What if the Market Rebound We’re Waiting on Doesn’t Fully Materialize?

Don’t worry. This is not a feature telling you about the impending mortgage market rebound. You already know that the market will change – if  not now or in three months, perhaps next year. Perhaps in 2027. But one thing we’re not guaranteed when that happens is a simple shift of trajectory that suddenly brings a continuously upward track in order volume. From an operational perspective, an up-and-down market, especially one that persists for some time, might be the one thing worse for lender throughput than a downcycle.

The answer to this is flexibility and scalability.

A volatile market can wreak havoc on lending operations

During downturns, mortgage lenders cut operational costs by trimming staff, streamlining processes and relying on existing technologies to maintain a lean operation. While the intention is to maintain profitability by doing this, it also requires that, when volume ticks up, lenders must rapidly rehire, retrain, and retool—often while volumes surge and wane unpredictably.

And what about those times when the market gets stuck in limbo? What if we don’t simply get a refinance surge that lasts 18 months, but instead, see different products wax and wane from month to month? We haven’t had many market cycles floating in this no man’s land over the past 25 years, but all indications are that for the foreseeable future, lenders will have to find ways to profit while adapting to any number of quick jolts to the market.

Operational lag occurs when a business which has cut resources to reflect lower order volume faces a sudden wave of volume while it lacks the throughput to adequately process that surge. Because the process of recruiting, hiring and training new employees to manage that volume typically takes some time, damage can be done at the service level during that period and, eventually, clients may simply look elsewhere for their needs. Compliance risks can also increase when an operation is stretched thin during a period of lag.

I’ve yet to meet a mortgage lender who enjoys a stretch of low volume. And yet, when we see starts and stops in the market, it’s not much more enjoyable.  What if a lender experiences, for example, a three-month surge, only to have another external development chill the market again? Operationally (and fiscally), you have a possible disaster on your hands.

Scalability starts with effective tech

To mitigate these risks, successful lenders are already taking strategic steps to ensure they are prepared not only for a full scale rebound, but for a series of rebounds and dips. First, they’re using effective technology to smooth those inevitable transition periods.

Having the right technology in place is non-negotiable when it comes to building a seamless operational scale-up. Lenders that have invested in digital transformation are better positioned to absorb volume increases without sacrificing efficiency or accuracy. And in 2025, you can’t have the most effective technology if you haven’t at least considered a place for AI tools.

Advanced loan origination systems integrated with AI-driven decisioning can all but eliminate manual intervention in your workflows. Tasks such as document verification, income validation, and fraud detection can be streamlined through machine learning, freeing up staff to focus on higher-value tasks.

How your tech stack integrates is also a major consideration. What good are the shiniest new technologies if you have employees hand keying data out of one system and into another because they’re not integrated effectively? Digital mortgage platforms that offer seamless eClosing, digital verifications and AI-powered underwriting experience reduce cycle times and deliver greater scalability. Borrowers benefit from a more intuitive and expedient process, while lenders can reallocate human resources to areas that require personal oversight.

Finally, although “The Cloud” was a top story in the early aughts, there are still firms out there that are barely making use of it, which is, quite frankly, baffling. Mortgage origination requires coordination across multiple stakeholders—loan officers, underwriters, appraisers and closing agents. Cloud-based tools enhance real-time collaboration, reducing inefficiencies caused by communication lags or manual data transfers.

Tech is critical, but there’s more to be done

It’s not enough to throw budget at great technology when it comes to preparing a truly scalable operation.  As with anything else in the lending business, strategy counts too. For a lot. Workflow optimization plays a pivotal role in ensuring smooth operations. Lenders positioned for sustainable success are prioritizing workflow efficiency in several ways. First, they’re continuously refining their workflows to eliminate redundancies and optimize handoffs between departments. If the market is changing constantly, especially lately, then why would we think doing things the exact same way we always have will bring consistent results? Lean methodologies—effective lean methodologies (just cutting isn’t effective without a plan for redeploying and empowering existing resources) – can really optimize productivity and effectiveness regardless of market conditions.

Another word about empowering employees. It’s absolutely critical. Bureaucratic decision-making slows down loan origination without any real positives. The most agile lenders are embedding decision-making authority deeper into their organizations, enabling producers, underwriters and processors to make real-time judgments within predefined risk parameters.

Next, where you see a lender that demands rigid role definitions that hinder adaptability, you’ll find operational lag during market shifts. Cross-training employees across different functions ensures that teams can pivot and support various aspects of loan processing as needed. This is particularly crucial in times of rapid volume increases.

Finally, never forget the value of outsourcing. The lenders positioned to survive and even grow during this unusual time are probably keeping available a pool of on-demand contract processors and underwriters who can be quickly deployed in times of high volume. Additionally, strategic partnerships with third-party fulfillment providers allow for temporary workload absorption without long-term staffing commitments.

Great tech and sound strategy only work when you have great people

Your plan and operational setup are pointless if you don’t have the right people in place. A successful market rebound strategy involves not just hiring new staff but fostering a resilient, knowledgeable, and adaptable workforce. It starts with recruiting, especially during down market cycles.

Rather than waiting for volume surges, forward-thinking lenders are already recruiting for critical roles such as underwriters, loan processors and compliance specialists. By anticipating future needs, they can onboard and train staff ahead of time. There are absolutely ways to do this without unnecessarily bloating one’s expenses.

Of course, great staff is only great when it’s not turning over regularly and when employees are satisfied and motivated. A strong company culture fosters retention and engagement, which is crucial during growth phases. Lenders investing in mentorship and training programs, leadership development and competitive compensation packages are the ones that attract and retain top talent.

Recruiting and maintaining top talent doesn’t stop once your people are in position to perform.

With regulatory landscapes evolving and borrower expectations shifting, lenders must prioritize ongoing training. This includes compliance refreshers, technology adoption programs and sales effectiveness training for loan officers.

Additionally, periods of high volume can strain employees, leading to burnout and attrition. Lenders that prioritize flexible work arrangements, mental health resources and recognition programs tend to foster a sustainable workforce capable of handling increased demand effectively.

If you’re reacting, you’re simply digging out of a hole

The lenders who thrive in a market rebound are those that have already taken action – smart action – before  the surge fully materializes. By investing in technology, refining workflows and strategically managing human capital, mortgage institutions can ensure a smooth transition into higher volume origination periods without the traditional growing pains.

As we continue along the long, strange trip that market conditions continue to take, mortgage executives need to truly understand their operational readiness. The coming months represent a pivotal opportunity to fine-tune strategies and position for long-term success. Those who embrace innovation, flexibility and proactive planning will be best equipped to serve borrowers efficiently while capturing new market opportunities.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)