Question

Business Plan

I have chosen the mortgage industry with my main company being Quicken Loans. For my market domain I will be focusing on mortgage origination and servicing. The main reason I selected this market is I have been employed with a mortgage servicing company for the last 8 years and have gained significant knowledge operationally of how important this industry is to all customers. I am looking forward to evaluating this market and gaining additional knowledge in this industry. I have seen the progression from the crash of the mortgage industry in 2006 where it clearly showed how important it is as it almost pushed the U.S. economy into a recession. The mortgage industry has a long history of highs and lows and I believe I will be able to accurately identify SOWT within this industry. With an ever-changing world the mortgage industry has to continue to shift and balance revenue opportunities vs. regulatory compliance directives.

While doing my research I will be using resources such as S&P Global Ratings Research, Harvard Business, Housing Wire, FITCH rating agency data, US News, etc. I believe the challenges I will face with researching this market is the enormous amount of news reports and data that do not fully represent the facts accurately. I also believe due to this being such a large market and the amount of change that has occurred good and bad there is a lot of data to work through. A main focus within this market I will be using is going to be digital transformation and how Quicken loans has embraced this with their consumer base to not only increase productivity, but also provide an easier streamlined approach for consumers. The world is now different and the majority of people use cell phones, electronic funds transfer, online accounts, etc. Quicken loans is using this technology to enhance the consumer experience.

As part of researching the mortgage industry and Quicken Loans I will also be discussing companies who were not as fortunate and made mistakes which led to their ultimate closing such as Thornburg Mortgage LLC who was effected by the subprime mortgage crisis in 2007 which forced them to file chapter 11 bankruptcy in 2009 and lead to multiple investigations of the founders.

Question: Please provide substantive feedback on the above market domain selection. Please also provide references if used

Answer 1

Mortgage loans are mostly dependent on the Real estate projects as of they are commercial projects or Residential Projects but with various constraints. The target groups will always be the Home buyers and HNI (High Net-worth Income Group) those are investing in the Real Estate. There are different Rules and Regulations and Policy Changes by the Government according to situations. The Financial Institutions also are the key partners but they are also dependent on the directions of the Central banks. If there is an increase in interest rates there will be adverse effects on the demand for Mortgage loans.

Here i would like to discuss the Current situation which I am facing In India. Being from Real Estate Industry and working as an Consultant in this Industry I had seen various problems being faced by the customers. In 2016 The Government of India introduced RERA (Real Estate Regulatory Authority) as of supporting the Customers who were facing the problems due to delayed Possession of their property. India being a country of young peoples, a large numbers of new comers has invested their hard earned money for getting their dream home. But at same time I have to say that most of them being till date had not received the possession of their property.

The Builders used Inappropriate means to get their land approved and bullied customers as they faced funds problem and could not complete the projects. There are various examples near Delhi NCR (National Capital Region), that a large number of Undelivered projects are available. The situation is not good because most of the investors are middle class and hardly afford a Home as his hard earned money goes in vain when the builders after getting payment agreed upon and rejects the plea of the customer to give his property.

Because of the same reason the RERA is working good to safeguard the rights of the customers. The Financial Institutions involved in lending for the Projects as already discussed are the key partners. But they also face a large number of problems as of timely loan repayment and the demand and supply of the Real Estate projects.

The Government of India is also providing subsidy for the Home buyers who are taking Mortgage Loan, but with certain conditions, one of it is that the property must be the first one purchased by the customer on his own name.

As you are having a good amount of experience in this industry I support your decision of being a Mortgage Lender. I have tried my level best to explain you the situations In my home country and think that this kind of situations are not available in Yours. But still i would like to say that you must be aware of the Government norms, The changes in interest rates also affects the demand of Mortgage loan and also the Industry players involved in the Real Estate Projects. You must closely look to every activity that is happening in the Industry after-all you will get the target customers from them only. There should be proper research on the Economic expansion of the country as it intends to Higher income growth, means the customers will have more disposable income to go for Mortgage. Please go through the Industry Demand curve that will make you aware of the situation and will guide you for the future prospects and opportunities.

Going through Social media Facebook accounts will be an Impact-full tool to gain access to a large number of customer. Start Putting some ads of your own and share with near and dear ones. After passage of some time you will get a good response.

You can also go for Project collaborations, start linking yourself with the developers to gain access to the customer base as asking for Mortgage loan. Try to provide customer the best of the services you can as relation building is essential in this industry. If you build good relation the customers will multiply in numbers.

Lastly I would like to have a closer look to the Real estate development in Saudi Arabia. It has gone a paradigm shift as huge number of investors are investing their money in the Real Estate projects as the projects are priced competitively to the global market and The Lenders are providing customized services to get through the demand and supply gaining access to huge customer base. The economy is expanding in folds as the Government has introduced large number of dream projects that involve large number of workforce as developers and the service providers - Mortgage Lenders are one of them playing the key role.

The digital transformation is also taken as an opportunity but still you have to go through various constraints as the financial Institutions will not share data with you. So you have to make some channel into these Institutions so that you get the desired output.

One more thing you can do is personally visit the potential customers if you are starting your business yourself. Though the beginning is small but with the passage of time the results will improve. I generally prefer to visit the Potential Customers as this gives me an overview about the worth and motive to buy a Property. I also assist for the Mortgage Loan if there is a budget constraint with the customer. Try my level best to convince for the Project I want to sell.

There is always a possibility of negatives in every part of life, facing a situation of subprime mortgage crisis in 2007 was a result of bad decisions taken by the Industry players. With a positive thought and Effective decision making we can change the face of disaster. The impact can be reduced but the motive should be always correct.

Kindly go through the business reports prepared by Capgemini, Nielsen etc that will prove beneficial to give you an industry outlook. Reports prepared by the World Bank is also remarkable.