Back Office Automation

7 Business Survival Strategies for Mortgage Loan Companies, Credit Unions, and Insurers

May 26, 2020
Autor
Inkit Team

Those who went through the financial crisis of 2007-2008 remember that everything started with the US subprime mortgage market. Then the local decline developed into a global banking collapse that hit almost every country and field. Many organizations introduced effective business survival strategies and enjoyed the blessed stability for the next decade. Mortgage loan companies and other businesses made important changes and felt prepared for possible economic challenges.

Yet 2020 has taught us that the reason for the worldwide economic decline may be strikingly unexpected. Although the trigger of the current economic shock is different, mortgage loan companies, credit unions, and insurers also suffer. Many borrowers have lost steady income and requested forbearance. Others have applied for refinancing and changed their mortgage rates to cut expenses. And finally, the majority of potential customers have reviewed their financial plans and are very unlikely to apply for anything, from conventional loans to VA loans, in the nearest future.

Still, this doesn’t mean that mortgage loan companies can’t do anything to get out of the woods faster. Some business survival strategies and financial planning tips aimed at cutting operational costs can help them save the budget and protect customers in these rough times. Read on to learn more about crisis management strategies for mortgage loan companies as well as:

  • The overall impact of COVID-19 on mortgage loan companies, credit unions, and insurers
  • 7 financial planning tips and business survival strategies for mortgage loan companies

The Overall Impact of COVID-19 on Mortgage Loan Companies, Credit Unions, and Insurers

Even though the US mortgage market is huge, most areas have already started to feel the negative impact of COVID-19. The pressure caused by income reduction and job losses makes people preoccupied with their personal finances. Fair enough, cutting expenses is one of the most popular financial planning tips. Unfortunately, for mortgage loan companies, credit unions, and insurers this leads to considerable liquidity and solvency challenges.

Regardless of the type of mortgage provider, insurance rates, mortgage products, and other factors, everyone is facing the same problems:

  • Customers take long loan payment holidays. Today, over 4.1 million US citizens are skipping their mortgage payments. Interestingly, 70% of them don’t seem to need help that much. They just use the opportunity to get relief from the monthly payments for up to 12 months. What looks like a great help for an average borrower, strains a mortgage company. With the increasing number of forbearance requests, mortgage loan companies fail to collect monthly payments and provide them to loan owners.
  • The number of refinancing requests steadily grows. This spring, refinancing rates have reached their historic minimum. Besides, the Federal Housing Finance Agency has considerably simplified the refinancing process for borrowers with closed forbearance. This makes people with an adjustable-rate mortgage very likely to change their financial plans. Hence, mortgage loan companies should expect to face a tidal wave of refinancing requests that need to be processed.
  • Mortgage delinquencies are projected to skyrocket. Some forecasts predict that the delinquency level will exceed the Great Recession rates, with 15% of homeowners falling behind on their mortgage payments. To mitigate the impact of this negative trend, mortgage loan companies, credit unions, and insurers will need to start cutting operational costs.

Most importantly, the market challenges that mortgage loan companies are currently facing will not be solved in the near future. When it comes to such serious deals as mortgage plans, consumers need a prolonged period of stability to become active again. Thus, only profound business survival strategies based on proven financial planning tips can help to go through the crisis.

7 Financial Planning Tips and Business Survival Strategies for Mortgage Loan Companies

The beauty of the listed tips is that these crisis management steps will positively impact your mortgage company in the long-run. They help to optimize processes and provide better customer service that always pays off.

#1 of business survival strategies. Simplify your online application process

billing address

Even with the ease of quarantine restrictions, many customers would like to apply for credit cards and mortgage loans online. Give them a safe way to do this on your website. This will increase traffic to your online resources and enable you to process customers’ requests remotely. As a result, the staff will have fewer personal meetings and will be able to focus on core business activities. Without this step, you won’t be able to withstand the market competition with such market giants as Quicken Loans that have versatile offline functionality.

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#2 of business survival strategies. Prepare to work remotely and optimize rent

Nobody knows when the pandemic will really end. Many scientists predict the second wave in the fall and winter, which means that we may need to socially isolate once again. If you have failed to organize the work of your team remotely this spring, make sure to do it now. First of all, this will help you ensure business continuity. Secondly, you may cut operational expenses on office rent by moving to a smaller office. If any of your current employees can perform their duties remotely and prefer to work from home, let them do so, and optimize your rent.

remote work

#3 of business survival strategies. Communicate with supervisory authorities and use regulatory opportunities

Despite the introduced loan payment holidays, mortgage loan companies may benefit from accrued interest rates in the long run. Nevertheless, to keep operating in the new circumstances while staying regulatory compliant, you need to follow regulatory updates. Note that the mortgage field is likely to see many significant changes soon.

#4 of financial planning tips. Consider offering new mortgage products and payment options

Flexibility is key for maintaining your profits and keeping customers. Think about the ways to adapt your current strategies to the changing market and offer a win-win type of cooperation. For example, you can reconsider your approaches to the calculation of credit scores and launch more demanded mortgage products. Or provide several options to process mortgage payments after the forbearance period ends: either request a one lump sum or add the missed payment to the overall mortgage term.

#5 of financial planning tips. Forecast different scenarios for your finances and emergency fund

Collect and analyze all the data about mortgage market trends, your current financial capabilities, and emergency fund. Use this information to develop several possible scenarios for your business: worst-case, realistic, and best-case. Prepare for the worst-case scenario and plan how to get out of it. This will save you from unexpected financial losses related to the offered loans in case anything goes wrong.

#6 of financial planning tips. Connect with customers who have limited access to digital channels through direct mail

Although the number of online lenders grows, many people still prefer offline communications. This may be a decisive factor when they start looking for the best mortgage company and convince them to choose your services. To target such customers while keeping social distancing, you should implement direct mail campaigns. Mail communications are suitable both for official messages and marketing materials. Besides, if you print in batches and optimize mailing, you can save a lot of your marketing & customer communications budget.

#7 of financial planning tips. Use cloud computing and workflow automation

cloud computing

Cloud SaaS solutions have already freed mortgage loan companies from legacy technology and the cost of keeping an internal IT department. Automation can reduce the financial load even more. With the right API platform, financial services can connect multiple tools into a single system that operates automatically. In particular, Inkit supports hundreds of integrations with CRMs, analytics, marketing, and other advanced services. Such software will synchronize your offline and online communications, including direct mail, with real-time customer behavior. This will allow you to interact with borrowers more effectively, track their data, and save costs thanks to the full workflow automation.

Want to optimize your budget with automated communications? Contact Inkit to start now.

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Let us show you how automating direct mail can increase your offline conversions.
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