UMortgage’s Casa: Past customers will be ‘good as gone’ without outreach
The mortgage landscape has drastically changed over the last year, and mortgage brokers need to be prepared for the fallout from all of these changes.
The most recent change occurred on Thursday, when the ban on trigger leads went into effect. While this has been lauded as a major win for the broker community, other changes in the mortgage world tie into some of the exceptions carved out in the new law.
One of those exceptions allows servicers being able to contact customers whose loans they service. While this carve-out doesn’t seem like a huge deal on the surface, recent mergers and acquisitions (M&A) in the servicer space mean those customers are not just being contacted by their servicers.
Over the last year, Rocket acquired the nation’s largest servicer, Mr. Cooper; Bayview acquired Guild Mortgage; United Wholesale Mortgage (UWM) acquired top-ten servicer Two Harbors; and most recently, Pennymac announced it was acquiring Cenlar’s subservicing business.
One veteran mortgage executive said what this should signal to mortgage brokers is that there will be a battle waged for their former customers.
Anthony Casa (pictured top), president and CEO of UMortgage, said as rates continue to slide, brokers need to be ready for the upcoming recapture of these loans.
“I think that the tale of the last 12 months has been the M&A activity in the servicing world,” Casa told Mortgage Professional America. “You've got so much consolidation. These investments don't happen unless they believe there's a huge opportunity to refinance and recapture the last four years of volume.”
Prepare for the ‘knife fight’
While rates have bumped back up a little bit this week, the expectation is that there will continue to be a gradual slide in mortgage rates. With more customers now holding mortgages above 6% than lower than 3%, the battle for refinances is already taking place.
And while brokers are gearing up for the spring buying season, Casa cautions not to forget about the refinances likely to surge throughout the year.
“If I were personally giving advice to clients, I'd say to brokers, I would say, yes, focus on the home buying season,” Casa said. “But the single biggest opportunity is, there is going to be a knife fight for your past customer. If you're not staying in touch with them, if you're not clearly setting expectations on how you're going to support them, when rates come down, they're as good as gone. All these companies are going to pilfer those past customers.
“My advice to everybody would be to really focus on how they're staying in touch with their past customers, not just through automation, but through sales activities, phone calls, and conversations. Be in a situation where they prioritize client retention, because that will grow their business much faster than just the new business they're originating.”
What Casa is saying aligns with what other mortgage executives have said. Michael Brenning, chief operating officer at eLEND, told Mortgage Professional America in October that servicers were coming for these refinances.
“Retention units inside of these big servicing shops that bought MSRs out there have the tools now and the support from their corporate organizations to retain those portfolios at a nuclear level,” Brenning said. “They couldn't do that in the past, even as recently as the COVID-fueled refi boom. Those servicers weren't prepared, technologically and process-wise, to support that boom. So the open market and brokers got to recapture their own clients and deliver them back.
“So, brokers, be aware, the servicers are out there. They're hunting for your portfolio. They're hunting for your client. You've got to be ready for that.”
Looking to scale your business
Casa said if brokers want an indication of where the market is heading, look no further than what the large mortgage companies are doing.
“If you're looking at the early indicators of the market again, if you follow any of the big mortgage lenders, they're all hiring underwriters, they're all really focused on staffing,” he said. “They only make those decisions when there's a lot of confidence in where the market is going. They're staffing up for where the market's going to be in 6 to 12 months.”
What that means for mortgage brokers who might already be overloaded with loans is that it might be time to look at bringing some help on board for what could be a busy year.
“I think for brokers, if you're already struggling to keep up with your pipeline, or you're even anywhere near capacity, I think you've got to start thinking long term about where the market's going to be,” Casa said. “Start the hiring process or start the process of identifying some talent to support your business.
“Because what you don't want, if rates go down, is for the thing limiting your ability to capitalize on serving your past customers and new business to be that you don't have the resources. Think 12 months out, and read the tea leaves to see where the market's going.”
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