costs:

  • Implemented automation: 64%
  • Diversified loan offerings: 56%
  • Consolidated staff: 51%
  • Outsourced: 45%

When asked to predict future trends impacting the lending space, 70% of respondents said increased costs will drive out smaller lenders or force them to consolidate, and 67% said originators will outsource more to third-party vendors to cope with market fluctuations.

Altisource said it believes that alternative products like construction, non-QM and CRA loans will present the largest growth opportunities in the year ahead.

“This could be a watershed moment to invest in these types of products to grow market share,” the company said.

“It is also a time to invest in top talent on your front line, like loan officers and underwriters. To stay successful, strategic decisions will need to be made regarding which internal services are critical to sustaining business and driving new growth,” it continued.  “Scalability is of utmost importance, and savvy originators will shift as many fixed overhead costs as possible to a variable model.”

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