If a secondary marketing team wants to reduce their production and the volume of loans in their pipeline, what action might it take?

• A. Increase their margin/raise their street price
• B. Lower interest rates on existing loans
• C. Hire additional loan processors
• D. Simplify underwriting criteria

Answer: (A)

The choice to increase their margin or raise the street price is an effective strategy for a secondary marketing team looking to reduce production and the volume of loans in their pipeline. By raising the street price, the cost of borrowing becomes higher for potential borrowers, which typically leads to a decrease in demand for mortgages. Higher prices can deter some buyers from pursuing loans, thereby naturally reducing the number of applications and loans being processed.

This approach aligns with the principles of supply and demand; as the cost increases, fewer people are willing or able to initiate new loans, helping to manage the pipeline more effectively. In contrast, lowering interest rates would likely increase demand by making loans more attractive, while hiring additional loan processors or simplifying underwriting criteria would only serve to increase capacity and expedite the processing of loans, further inflating the pipeline rather than reducing it.