I have been fortunate to experience many sides of the mortgage industry. My past 16 years have included positions as an originator, sales manager, operations manager, and for the past seven years, co-owner of a successful multi-state mortgage bank/brokering firm. I have also been a participating member with industry trade associations and have worked on legislative efforts. From these experiences, I have seen change, as we all have. And I see opportunity.
As all of us in the mortgage industry know, the past four to five years have been, at the very least, “hang-on-by-the–seat-of-your-pants” interesting. Most of you would probably agree that we aren’t yet done with this wild ride, despite a widespread desire for things to return to normal. In my view, getting back to “normal” is something we ought not to hold our breath for. Normal was not the 2000s. Normal was my first three years in the business, before automated underwriting engines. So rather than look back, we need to look forward and recognize that there is a new normal in place in the mortgage industry that both individuals and companies need to embrace if they are to capture the opportunities that lie ahead.
As housing markets have cooled off, the number of mortgage industry participants has fallen. Unless rates drop yet again, I would estimate that we will continue to see industry numbers fall throughout this coming winter and well into 2012. There will be fewer loans to be had and potentially even fewer participants to originate those loans. Order-takers beware: You are on the short road to extinction. Either your company better be really good at cost-effectively originating loans for you or you had better get out of your (dis)comfort zone and start originating business with a redefined sense of purpose.
I have seen success follow individuals who view being in our industry as a true and honorable profession. I have also seen failure engulf those who lacked foresight to plan for change in the mortgage climate. As industry professionals, we simply cannot do things the way we have in the past because that past no longer exists. We each need to evolve if we are to make it going forward. To illustrate that point, if you are a “refi expert,” I would suggest you are at the end of your line unless you have identified a strong niche of opportunity to focus on when interest rates rise. Our current rates hovering around the four percent range are not, by any standard, normal and they will increase sometime in the near future.
I have also seen negative individual traits that lead to poor results in our industry. Most of the time, those who possess these traits do not recognize the dark cloud they are placing right above their own head. Sadly, they are the “walking dead” of our business. Negative traits include seeking out the highest compensation to the detriment of more valuable or comprehensive factors. Another negative individual trait includes switching employers frequently. This is tough on past client and referral relationships, ultimately leading to the conclusion that the real problem is in the mirror, not the company affiliation. Equally negative traits include thinking loan-by-loan versus managing a vibrant pipeline (don’t think commission, think relationships and long-term volume), blaming underwriting instead of poor packaging/application-taking, and generally taking negative news as a negative on your own business. Individuals make up this industry and negative traits can bring down the individuals in it.
When I step back and compare my own company with other successful operations out there, I can see that size doesn’t necessarily matter. Rather, there are a handful of traits that seem to be a common thread for success at any sized firm, including:
►Continual industry-related education
►Surrounding people with other successful people
►Meeting and dealing with individuals on a face-to-face basis which includes referral sources as well as clients and even industry peers
►Staying in touch with past clients
►Putting on a smile when you show up in the morning
Again, the quality and strength of a mortgage company doesn’t relate to size or business channel. Others may say so, but don’t listen to them as they are operating out of fear. A strong management team will be able to see the forest through the trees and successfully guide those who make their living originating loans for the company. The key is staff engagement. If you are a manager, are you engaging your staff and challenging them to grow or are you just a “good times” manager (like an order-taker in a refi boom)? If you are on a team, is your team diverse and can your team divide and conquer? If you are an originator, do you feel your manager/management is capable or are they floundering right now? In asking these questions, be serious in your analysis because your own success is most likely on the line, if not right now, for sure in the near future. Make the company’s environment work for you, or get a new environment.
The mortgage industry is unique to other businesses, even service-related businesses. We don’t have any inventory on our shelves (at least, we hope we don’t … think buybacks). As originators, we don’t really have a lasting client relationship (although maintaining a post-transaction relationship is always good marketing, especially for referrals).
We don’t invest funds for clients so we are not advising them over any period of time. We do not insure their homes, and consequently, we don’t collect a new check once a year. Bottom line: Whether we like it or not, we are providers during a limited period of time of a financial product that is a liability to our customers. Adding to that is the fact that consumers and large institutions have been trying to commoditize what we do during this low rate, post-housing boom reset period. All of these considerations make us, and what we do, truly unique and that can create opportunities based on how effectively we distinguish ourselves and/or our organization.
Granted, the past few years for our industry have posed challenges to both individuals and organizations, but from it all comes great potential for those who recognize that innovation and change are good and essential. When is the last time you and/or your organization assessed your standing in our current environment? What are you doing differently today from what you did yesterday? Now is the time to refresh or create, for the first time, a business plan that includes a “back-to-basics” approach. Whether you originate referred business or leads-based business, you and/or your team should be sharpening your sales and management skills along with your knowledge of our mortgage industry.
One other benefit from my 16 years in this business is that of perspective. In drawing upon it, a simple fact is clear: What we have done in the past doesn’t work anymore. My perspective also tells me that opportunities in the mortgage industry are still to come. The housing market isn’t going away and neither is our industry—both are evolving and both will survive. The opportunity for all of us is grounded on how effectively we evolve within today’s new mortgage marketplace.
Eric Wiley is chief operating officer and co-founder of Pacific Residential Mortgage LLC. He has served on the board of the Oregon Association of Mortgage Professionals (OAMP) and is an active member of the Oregon Mortgage Lenders Association (OMLA). He may be reached by phone at (503) 905-4902 or e-mail [email protected]