Skip to main content
Perspectives Blog

Mortgage Lenders Cite Business Process Streamlining and Talent Management as Top Business Priorities

July 12, 2021
Mark Palim
Mark Palim

Vice President and Deputy Chief Economist

Li-Ning Huang
Li-Ning Huang

Principal – Market Research

Business process streamlining remained the top priority for a plurality of mortgage lenders for the second consecutive year, while talent management surpassed consumer-facing technology as the second most important business priority, according to Fannie Mae's Q2 2021 Mortgage Lender Sentiment Survey® (MLSS).

In 2020, the mortgage industry originated a record-breaking $4.3 trillion, its largest annual volume since 20051. However, despite the continued recovery of the larger economy, for the mortgage industry, in some ways 2021 has shaped up to be a more challenging year. The absence of further mortgage rate declines is constraining the refinance market. Meanwhile, the lack of homes available for sale relative to demand, strong home price appreciation eroding affordability, and construction supply-chain disruptions are all headwinds for the purchase market. Consistent with these trends, 70 percent of lenders indicated that they expect their profit margins to decline from the highs set in 2020, the largest share since the survey’s inception in 20142. Against this backdrop, we used our most recent quarterly MLSS to survey over 200 senior mortgage executives to better understand lenders' most pressing business priorities and challenges.

For three consecutive years, lenders have cited business process streamlining, talent management and leadership, and consumer-facing technology as their top business priorities. In Q2 2021, the priorities of process streamlining and talent management reached their highest shares in five years. Moreover, the importance of consumer-facing technology has slowly ticked down over the past two years, after peaking in 2019. The importance of "cost-cutting," another commonly cited business priority, fell further this year after jumping in 2018, a year when rising interest rates led to a decline in industry production volumes that forced many lenders to pare back expenses to maintain profitability.

Top priorities reported by mortgage lenders


Lenders' business priorities appear to be consistent with their assessment of market threats and trends. Once again, most lenders cited "online direct-to-consumer lenders" as their biggest expected competitor over the next five years, followed by mortgage brokers. Many pointed to direct-to-consumer lenders’ advantages in user experience, streamlined mortgage processes, and advanced analytical and marketing capabilities. In preparing for the shift toward a smaller, more purchase mortgage-focused market, most lenders cited improving the mortgage origination process and customer experience as their top strategies.

As lenders roll out their post-pandemic workplace strategies, managing human capital is becoming more complex. Many employers are having to update their talent management practices, including offering hybrid work schedules, adopting a more refined approach to diversity, equity, and inclusion, and paying greater attention to the overall well-being of employees, as the competition to attract and retain talent rises. In our previous special topic survey examining lenders' post-pandemic plans for their workforces, most lenders indicated that they are open to a hybrid model, noting that its flexibility allows them to better balance talent retention, productivity, and the preservation of company culture3.

Lenders commented that running a mortgage business requires highly experienced professionals, who are not only knowledgeable of processes and technology but also have the interpersonal skills to provide quality customer service. Lenders pointed to employee turnover as an ongoing challenge, along with a tight hiring market, an aging workforce, and the continued need to invest in training as their key challenges.

The competition for talent is also evident in reported cost trends. Personnel costs remain the leading loan origination expense and, as a share of total loan origination expense, have actually increased from 64% in Q1 2010 to a peak of 70% in Q2 20204. While some industries have offshored or outsourced manufacturing, or have started leveraging talent without geographic boundaries, the majority of lenders have said it is not beneficial for the mortgage industry to outsource loan origination5, making it harder for lenders to adjust their staffing levels over time as demand fluctuates. In fact, lenders testing hybrid work arrangements6 could facilitate the redesign of business processes that allows distributed workforces to work more efficiently on back-end tasks, and thereby contribute to continuous improvements in customer service, which lenders have repeatedly described as vital to their success. Additionally, a geographically distributed workforce would likely allow lenders greater recruiting flexibilities and business expansion opportunities into other geographic markets.

To learn more, read the research deck or access our infographic.

Mark Palim, Vice President and Deputy Chief Economist
Li-Ning Huang, Market Research Advisor

July 12, 2021

The authors thank Ahmet Hacikura at Oliver Wyman, Tomas Ducaud, Rebecca Meeker, Ryan Jackson, and Steve Deggendorf for valuable contributions in the creation of this commentary and the design of the research. Of course, all errors and omissions remain the responsibility of the authors.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

1 BlackKnight's January 2021 Mortgage Monitor,>

2 Q2 2021 Mortgage Lender Sentiment Survey,

3 "COVID-19 and Remote Working," Q1 2021 Mortgage Lender Sentiment Survey Special Topic Study,

4 Analysis by Economic and Strategic Research group, based on Quarterly Mortgage Bankers Performance Reports published by Mortgage Bankers Association

5 About 80 percent of lenders surveyed say that they don't believe it would be beneficial for the mortgage industry to outsource mortgage origination. "Impact of Digital Innovation on Lender Workforce Management," Mortgage Lender Sentiment Survey, First Quarter 2020,

6 "COVID-19 and Remote Working," Q1 2021 Mortgage Lender Sentiment Survey Special Topic Study,