In STRATMOR Group’s January Insights Report, Senior Partner Jim Cameron borrows from Abraham Maslow’s famed “hierarchy of needs” theory to offer mortgage lenders a real-world approach to shaping their strategies in 2024.
In his 1943 paper, “A Theory of Human Motivation,” Maslow identified five levels of human needs, from the most basic to the most advanced. Cameron’s InFocus article, “Maslow and Mortgages – The Path to Actualization in Today’s Market,” outlines a similar hierarchy that recommends lenders get back to consistent profits before embarking on their longer-term strategic goals.
Cameron poses a question to the industry: Can a hierarchy similar to Maslow’s human needs define the stages of need in today’s mortgage lending space? He then outlines his “Mortgage Lending Hierarchy,” a transformative, five-stage journey towards self-actualization for lenders to fulfill their vision, mission and purpose.
In order of priority, here are the “needs” Cameron envisions for mortgage lenders:
- Scrutinize Cash – Because “cash is king,” clearly understand and closely manage cash flows, which are the lifeblood of any company and foundational to survival.
- Surgically Repair – Do what it takes to break even to build a sense of safety and security in the company’s financial position.
- Stabilize – Achieve a reasonable level of recurring profit and build your team connections and culture to create a sense of connection and stability.
- Strategize – Engage in robust long-term planning, earn the respect of others, and clearly identify the company’s unique value proposition to build esteem and recognition as an industry leader.
- Self-Actualize – Fulfill the vision, mission, and purpose of the company.
“In today’s environment, lenders that are losing money on production must first focus on shorter-term tactical measures,” Cameron writes, “Once lenders have demonstrated that they are squarely in the black, generating consistently positive cash flows, then they can identify and execute longer-term strategies.”
STRATMOR’s outlook for 2024 is cautiously optimistic, according to Cameron. “We see the pace of consolidation quickening in the first and second quarters, followed by a modest rebound in profits during the spring and summer,” he writes.
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