Keeping the customer in the driver's seat: A chat with Kirk Smith, president of SouthStar FundingEric C. PeckKirk Smith,Southstar Funding
Founded in June of 1998, Atlanta-based SouthStar Funding has
consistently ranked high among the industry leaders in origination
volume ($3.4 billion in 2003 and $4.25 billion in 2004). Primarily
a wholesale lender offering a variety of products including
sub-prime, interest-only and alt-A programs, SouthStar prides
itself on its strong customer service, forging bonds that last and
endure over time through the company's nationwide network of
7,000-plus brokers.
Recently ranked number two in the Atlanta Business Chronicle's
2005 A+ Employer Award, this honor marks the third consecutive year
that SouthStar has been named one of Atlanta's top employers (the
company ranked number one in 2004 and number 14 in 2003). The A+
Employer Award is based on factors such as benefits offered to
employees, including insurance, flexible work schedules, vacation
and performance recognition. In addition, SouthStar was also
honored this past June by the Atlanta Business Chronicle as ranking
number eight on the publication's Pacesetters list of fastest
growing privately-held companies, the fourth consecutive year they
have been recognized in the top 20 of this listing.
Since October of 2004, SouthStar has been conducting phone
surveys of its broker customers in order to ensure the continued
delivery of outstanding customer service. After every loan
application submitted, a SouthStar representative calls every
broker and loan officer, gathering feedback and making sure that
service goals were met. Those surveyed are asked about the
timeliness in which SouthStar loan specialists initially contacted
the broker, courtesy levels experienced and the accuracy of the
closing package, concluding with an open-ended question on how
SouthStar can better serve their customers.
We recently sat down with Kirk Smith, president of SouthStar
Funding, for an in-depth chat about the company and its
relationship with the mortgage broker community. He earned his
bachelor of business administration degree from the University of
Georgia in 1983. Coming to the SouthStar helm with the background
of a loan officer, Smith served as vice president of EquiBanc
Mortgage Corporation from 1996-1998. He is currently a member of
the National Association of Mortgage Brokers, the Mortgage Bankers
Association and the National Home Equity Mortgage Association.
The Mortgage Press: One of the things about SouthStar is
that the employees are "broker-centric." Where does that
"broker-centric" philosophy come from?
Kirk Smith: My partners and I were all loan officers
before we founded SouthStar Funding, so we have a rich mortgage
broker background. We understand what it is like to be a broker and
understand that it is difficult. The biggest thing for us is just
understanding that customer service is the most important thing we
can deliver. Customer service means that you respond to your
customer, that there is no red tape involved and that you strive to
make the transaction as easy as possible for them. I don't know if
you necessarily need a mortgage background to do that.
The one thing that we tell our salespeople is that they cannot
be afraid to say "no." Time is important to us and it's important
to our customers and you cannot afford to waste it, and we'd prefer
to give someone a "no" answer early on.
TMP: How do you have new employees mirror SouthStar's
company culture?
KS: Whenever we open a new office, whether it be Orlando,
Denver or our newest office in California, we always promote
someone from within to go and run the new facility. The person
running the new offices has always been a part of the SouthStar
culture and knows our operations.
The other thing we do is host the SouthStar University, where we
bring in people from our offices nationwide back to our Atlanta
headquarters for training. It could be training on systems,
procedures and the way we do things or training on customer
service. We basically want consistent training so that we can
import that into the additional offices as we open them. Any time
you allow others to train, you have inconsistency and messages get
crossed. We want to make sure that our training is very disciplined
as we bring people into the company.
We want these managers to have entrepreneurial opportunities to
manage their centers and not have Atlanta [SouthStar's corporate
office] looking over their shoulder, telling them what they can and
can't do. They like the individual freedom. At the same time, we
need consistency and want the customer who sends their loan to
Atlanta to be dealt with the same way as a customer who sends their
loan to Denver. So, it's sort of a Catch-22, where you want to
promote independence, but, at the same time, want to make sure that
we have consistency across the board, and that is what SouthStar
University really does for us.
TMP: Do the employees have to return to SouthStar
University every year and re-certify? What do you do to make the
University an enjoyable experience?
KS: We have a program where underwriters, processors and
closers go through the class again, whether it be a few days or a
week, so that there aren't any holes at their position and that we
are certain that they were trained properly the first time around.
We've actually run into situations where we'd get a "push back"
from some employees as to why they had to do this and why they had
to take time out of their day. One thing that we did was to get
together in a room and get feedback on the re-certification test
that they took in an open forum. They actually enjoyed that free
flow of understanding that there are really a bunch of different
ways to perform a certain work task, there is really no right way
or wrong way, but we just want to make sure that their thinking
process is intact. They actually ended up getting a lot out of it
and we may eventually end up calling it something other than
re-certification, because that term does set a negative connotation
in some people's minds.
At SouthStar, we are very big on service benchmarks at every
position. Everyone in our company gets paid a bonus based on some
metric that is important to their position. To them, the better job
they do, the more profitable the company becomes and the more money
they will make personally. So, there is some incentive there, as
well, for people to improve at their job, because they can profit
from it.
TMP: Do you feel that education should be a
responsibility of the mortgage industry trade associations or the
individual mortgage brokers?
KS: The more our customers [brokers] understand how to do
business with us, the easier it is to provide better service. But
when you talk about training, it's tough to come up with an overall
program for the mortgage broker. The trade associations cannot do
it because not all mortgage brokers are necessarily members of the
associations. If you ever wanted to conduct formal training, I
think it would have to fall under the law of the state and I'm not
sure if the states have proven that they can do that
effectively.
TMP: What are the major benefits of having your business
concentrated more on the wholesale channel rather than the retail
end?
KS: Our retail channel, based primarily in Atlanta,
represents approximately five percent of our overall business. For
us, the wholesale business is more efficient; we can do business
more effectively and at a cheaper rate. Retail is more expensive,
as there are a lot of brick and mortar issues and turnover is
constantly an issue. From the wholesale side, we've found something
we do pretty well and we want to continue that trend. I know a lot
of companies want to diversify out and do retail, but retail is a
tough business these days, especially from a sub-prime standpoint
with the Do-Not-Call lists and telemarketing issues out there. In
the long run, if you are going to be in the retail business, you
need to have realtor-builder relationships and a good referral
network. That takes a long time to amass and it's not easy to do,
so from our standpoint, the wholesale model works better for
us.
TMP: Do you train the brokers on SouthStar's individual
products?
KS: We won't allow someone to sign up with us unless
they've been trained by a SouthStar account executive. We don't
want them to go online and sign up with us without truly
understanding all of the features of our products. Usually, when we
release a product or a special feature, we want to make sure that
our salespeople are doing the necessary training and that goes for
our account executives as well.
TMP: What is one of the biggest things a loan officer
can do at the initial interview with the client that can ease the
client's fears in the home buying process and instill a greater
sense of trust?
KS: One major thing is to set the proper expectations
up-front. That is the same thing we ask our wholesale sales force
to do with our broker customers. We tell them what the process is,
we tell them when they should expect to hear an answer, we explain
to them how the process works and then stick to that process. You
don't have to make miracles, you just have to do what you say you
are going to do. So many times when we meet with a customer, we are
so busy taking their info and worrying about where the process is
headed next, that we don't take the time to make sure they
understand what to expect from us. If you set the proper
expectations up-front with the customer and meet those
expectations, they can't help but be satisfied. What happens is
sometimes we don't set any expectations at all, and how are you
going to give great service if they don't even know what great
service is?
You'd be surprised, because if you told a customer that you were
unable to do something they need you to do, they will respect you
more. Sometimes they are testing you just to see how you'd react. I
don't think you can ever compromise that you are only as good as
your word, and if you set that up-front and stick to it, I think
you will be successful in any business, not just the mortgage
business. If the customer is not clear on what you are going to do
for them, there is always going to be a problem.
On the wholesale side, we do a customer service survey after
every loan closes and we ask the questions, "Did you get an
outgoing phone call to notify you that your file was submitted?"
"Was your file underwritten in 24 hours?" "Did your underwriter
call you to go over the terms and conditions on the file?" "Was
your underwriter helpful and pleasant when you needed to contact
them?" "Was your closing package on time and accurate?" But, we
state up-front that these are the benchmarks we have and are just
following up on them to make sure that we are meeting those
benchmarks.
It impresses the customer, because it shows them that you do
take this seriously, and these are the rules you've laid out and
are trying to stick to.
TMP: What advice would you give to today's mortgage
broker to maintain their current pipeline and generate new
business?
KS: The only way you can do that is to constantly remind
the customer that you are there and in business. People I know who
have been successful at it have shown up at the closing, they do a
follow-up thank you card, and present a special gift after the loan
closes. They also send out a newsletter or postcard on a regular
basis, just reminding the customer that they are there. They are
not only reminding the customer to do business with them the next
time they have to do a loan, but are also reminding them that you
are a mortgage broker they can refer to their neighbor. Referrals
are the cheapest and most effective sources of business.
TMP: Where is the future of the broker industry headed
and what are some of the problems currently facing the broker
industry?
KS: We don't see the mortgage industry going anywhere but
up, and brokers will remain a large piece of the process. I think a
lot of the predatory lending concerns we had a few years ago have
sort of passed as many of the states have come up with their own
laws and regulations. I think the consumer now feels better about
the industry and there are not so many articles in the mainstream
media about predatory lending.
Frankly, from my standpoint, interest rates are lower than they
have ever been, particularly on the sub-prime side. Some of those
rates are not that far off from conventional Fannie Mae rates. The
old days of gouging customers and charging high fees and interest
rates have passed because the market is so competitive these days
that you can't make a living doing that.
I believe that the smaller companies who are more in touch with
the customer will succeed ahead of larger companies that are
publicly held or merged. I also think that the customer wants to
have a personal relationship with the mortgage professional. I also
don't see the online business moving. Five years ago, everyone was
convinced that half of the originations were going to be online and
that has not happened so far.
