Mortgage Industry Trends

There's a weird dynamic in the mortgage lending business operating around technology and the way lenders invest in it.

Forget for a moment that our industry puts about one-tenth of the budget into R&D and technology that most other industries do and focus on when they invest. In most industries there is a season for new technology investment. It generally coincides with the calendar year or a longer business cycle, but vendors know that when that time comes around, they'd better have their trade show booth in shape and be ready to sell.

But in the mortgage space, it's feast for famine for lenders and that reflects on the vendors who hope to introduce them to new tech. In good times when volumes are high and lenders are busy, they can't really afford to introduce new technology into a workflow where deals are spread out along a 30-45 day processing cycle. That's a generalization because when the industry lived through the historic refi-spike in the early years of this century, there were plenty of lenders who were implementing technologies that would keep their borrowers on the line until they could get a loan officer on to take their refinance order. But in general, good times for lenders are bad times for mortgage technology vendors.

When the market shifts and lenders find they have excess capacity and time on their hands, they worry that they aren't seeing enough revenue to make large investments in new technologies. During markets like this one, where both volumes and margins are falling through the floor, lenders tend to slam their checkbooks shut. So, bad times for lenders are bad times for mortgage technology vendors.

Now, you can remember that stat about 1/10 of the budget and it makes a lot more sense.

So, if you're a vendor in need of a new client, how can you break through this?

1. Remember that just because the lender doesn't think it's a good time to invest in new technology doesn't mean he isn't smart enough to know that he has to.

2. In an industry as small as the US mortgage lending business, you must not discount the word of mouth generated by your existing installations. Remember that the decisions to invest in the majority of new LOS implementations were found to be heavily influenced by an executive's former experience with the tool.

3. You've heard about selling benefits instead of features. Forget that. Sell results. It's the only thing that matters in this business. If you can prove that you can deliver, you'll get the business.