Despite Challenges, Lenders Plan for Growth

Regulatory challenges and an expected drop in demand haven't turned mortgage executives from their plans of growing their businesses in the coming year, according to results from a recent survey.

In a review of Fannie Mae's November survey of senior mortgage executives, Li-Ning Huang, senior manager of the company's Economic & Strategic Research Group, found that though respondents are concerned about compliance issues and weak borrower demand, most are still optimistic about the year ahead, particularly when it comes to their growth plans.

"Most lenders surveyed said that they are looking to either grow or maintain their origination and servicing businesses," Huang said in a post on Fannie Mae's website.

In fact, the company found, 88 percent of lenders surveyed said they're looking to grow their origination business, and 70 percent said they intend to expand their servicing. Only four percent said they plan to downsize their servicing business, and none expect to dial down their origination operations.

In an email, Steve Deggendorf, director of business strategy for the group, explained that while lenders' short-term outlook for mortgage demand is pessimistic, their growth strategies take a longer view.

"Although lenders have become increasingly concerned with weak consumer demand over the last year, they are still optimistic about the mortgage business for the longer term," Deggendorf said. "We speculate that, in Q1 2014 when many regulatory changes took effect, lenders invested a lot of resources on compliance and were more pessimistic on their profitability. Now, lenders seem to have adjusted to handling compliance issues and can focus more on their firm's longer-term strategy and business."

When it comes to lending, more executives said they plan to increase the number of retail branches or loan officers than any other answer. "Expanding market outreach" was another frequently cited tactic.

A major part of that marketing strategy includes increasing outreach to first-time homebuyers, who market-watchers hope will play a more active role in the housing market this year. Fifty-two percent of executives in the survey said they're going to step up their marketing to first-timers. (Forty-two percent said they want to increase their marketing to move-up homebuyers, who are coming back as equity improves.)