Manufactured Housing News

Lending isn’t only a predominant source of revenue for many financial institutions; it’s also one of the major sources of risk. According to financial experts, managing risks efficiently is imperative to boost the overall portfolio performance and returns expected. But for many organizations, managing risks is a complicated process particularly due to lack of know-how.

The problem becomes even more complex as we move toward manufactured home loan portfolios, given the little-explored, ever-changing manufactured home lending environment. The good news is that most optimization models for conventional mortgage portfolios can be applied successfully to any manufactured home loan portfolio.

Below are the top three ways we suggest financial institutions pursue their venture to overcoming the volatility in today’s manufactured home lending market and improving their portfolio performance.
 

Outsource manufactured home loan origination and servicing.

Outsourcing loan origination and servicing to a specialized company with plenty of experience in the industry can improve your overall manufactured home loan portfolio performance. In short, outsourcing will allow your institution to:
- reduce overhead expenses;
- replace variable costs with predictable fixed costs;
- minimize the cost of recruiting, training and retaining in-house staff;
- concentrate on other areas, such as attracting new borrowers and building long-term relationships with them;
- offer your members or customers the best possible loan products and services in the market;
- build credibility and trust for your organization, which partially comes from knowing that a reliable third-party loan origination and servicing company is handling the money of your customers.

Build a manufactured home loan portfolio management system.

For effective loan portfolio management, your financial institution must have an efficient system in place. To develop such a system, it’s imperative that you focus on the following key areas:

Objectives.

The main objective of any loan portfolio management system should be the identification of potential risks. When loan delinquencies are on the rise, for instance, a financial institution should concentrate on the factors that affect the loan repayment performance of the borrowers.

Segmentation.

Grouping borrowers based on criteria like credit scores, DTI ratios, down payment amounts, loan terms, etc. will allow you to determine certain patterns in your borrowers’ repayment behavior. Not only will you be able to better tailor your loan products and services to each borrower category; you’ll also find new ways to protect your bottom line and enhance your portfolio performance. 

Analytics.

Accurate loan portfolio analysis enable financial institutions to identify a series of loan portfolio problems. Unfortunately, many organizations still use spreadsheets to perform such analysis. In addition to the time spent collecting, comparing and compiling information, misreported, outdated, redundant and incomplete data often prevents small banks and credit unions from correctly identifying and addressing the underlying causes of portfolio under-performance. Since specific manufactured home loan portfolio items like collateral values, delinquencies and charge-offs need to be monitored and analyzed accurately, specialists recommend opting for a reliable loan portfolio management solution. At Triad Financial Services, for example, our experienced professionals centralize data, issue comprehensive reports and perform thorough loan portfolio analysis upon request to help financial institutions proactively identify risk indicators and take the right measures before small issues escalate into big problems.

Set realistic targets for each manufactured home loan portfolio.

Setting realistic risk and return targets, and actively making adjustments are two important parts of manufactured home loan portfolio management. For instance, tightening lending standards and raising the interest rates on new origination products to compensate for the possibility of default is a common practice among lenders. In addition, C-level executives and operational level teams need to understand not only the risks posed by each category of credit but also how the risks of individual loan products interrelate with each other in a manufactured home loan portfolio.

Regardless of what others may say, risks are inherent in the credit process. But when potential risk factors are analyzed, managed and controlled efficiently, a financial institution can consistently boost the performance of its loan portfolio.

If you’re looking for a whole new approach to credit risk and loan portfolio management, feel free to call our experienced professionals today at (800)-522-2013, Ext.-1634 or investors@triadfs.com. Over the past 57 years, Triad Financial Services has developed a turnkey portfolio management, loan origination and servicing solution to help financial institutions expand their loan portfolios and increase revenue.