Education: Key to broker success ... Becoming more than an order taker requires seeking out educational opportunitiesAl CrisantyAmerican Brokers Conduit, ABC, loan borrower, financial advisors, mortgage planner, David Kuiper, ABC Advisor Center, ABC Power Call
"The brokers who do the work necessary to build up their
book of business during this difficult time will be the most
successful in the days ahead."
--Al Crisanty, Executive Vice president and National Production
Manager
American Brokers Conduit
I recently read that the majority of mortgage brokers working in
the mortgage lending industry today had not yet worked through an
entire mortgage cycle. Im not sure thats true, but if it is, many
brokers in the market today might be wondering if the business will
ever return to the glory days of the latest refinance boom. I can
tell you from personal experience that it will.
Our business is cyclical. It comes on strong for a few years and
then moves through the downside of the cycle, allowing us to catch
our breath and prepare for the next boom. This has been the way in
our business for many years. But thats not to suggest that this
isnt a great time to be doing mortgage business, because it is. The
brokers who do the work necessary to build up their book of
business during this difficult time will be the most successful in
the days ahead.
While the changes were seeing in the market today are guaranteed
to reverse themselves in the future, there are changes were seeing
in our customers that will not. All loan originators must realize
that the borrowers were serving today are much different than they
were even a few years ago. Brokers who dont take these changes into
consideration and learn how to serve these customers in order to
effectively build their businesses will find the going much more
difficult.
A new kind of American home loan borrower
Fifty years ago, home mortgage loans were viewed as a necessary
evil by most Americans. Our grandfathers didnt relish the idea of
going into debt to anyone, for any reason. They worked hard and
paid off their home loans as quickly as possible and, in the
process, built up the equity that helped to create one of the
richest societies in the world. Over the years, our lives became
complicated and expensive, and we settled into the reality that we
would all have a mortgage loan and spend the better part of our
working lives paying off that 30-year, fixed-rate note. But as the
last millennium drew to a close, all that changed.
As cycles go, the last wave of home loan refinances (1999-2003)
was a tsunami. Loan volume that had never risen above $1 trillion
skyrocketed to more than $3 trillion in just a few years. People
who had never considered refinancing their homes rushed back to the
closing table to get a better deal as interest rates fell through
the floor. Some home borrowers refinanced their loans every six
months, getting a better deal each time.
Those days are over, but the lessons homeowners learned cannot
be forgotten. The mortgage loan is now just another financial
instrument that can serve many purposes in addition to buying a
home. Borrowers today, in general, understand the terms of the
mortgage and they know the consequences of their actions. They
monitor the financial news and make refinance decisions
accordingly.
But that doesnt mean they dont still reach out for help. In
fact, while we know that more than 70 percent of American
homeowners consistently log on to the Internet to research mortgage
loan interest rates before contacting a lender or broker, only a
small percentage of them actually follow through to close their
loans online, preferring to contact a professional for support.
Despite their increasing technological sophistication, todays
borrowers are still looking for a trusted financial advisor to help
them navigate the mortgage lending process. But they are no longer
satisfied with a broker who can only quote them a rate. They demand
more, and that means successful brokers have to educate themselves
to become more than they have been in the past.
Preparing yourself to serve todays
borrowers
Im not suggesting that every mortgage broker needs to go back to
school to become a certified public accountant or tax attorney, but
it is true that todays borrowers need to know more than the current
annual percentage rate before theyre willing to make a buy
decision. Its up to the mortgage broker to provide this
information. In fact, if the borrower feels the broker doesnt know
significantly more than they do about the lending process, and the
long-term effects the mortgage decision will have on their
financial lives, theyll go elsewhere.
This is exactly why were seeing more mortgage loan leads coming
into lender queues from financial planners and accountants.
Borrowers have a desire to know more about what a particular loan
will do for them (and to them) and are seeking out people they
think can answer their questions.
Unfortunately (or fortunately for mortgage brokers), very few
trusted financial advisors who dont originate mortgage loans full
time can answer all of the questions about the mortgage loan or the
process of getting one. This is a great opportunity for brokers who
are willing to put in the time and make the financial investment
necessary to be better educated advisors.
Borrowers today want to know which deal is best for them, given
their current financial situation. They want to know how this deal
will affect their net worth and their tax situation. They want to
know how the benefits will change over time as the loan is paid off
or if they choose to refinance. And they want to know how much
flexibility, if any, theyll have in the future should their own
circumstances or market conditions change.
Its important for brokers to be able to answer these questions
because there are lasting negative consequences from either having
no answers for them or the wrong answers. Borrowers who find that
they are not in the right financing vehicle after the closing will
experience remorse. This will limit the brokers future referral
business and destroy any chance of creating a customer for life
from the transaction.
This is a critical point. For years, the mortgage industry has
been forced to admit that there was no loyalty created in the home
lending process. Customer satisfaction ratings consistently ranked
our industry below the Department of Motor Vehicles in most
consumers minds. Thats a pitiful state of affairs. But its one that
can be changed.
Of all of the players in the mortgage lending transaction,
mortgage brokers have the best chances of creating customers for
life by being good financial advisors. They are the first players
in the game on the financing side and often the last people the
borrower shakes hands with at the closing table. No one has a
better opportunity to own the customer.
Shifting from loan salesperson to mortgage
planner
To make this happen, brokers have to think differently about the
way they deal with their customers. David Kuiper, MBA, CMPS put it
best when he addressed members of our broker network during one of
the many free broker training seminars we offer. In addition to
managing a busy mortgage practice, Kuiper is a nationally
recognized author, speaker and trainer for the mortgage industry.
He is known as being an expert on first impressions and building
client intimacy. He said, "Mortgage planning requires that you make
a mental shift from processing transactions and pricing deals to
providing life changing advice for clients."
Thats exactly what its all about. Because even if we dont
realize it, every time the customer returns to the closing table,
they are making a change in their financial life, which impacts
everything else in their world. We all, as originators, have to
ensure that these changes are based on solid advice that yield
long-term satisfaction for our customers. Kuiper suggests that
originators listen to the clients self-described ideal situation
and honor that request with a suitable loan program recommendation.
But then, he said, brokers can take it a step further.
"I ask the question: 'Would you be interested in seeing an
alternative that may significantly enhance your net worth?' Of
course, there is only one answer to this question: Yes! I then show
them the results of how making a lower down payment, utilizing
interest-only financing and never paying extra to the principle
actually works to their advantage."
This idea may not apply to every borrower, but the point is that
brokers must be in a position to suggest ideas that will truly
change the borrowers life. As Kuiper points out, 95 percent of
Americans do not work with a financial advisor. Left to their own
devices, most people would consume, rather than conserve, their
equity, cash flow and tax savings. By helping your borrowers make
better decisions, youll create a lasting impact, which is the very
best way to create customers for life.
But its not just a long-term benefit that brokers get from
helping their customers get more out of the mortgage lending
experience. There are short-term benefits too. Kuiper teaches that
brokers that learn to practice mortgage planning see their average
loan size increase dramatically, find they are rate-shopped less
frequently, see more referral business and find that their clients
view them as a trusted advisor and no longer see them as an order
taker.
"This builds a true client for life strategy," Kuiper says. And
hes right.
Getting the training you need to succeed
How can brokers become more than order takers and take their
businesses to the next level? Brokers must seek out educational
opportunities that will enable them to be better advisors to their
customers. In fact, brokers who do not have the skills to go to
this next levelwhich, I admit, was not a hindrance during the
refinance boomwill not be successful in the future.
Fortunately, broker training opportunities are everywhere. There
are professional trainers and public speakers, business and trade
associations, as well as business partners, all offering tools and
techniques designed to improve the loan originators business.
Flipping through the pages of this publication will provide many
good ideas.
No broker in the country needs to travel far to experience a
seminar from one of the nations top trainers. These traveling
teachers cover the nation and are bound to appear in a nearby city.
The drawbacks are that they can be expensive and often focus on
sales skills. Selling is the act of moving the borrower from
prospect to close. Without the ability to offer good advice, the
sales act will be limited to techniques that, while they may be
effective, do not guarantee that the borrower will not feel remorse
after the close. Another opportunity is provided by the many state
and national trade organizations that serve our industry. You may
be reading this during the National Association of Mortgage Broker
Annual Convention, which always provides a host of great session
speakers and training opportunities. From online classes to
training tapes, your trade organization offers many programs, some
of which are important for state licensing requirements. The
drawbacks are that this training can be expensive and may require
the broker to travel, taking an inordinate amount of time away from
the business.
In my experience, leading brokersthose who understand the
importance of continuing education and training to their
businessesare most often limited in their training options by
budget and time requirements. If the training takes place during
business hours, most successful brokers are hard pressed to justify
the time away.
One of the best ways to take advantage of training opportunities
is by working closely with your wholesale lender. No oneexcept for
the brokerhas more to gain from the brokers success than the
wholesale lender.
Why it makes sense to work with your
lender
The fact that your success is directly tied to the success of your
lender is only one reason why it makes great sense to take
advantage of any training opportunities offered here. Another is
that a good lender will offer a great deal of training at no
charge. In addition, many opportunities will be offered through the
company Web site, which is a site youre likely to be frequenting
anyway through your work and can access after hours. Not all
wholesale lenders offer educational programming. Not all of those
that do are adept at providing good educational opportunities. Even
so, brokers would be advised to find out about all of the training
opportunities offered to them through their wholesale lending
sources. In addition to great information that is designed
specifically to make brokers more effective and successful, loan
program specific information will make it easier to meet lender
requirements, something each broker must do anyway.
While lenders may not always make this point clear, the brokers
that make up their third-party loan origination networks are among
the most important relationships these companies have. Good lenders
will do whatever they can to help these brokers succeed. This
usually becomes more evident during this part of the cycle, when
lenders depend more heavily on their broker networks for loan
volume. The best lenders will continue to offer these programs long
after the market ticks upward.
In our own companys case, we set up an entire division just to
provide training opportunities to our brokers. We set up a special
Web site more than two years ago to deliver special educational
content and have found it very rewarding, both for our own mortgage
banking firm and for the brokers that work with us.
From our Advisor Centerwhich offers specific sales scripts,
presentations and industry updates, to our monthly Power Call
information updates featuring calls with the industrys top
speakersto our On-Demand Seminars, we do all we can to get our
brokers the information they need to be more successful. Its in our
own best interest and it makes the loan originators we work with
the very best in the industry.
Increasingly, the information were providing has to do with
enabling the mortgage broker to be much more than an order taker to
todays mortgage loan borrowers. Brokers are called upon to go
beyond the basic loan program and pricing information in order to
be better advisors to their customers. Wholesale lenders that care
about their brokers success will help them get the training they
need to be that valuable resource to home loan borrowers. Anyone
who has been in this business for more than a single cycle will
tell you that the business will come back strong in the future.
What wont come back are home loan borrowers that dont understand
the mortgage process and what it can offer them. If anything, the
borrowers of the future will demand even more of the brokers that
serve them.
Consequently, brokers should reach out to their lenders now to
find out what training is available and to demand access to the
information that will make them better at the jobs they do. For
without that training, many brokers will not weather this part of
the cycle and, even if they do, will be ill prepared to capitalize
on the next upturn in the market.
Al Crisanty is executive vice president and national
production manager for American Brokers Conduit in Melville, N.Y.
He may be reached at (516) 620-1009 or e-mail
[email protected].
