Mortgage Banking Executives Remain Paralyzed

Sure, mortgage rates are down but being in the mortgage industry today still serves up a dose of heartburn.

Even though the mortgage industry outlook for 2025 and 2026 is expected to be just a ‘little’ better than 2024, even though recent rate cuts finally allow some lenders to eke out a profit, most mortgage banking executives remain paralyzed when it comes to strategic planning for 2025.

Mortgage bankers remain hostage to a persistent four headed housing monster that is crushing their ability to meet the housing needs of American’s – lack of affordability, lack of inventory, rate stagnation, and virtually everyone’s homeowners’ insurance being increased or cancelled. Those in our industry desperately wanting to serve our customers, helping American’s accomplish the dream of homeownership, simply can’t.

Ask any housing economist about their outlook for 2025 and they’ll continue to chirp hope and optimism, but just know they all have their fingers crossed behind their back – given there is no substantive justification to being confident the mortgage industry is back.

With that said, can you blame mortgage executives for remaining paralyzed?

So, what is a mortgage executive at a credit union, bank, HFA, or independent mortgage banker to do? Bottom line: It’s time to ask for help. This is not, well maybe it is, a shameless plug for my expert mortgage team at BlackFin (nobody knows lending better) but asking for help is the most important piece of advice for you, your team, and 2025. Why? It’s time to get out of your head, thinking like a traditional mortgage banking executive who is sitting idly by waiting for volume to cure all. It’s time to come to terms with the fact there is no overwhelming increase of loan apps, buying frenzies, or a sudden massive shift in the market will drive an uptick in loan volume during 2025 on the horizon. It’s simply not going to happen. No housing policy change in the next six or nine months is going to dramatically change things for the better in 2025. Time to wake up and accept the fact that you are in the new normal.

Moving forward, remaining paralyzed won’t be an excuse for lack of growth. You think there is no margin, you think there is no capacity, you think there is no possible strategy to grow mortgage revenues? Well, you’re wrong. Maybe an M&A buys a little time but that’s not really the answer. Believe it or not, there is ample opportunity for increased mortgage lending revenues and opportunities in 2025. The question is, are you looking in the right places to optimize and chart a better course for increased sales? To survive and thrive in 2025 and beyond will require mortgage executives to think differently. You now need outside forces to break free from being hostage to today’s market conditions (its why firms are hiring BlackFin for our 3D Business Review).

In a recent survey of CEO’s BlackFin found 68% of Executives want to focus in 2025 on strategic growth-related initiatives, while also trying to focus on talent retention as they fear even a little more robust lending market will put their best assets at risk of leaving. However, 73% of executives admitted they remain paralyzed and need outside help to accomplish these goals, reduce stress, mitigate all sides of organizational risk, bring fresh ideas to define new strategies to grow profits, ensure strategic execution, and to help them solve the biggest issues of the day – they just don’t know how to ask for help, or how to seamlessly integrate a consultant without alarming or exposing themselves to staff. Which is where BlackFin’s secret sauce for stepping in can make for a positive experience.  

Here are just a couple thoughts for lenders to consider as they prioritize where to put their energy in 2025. I’ve also included a 2025 challenge for each recommendation to help you measure success, allowing you to look back at this time next year and realize your team not only survived but thrived.

1. Learn and understand Artificial Intelligence (AI). Another shameless and self-serving plug, BlackFin can help you sort through the AI hype curve our industry and the country are in the midst of. At the very least, take our Mortgage AI 101 Training class or read our white paper about AI in Mortgage Banking. We can help you better understand AI and strategically design your tech roadmap to effectively and efficiently integrate AI. Thoughtfully helping you define strategies for using AI to enhance decision-making, customer experiences, and operational efficiency. Understand its limitations and its biases to avoid over-reliance. Just because a vendor has the initials AI in their marketing doesn’t mean they are ‘actually’ solving a problem, or that it will automatically make you more efficient or reduce costs (don’t be ‘sold’ technology). Aside from BlackFin, you need to dig into AI and really understand where it’s at and where it’s going. 2025 Challenge: Become an AI expert as it relates to mortgage lending so you can more easily separate vendor fact from fiction and assess its actual usefulness and best in class real world application for your firm.Identify the top three vendors you need to have on your radar as truly bringing our substantial value. A good place to start might be BlackFin’s Preferred Partners…

2. Prioritize Sustainability. Sure, the election may be over, policies may shift, some regulations may lift – it doesn’t mean you throw all caution at the wind. 2025 will require us to continue being more resourceful than ever before to keep loan operating costs down. To do, so will require you to go even more green than you have been by automating more steps and increasing productivity per employee. Now is the time in a slower market. 2025  Challenge: set a Key Performance Indicator (KPI) to reduce paper use by 50%, increase per employee loan productivity by 1, and drive down energy costs by 10%. Write your plan, research, then implement.

3. Foster a People-Centric Culture: Despite AI and automation, people will continue to be the most important asset of any lending team. Get back to leadership basics by deciding (or renewing) who you want to be to the market, share the renewed vision and mission with your team. Then invest in strategies and foster cultural development initiatives that reinforce the vision and the renewed commitment. Provide flexible working environments, and most importantly provide a career development plan for your people (we design and implement career path models for lenders). Set annual personal development goals and watch how your renewed vision and mission will magically help you surpass your 2025 goals by mid-year. Amazing what happens with just a little bit of leadership renewal sparks new energy. Since I got in this business over 35 years ago, it’s always been said – only the strong will survive. Look around, as of today you are left with the strongest, brightest, and most resilient staff this industry has ever known. Leverage those assets by providing them with the environment and renewed spirit they deserve to accomplish new heights in 2025. Perhaps one day they will reflect on their time with you and say – that was an amazing time, we got through it together and look what we did as a team in 2025. They will have your leadership example to thank. 2025 Challenge: Refine your vision, mission, goals, and your state of mind to achieve more than you budgeted for in 2025. Design and implement at least two new people and cultural-based initiatives that will reduce turnover by 5 to 10%. 

4. Stay Agile and Resilient: Well, for any lender still standing, if there’s anything we’ve learned in the last three years it is, how to be resilient and agile. Up to this point you’ve been cutting, slashing, and burning wherever necessary. In 2025 you will need to remain agile and resilient. You will have to continue analyzing the market and your lending team – finding new ways to optimize your firm, lower costs, and you must define new strategies for being able to grow sales revenues. I recently finished a 3D business review with a regional lender where the CEO had already cut back to the bone as far as anyone could possibly imagine (well, maybe you can) and he also claimed to have done everything they could do to drive new sales and lower costs in 2024. Yet, my outside perspective still provided a path to cut costs by another 20% and I provided over a half a dozen new strategies to effectively increase sales by another 30% in 2025 without sacrificing employees or the customer experience. The problem is – he was too close to see the possibilities or opportunities. He couldn’t break free of his own institutionalized thinking, trapped by his own walls, hostage to traditional mortgage thinking. Just asking for help (a 3D business review) he is completely renewed and reenergized. He can now clearly see a path to 20 or 30% revenue growth in 2025. Now, once Loan Officers in the market pick up on this renewed vibe (as my son would say) he will be attracting new and top talent and before you know it – surpassing his original production and revenue goals for 2025. It’s time to think differently. The volume is out there, the question will it be your competition that earns the business or will you be better positioned to earn it? 2025 Challenge: Define and implement three new, meaningful, revenue growth strategies and two new cost-cutting strategies that will not impact customer experience or reduce staff.

5. Embrace Digital Transformation: One of the nation’s largest credit unions hired BlackFin earlier this year, now in phase 2 and 3 of the project, to help them implement an entire new tech stack and transform their entire mortgage lending division. Now thinking differently, they are breaking away from traditional mortgage banking process while ensuring they are aligned with a tremendous LOS partner that can support this paradigm shift – the client now realizing this transformational approach will lower operating costs and allow them to more easily scale and provide a resounding better member experience. All by using more established, new technology. Once they made the decision to stop being sold technology by vendors and instead could pave their own way, they now see the light. And wouldn’t you know it, we’ve since been hired to help another lender rebuild their tech stack through digital transformation so they also can move away from traditional mortgage LOS and reap the rewards of ‘truly’ being digital. Most surprisingly to all parties is that Digital Transformation is not as expensive as they thought. 2025 Challenge: Define and implement 5 new customer-centered innovations. Remember, it’s not what you do or how you did it, it’s how you made the consumer (member) feel.

6. Strengthen Collaborative Ecosystems: In 2025 lenders will need to build, re-build, and strengthen strategic partnerships. The true test of any collaboration is listening to your collaboration partners talk. Ask yourself, are they selling, re-selling someone else, or are they fully engaged in a dialogue to learn more about our team’s mission, vision, goals and challenges. Even if it doesn’t benefit them. Are they truly listening and then working with you to help define solutions that might or might not even include them. Surround your team with strategic partners who truly care about your success (hint, each client we work with quickly realizes BlackFin isn’t into consulting for billing hours – they truly are experts, who actually care, and want to help). 2025 Challenge: Define the five or six true and authentic collaborations you need in 2025. Relationships that you can rely on, need, or foster to build a stronger more efficient, productive, and profitable business. For example, just because a technology vendor is the backbone to your business, doesn’t mean they value your relationship more than they value your invoice payment to them each month.

In closing, warning, another shameless plug, if you’re stuck and don’t know where to start to break free from paralysis of 2023 and 2024, if your wanting to reset your energy and prepare for an amazing 2025 – ask for help. It’s why we designed the 3D Business Review at BlackFin to give you the kick you might need so you can maximize all that is in front of you. Success in 2025 will demand a balance between technological advancement, human empathy, and strategic foresight. It’ll require a winning mindset, thinking and acting differently, a keen eye toward transformation using new ideas that will better maximize all that 2025 can offer. Stay adaptable, be purpose-driven and you’ll be able to more easily navigate any uncertainty while inspiring and realizing growth and innovation.