Understanding Breakeven to Right Size Your Mortgage Company

What are your plans now that the refinance wave is over? Originations have dropped by 50% and may not have bottomed out. To survive in the current market, our clients are faced with redefining their business projections and “right sizing” their business models to fit the demand. Companies that are doing this will remain competitive, mitigate over staffing losses, and set a new baseline from which they
can grow their business.


To assist with this task, we have developed a “What If” scenario process providing guidance on how strategic changes will impact your bottom line. We’ll provide you with a model to lower your breakeven point to its minimal volume. Then, we provide insight into the potential profit as you originate units and volume above that new norm. Finally, we monitor the results of your actions providing monthly analysis of the resulting outcome until the final changes have been realized.


The purpose of this is to help make quick, impactful decisions with the following perspectives in mind:
What if I make an adjustment to…

  1. Gross Margin – increase (decrease) for competitive reasons
  2. MLO Comp -
    a. Decrease for margin preservation; or
    b. Increase for MLO retention
  3. Cost Reductions:
    a. Fixed Expense Reductions:
    i. FTE (fulfillment) – overcapacity
    ii. Reduction of third-party services (recurring)
  4. Bonus plans – are these aligned with your current strategy?
  5. Net Margin, Breakeven, and potential profit (post adjustment)

Using your closed loan counts, financial data, and a list of changes (e.g. margins, bonus plans, fixed
expense, recurring vendor services, etc.) we will provide you with a report that shows you “what if”
scenarios including a matrix of costs cutting to help guide your decisions. Then we will follow up for
three months until the cost-cutting measures have been realized to their fullest extent.

On the following graphic is a sample of the work and report.

Find Your Breakeven Point to Forecast Profit/Loss
Breakeven Simulation

If you are interested in learning more about how we can help you survive and thrive in the new market,
contact us at:


John D. Beneventi – Co-founder and Financial Officer
Phone: (858) 759-7028
Email: [email protected]

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