The mortgage industry can learn a few things from Forrest Gump

It may be time for a few mortgage businesses to look to the 1994 hit movie “Forrest Gump” for some sage advice on taking on the coming “storm.”

Last year’s historic refinance market of record origination volume is likely to give way to a strong, albeit relatively weaker, purchase market. The industrywide reaction to it is fairly apparent. Each day, we seem to hear the news of a new acquisition or merger. It makes perfect sense, especially now. Some firms, flush with cash after a spectacular year for origination revenue, are staking their claim to increased market share. At the same time, other businesses, recognizing the impending volume dip and perhaps not wanting to experience the margin pressure that can come with this kind of market, are cashing in and selling high. We can expect to see a lot more M&A-fueled consolidation in the coming months. But taking an aggressive M&A strategy to grow or cashing out are only two ways mortgage businesses are preparing.

A third course some firms are taking, clearly, is to charge headlong into the purchase market. Many businesses, especially lenders, are shoring up their operations with new technology, staffing changes or more aggressive marketing in an effort to win their market share without the benefit of M&A. This is a worthy strategy as well. We’ll soon be hearing more about crumbling margins as costs rise and volume shrinks. But make no mistake about it: there is still ample opportunity ahead for those who invest wisely in themselves and their operations now.

However, there is also a handful of businesses out there which seem to be battening down the hatches: ramping down staff, cutting expenses … almost mooring themselves into port to await the passing “storm,” if, indeed, you consider anything that isn’t a refinance glut to be a storm. It’s reminiscent of a classic scene from “Forrest Gump.”

In the scene I’m referencing, you’ll recall that our hero, Forrest Gump, has teamed up with Lieutenant Dan, his former platoon commander during the Vietnam War, to try their hand at shrimp fishing in the Gulf of Mexico. After sifting through empty net after empty net one beautiful day at sea, the perennially bitter Lt. Dan challenges the churchgoing Forrest on deck: “Where the hell’s this God of yours?” We are then treated to Forrest’s deadpan voiceover: “It’s funny Lt. Dan said that. Cuz’ right then, God, showed up.”

The scene jumps to their boat being tossed on the waves of a horrible storm, which turns out to be the infamous Hurricane Carmen. This shot is followed by TV news footage of the devastated shrimp fleet in what’s left of the port. Shortly after, we learn that Forrest’s boat was the only boat in the fleet not destroyed in port. By staying out in the storm, they had survived, and would go on, facing no competition, to strike it rich as the Bubba Gump Shrimp Corporation, eventually landing its CEO, Forrest, on the cover of Fortune magazine along with his first mate, Lt. Dan.

While this is not to suggest that if businesses simply take on every storm, they’ll automatically outlast the competition, there is a lesson to the entire analogy. Simply battening down the hatches and cutting costs in the face of a more difficult, but still promising purchase market is no better than waiting for the storm to pass from port. There will be no fishing, the entire reason the boat exists, from there, and it may well be destroyed in the process.

If your business isn’t taking either track of the M&A strategy as we transition to this new cycle, it’s past time to shore up your efficiencies and marketing. It’s one thing to spend money haphazardly or take needless risks. But it’s consolidating markets like this that reveal the leaders in the business. The true success stories are made here. Now is the perfect time to take some calculated, strategic risks — whether that’s with technology, product mix or marketing approach. However you choose to do it, it’s time to head out into the unknown. After all, there’s still a lot of shrimp out there to be caught!