Lenders looking to cut costs are more willing to lay off their back office staff than slash other business expenses, according to a new Fannie Mae survey.
While cost-cutting wasn't firms' top business priority, more senior mortgage executives placed prospective layoffs above trimming general and administrative expenses. The findings in the Mortgage Lender Sentiment Survey, which reached industry leaders from 217 different nonbanks, depositories and credit unions in early May, showed mixed results for other lender sentiments.
Overall, 37% of respondents said they're prioritizing "streamlining business processes", compared to 29% of executives focusing first on shaving expenses. Executives defined streamlining such as improving employment and income verification, or utilizing
For firms weighing trimming budgets, a combined 59% of bosses said terminating back-office staff was their top, or second area to cut. That compared to a combined 35% of respondents focused on minimizing general and administrative expenses such as facilities and equipment, and 22% who pointed to loan officers. The survey didn't touch on
The answers are a reversal from last spring, when companies said they'd prioritize general and administrative savings over layoffs. Lenders however are still more conservative than the past few springs, when the majority of industry leaders facing a rising rate environment told Fannie Mae
Mortgage firms aren't fully comfortable with e-notes
The survey also revealed lender frustrations with
A combined 46% of current e-note adopters said their first or second-largest challenge was investor or business partners not supporting the technology. While operational challenges with e-notes rated highly, lenders also cited their ineligibility for certain loans. More hurdles included investor restrictions on
"Several of our correspondent lenders have not invested in the process to start using e-notes," wrote a leader of one unnamed mid-sized institution in the survey.
The mortgage industry as of April 1 had 2,513,663 unique e-notes registered on the Mortgage Electronic Registration Systems eRegistry, according to Fannie Mae. Independent mortgage banks are more likely to use them than credit unions and depositories. Those familiar with the technology cited benefits including faster funding and reduced errors.
"Because eNotes have a cleaner paper trail with less backend risk, perhaps the (government-sponsored enterprises) offer some sort of pricing advantage," wrote another source from an unnamed large institution.
Lenders temper their housing forecasts
The majority of mortgage leaders in May conceded the difficulty in
The share of executives surveyed who expect home prices to stay the same in the next 12 months grew at the highest level since 2021, according to Fannie Mae. A leading 45% of consumers meanwhile in the GSE's Housing Market Survey still expected prices to rise.
Prices are cooling nationwide, and the approximately 1.36 homes for sale in June was the most since 2019, a
Lenders were also split on their economic outlook, with a near-equal share suggesting the nation was on the right, or wrong track. Sixty-four percent of consumers meanwhile told Fannie Mae in May they were concerned about the future.
Shaky inflation and job data earlier this month drove mortgage rates to a 10-month low, and spurred
