Agustin Del Rio: In Wilson We Trust–Surviving the Mortgage Market’s High Tides

Augie Del Rio

Agustin (Augie) Del Rio is Co-founder and CEO of Gallus Insights, Chicago, a Software-as-a-Service (SaaS) provider of Business Intelligence & Data Science for mortgage lenders and servicers. Prior to Gallus, he was an Investment Banking Vice President at Goldman Sachs in New York. After five years on Wall Street, he led the Financial Planning and Analysis Division at Caliber Home Loans. He can be reached at

The latest report from the Mortgage Bankers Association presents a scenario for Independent Mortgage Banks that’s akin to being stranded on an uncharted island, much like Tom Hanks’ character in “Cast Away”.

This comparison becomes particularly poignant as we delve into the current state of the industry.

From Q2 to Q3 2023, we observe a decline akin to the initial struggles faced by Hanks’ character. The percentage of profitable firms has dropped from 58% to 51%, and losses per loan have nearly doubled, increasing from $534 to $1,015. Productivity mirrors these challenges, with less than three closings per sales employee per month, a stark contrast to more than 8 during the bustling activity of 2020.

Financially, the industry’s year-to-date revenues have plummeted by 33% compared to 2022, standing at $42 billion. Although expenses dropped by approximately 27%, it has not been enough to stave off a nearly $5 billion loss YTD. These figures reflect a challenging survival scenario, reminiscent of the one faced by Hanks’ character in the movie.

However, much like the resourcefulness and resilience shown in “Cast Away”, the IMBs have significant financial strength. The average book value of equity for an IMB is around $39 million, and the tangible net worth to asset ratio is about 35%, indicating a robust financial buffer. This strength is crucial, as the protagonist’s ingenious use of resources was to his survival and eventual rescue.

The question then arises: How do IMBs continue to remain solvent and liquid despite nearly $5 billion in YTD losses? The answer lies in the wealth accumulated during the industry’s “Great Ride” from Q1 2019 to Q1 2022, where an estimated $103 billion in earnings was accrued.

As in “Cast Away”, where the protagonist had to focus on the basics for survival, IMBs must concentrate on fundamental strategies for weathering this storm. This includes adhering to the essential practices suggested by industry experts, such as comprehensive metrics for Loan Officers, running cash projections, and disciplined recruitment strategies.

In conclusion, much like Tom Hanks’ character in “Cast Away” who kept hope alive and eventually found his way back, the mortgage industry, too, stands at the brink of navigating through its challenging phase. With almost $40 million in wealth on their balance sheets, the average IMB is well-equipped to protect its assets and emerge stronger, ready for the next cycle of growth. The industry’s story is far from over; it’s just waiting for its next, hopeful chapter.