It may be time for some mortgage companies to read the 1994 hit "Forrest Gump" for advice on how to cope with the coming "storm".
Last year's historic refinancing market with record volumes is likely to give way to a strong, albeit relatively weaker, purchasing market. The industry-wide response to this is pretty obvious. We seem to hear the news of a new acquisition or merger every day. It makes perfect sense, especially now. Some companies that are cashless after a spectacular year of origination revenues claim to be increasing market share. At the same time, realizing the impending volume decline and may not want to experience the margin pressures that can come with this type of market, other companies are benefiting and selling high. We can expect significantly stronger consolidation through mergers and acquisitions in the coming months. However, an aggressive M&A strategy for growth or payoff are only two ways mortgage companies prepare.
A third course that some companies are clearly taking is clearly to go straight into the shopping market. Many companies, particularly lenders, are stepping up their business with new technology, personnel changes, or more aggressive marketing to gain market share without the benefits of mergers and acquisitions. This is also a worthy strategy. We'll soon hear more about crumbling margins as costs rise and volume shrink. But make no mistake: there are still plenty of options for those who now invest wisely in themselves and their businesses.
However, there are also a handful of companies that seem to be closing their hatches: down staffing, cutting costs … almost bogging down in port to wait for the temporary "storm" when you are actually considering something that is not quite right . t a refinancing glut to be a "storm". It is reminiscent of a classic scene from "Forrest Gump".
In the scene I am referring to, you will remember our hero Forrest Gump teaming up with Lieutenant Dan, his former platoon leader during the Vietnam War, to try his hand at shrimp fishing in the Gulf of Mexico. After sifting through one empty net after another on a beautiful day at sea, the eternally bitter Lt. Dan out the church forest on deck: "Where the hell is this god of yours?" We are then treated with Forest & # 39; s expressionless voice-over: "It's funny that Lt. Dan said that. Cuz & # 39; right then, God, showed up."
The scene jumps to their boat being thrown onto the waves of a terrible storm that turns out to be the infamous Hurricane Carmen. This recording is followed by TV news about the destroyed shrimp fleet in the remains of the port. Shortly afterwards, we learn that Forest's boat was the only boat in the fleet that was not wrecked in port. By staying out in the storm, they had survived and would face the Bubba Gump Shrimp Corporation with no competition and eventually land their CEO Forest along with his first companion on the cover of Fortune Magazine. Dan.
While this doesn't mean that companies that simply face any storm will automatically outlive the competition, the whole analogy has a lesson. It is no better to close the hatches and cut costs in the face of a tougher but still promising buy market than waiting for the storm to come out of port. It is not fished from there, the whole reason the boat exists and it could well be destroyed in the process.
If your company is not pursuing either M&A strategy as you transition to this new cycle, then it is time to step up your efficiency and marketing. It's one thing to spend money randomly or take unnecessary risks. But it is consolidating markets like this that show the market leaders. This is where the real success stories are made. Now is the perfect time to take calculated strategic risks – be it with technology, product mix or marketing approach. Whichever you choose, it's time to venture into the unknown. After all, there are still a lot of shrimp to be caught!