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This month, we had a chance to chat with Michael Maida, national sales director of GSF Mortgage Corporation. Michael has a long history of working in the mortgage industry, with nearly 20 years invested in the industry. His background includes working with some of the largest wholesale brokers in the Wisconsin area. He then went on to serve in the capacity of an account executive for lenders such as Countrywide. His expertise in both the sub-prime and conforming arena made him one of the leading AEs in his region, helping loan originators in expanding their customer base and knowledge of the industry. He earned several awards for his accomplishments of reaching new highs in production levels and closing ratios.
Having been able to not only originate business, but teach others how to do the same, along with his vast knowledge of the industry guidelines and regulatory issues continuing to change, led him to his current position as national sales director for GSF Mortgage Corporation. At GSF, he directs a staff of AEs, as well as gets involved with all of the upcoming legislature that is pending and is influential in implementing legislative changes within the company. Michael also has been actively involved with local banks and credit unions to help them with their mortgage divisions and implement quality control within their organizations.
Please tell us how you first got into the mortgage business.
In 1992, I entered the industry as a loan originator. After a year or so in the industry, I was then given the opportunity to manage branch development. Being involved with retail for approximately six years, I then entered the wholesale arena, starting with a regional lender, which gave me the opportunity to hone both my personal underwriting and loss mitigation skill sets that have proven to be one of the best things I’ve learned from my wholesale experience. As my experience grew, I was given the opportunity to work for one of the largest wholesale lenders at that time. That experience taught me best practices in employing analytics to measure business partner performance from a profitability standpoint.
Give us a brief history on GSF Mortgage Corporation.
GSF Mortgage was created in 1995. The principals of the company, as well as most of the branch management team, have worked together over 35 years, going back to a finance company that exited the lending arena. GSF Mortgage opened GSF Funding to fund and source FHA, FNMA, FLMC, USDA, VA and conforming products for its retail division. GSF Mortgage manages ancillary companies that compliment the retail platform, from real estate, title and funding, along with real estate development.
GSF now offers various solutions for mortgage companies of all sizes, from branch management opportunities, to wholesale programs, to correspondent programs.
What was the genesis for this all-encompassing platform?
In 2007, we had a vision of encompassing both wholesale, delegated and non-delegated correspondent lending to our funding platform. Our successes in those arenas were contributed to the development of stewardship programs for both wholesale customers developing FHA lending sponsorship and mortgage bankers developing robust correspondent platform.
Over the last two years, our wholesale business partners have suffered substantial headwind from both regulatory and market-driven challenges. Being quick to react to environmental and economic challenges, we added the Professional Branch Opportunity to our product suite. We are welcoming both existing wholesale customers who we have matured along the years, as well new business partners to our retail branch environment. That has been extremely successful for both GSF and the business partners new to banking.
What role does your wholesale sale account executives play in managing these platforms?
One of the roles our AEs provide is to initiate the first line of defense in risk mitigation, by holding the business partner to the highest standard of submission. They also assist operationally through aggressive pipeline management. GSF also provides our account executives with a professional marketing and public relations team to assist in vetting potential clients. My philosophy in getting the most out of our sales staff is to compensate commissioned employees on the higher end of the scale. Although our comp expense percentage may seem higher than what we deemed acceptable in the past, what we gain is an increase in operational effectiveness due to a higher quality product entering our system. You take out most of the loan level challenges most AEs typically deal with, thus freeing up more time to train our business partners on GSF's policy and procedural efficiencies that help maximize the overall velocity of submission to consummation. The end result is this greatly reduces your cost to produce, which in turn, results in lower margins necessary to maintain profitability.
Training our AEs in managing multiple customer groups (wholesale, correspondent and retail branch management) insulates our sales force from a changing landscape that threatens their livelihood, or secondary market appetite which, from time to time, impacts each business channel.
What are your current efforts given the unstable environment of mortgage lending today?
We have, until most recently, focused on our existing wholesale customers for branch opportunities, reaching out through normal prospecting measures to deliver the message from our AEs. We now provide our AEs with a professional marketing and PR team to assist in vetting potential clients. We have also expanded our outreach through various vehicles, including advertising in National Mortgage Professional Magazine and other outlets. This message we are trying to deliver again is to say: "No matter what you are, you have a home with GSF Funding and we are going to properly back your loan and provide the tools necessary to be successful in today's industry."
At GSF, we are able to offer things that are not typically available on the secondary market for the smaller mortgage brokers and mortgage bankers. For a small correspondent who does $2-$3 million per month in funding, to be provided live security pricing, bid ask pricing and bulk trade transactions is unique and not often an option for that size of customer. As we look to increase our servicing portfolio, we have accomplished that goal through hedging strategies typically reserved for the most robust of customers.
No matter what division it is, wholesale, retail or correspondent, I think each one of those provides a very unique structure that is different than what our competitors do.
Are there any books that have guided your business philosophy?
I can sum all of our philosophy up with two great books. One of them is Blue Ocean Strategy, by W. Chan Kim and Renee Mauborgne, which we use as our company mantra ... the simultaneous pursuit of differentiation and low cost. To summarize the Blue Ocean Strategy or "BOS," all of our competitors are sharks, and we are competing for the same customer. You can resort to lowering your profitability or increase operational staffing to accommodate faster turn times. You can compare this competition between like companies to sharks who are out there biting each other. Pretty soon, we all compete right into a non-profitable product. One company will perform a transaction for a quarter of a point less, while one will do same-day closings ... all of those things take away from profitability within your company. You tend to follow the leader, so to speak, when it comes to defining a business-partner relationship.
We thought that moving outside of this "bloody, shark infested ocean" and into "the blue ocean," swimming away and doing something unique, would be the key to our success.
The second book would be The Fred Factor by Mark Sanborn, a great book that defines customer service. If you can adopt a business model that works around the BOS and can provide customer service, similar to what is described in The Fred Factor, you are really guaranteed success.
Having worked at one of the country's top wholesalers, how have you taken those experiences and business environment, and moved it over to the day-to-day operations of GSF Funding?
I was always in the top five percent nationally from a production measure while working with my former employer. The successes that we had as a wholesale branch directly resulted from a customer service standpoint. Being a self-proclaimed "workaholic," I felt the entire team shared the same dedication to success as I did. We built our company from the ground up, with customer service being paramount to everything else. If we could duplicate the service and had increased flexibility and maneuverability, success was inevitable.
To be honest with you, the only thing I left behind was the challenge of making change when change was due. Whether it is environmental or economic, something always changes in the mortgage industry. The only thing consistent is change. As these issues came up, such as downpayment assistance going away, USDA capitalization issues, the 2010 Good Faith Estimate (GFE) ... those types of things that are radical changes to the industry and to be able make changes operationally on a dime and quickly disseminate the new policy or producer to our customer quickly.
To what do you attribute the success of GSF Funding?
I find our success in beneficially melding with our business partners. We learned a lot from the successes of the large national aggregators, and offered a lot of the tools we have earned to our business partners, we liken our company to a speedboat, large aggregators are too big to adopt flexibility in policy, they are the ocean liner that is very slow to move and adapt to change. On a dime, we are able to create policies and procedures that aid in our success and to the success of the wholesaler market. For that, we feel that we earn some form of loyalty out of the broker industry.
Do you feel that brokers are more loyal these days than they were during the times of the industry boom?
Brokers are much more loyal nowadays. From a competition standpoint, there is less out there. You can earn business, buy business or scare someone into doing business with you. Some of the larger aggregators employ the scare tactic, rather than earn business from a service standpoint. The fact that there is less competition is the number one reason contributing to the loyalty factor.
What specifically does GSF Funding do to implement a partnership strategy versus just "having brokers?"
We continually take care of our business partners by giving them a hand up. Whether it is creating collateral pieces they can distribute to their referral sources, to developing hedging strategies that allow them to offer more aggressive pricing in a longer-term lock period. In a purchase transaction, you are typically dealing with a 35-40 day lock, and we develop hedging practices that allow them to fit more comfortably into that scenario.
Our ratio of purchases to refis is extremely high. As a company, we do more purchases than refis. We've had a higher purchase concentration over refis by helping our business partners in developing their purchase money marketing strategies.
I think that by doing more of a bulk style transaction, this allows the business partner the ability to spend more quality time processing the file and less time waiting for an underwriter to make a decision on the file. They know that when they deliver the file to us, they have guaranteed service they can expect. That all lends to a better customer, higher pull-through ratio, thus contributing to our success and it takes out the environmental roller-coaster of highs and lows.
For those looking to join a growing company through our professional branch opportunity, we adopt the philosophy that you can be in business for yourself … not by yourself.