Adaptation … one of the lesser spoken-about traits of the top business executive. In the ever-changing world of mortgage production, the ability to adapt could mean the difference between success and having to find a new line of work.
Congratulations! The mere fact you are taking five minutes out of your day to read an article on the subject, by a writer you may never have heard of, shows you can adapt. After many years of negativity in the mortgage business, don’t you think it's time we look forward?
The goal of this article is to begin the process of looking at the job of increasing production differently than the way it used to be. With all the changes our industry has gone through over the last few years, old methods are simply not as effective as they used to be. While we will only be able to skim over several topics, the basic ideas and principles covered in this article have proven to be very effective in helping my clients refocus their energy into new areas and begin to build production for the long haul. Whether you are a VP level executive, branch manager or a loan officer, hopefully you will pick up a few new ideas and begin to move forward.
If you look back over your time in this business and compare the many facets of your job and how you executed them, you will see how much you have already adapted. If you have been around long enough, think back to before automated underwriting. Originators had to put a very thick loan file together and send it to underwriting. An underwriter had to examine the file, page by page (remember when we actually used paper?), and then make their own decision on whether or not to approve the loan. Remember when there were just a couple of well-worded disclosures instead of the multitude of confusing pages we must attempt to explain to buyers today? The amount of time we all spend on non-producing activities has grown to an all-time high, with no end in sight. If you are forced to spend more than half of your time on compliance issues, you better make great use of the little time you have left to build your business.
Production, or basic loan generation, has been the job of the loan originator for a very long time. Unless you work with a company that buys leads and spreads them out throughout their call center, generating loans has most often been left to the loan officer. Some originators spent day after day, sitting in a model home, hoping to grab a customer when buying a new home. During the many hours of boredom, we might begin to build a relationship with that salesperson. But who has the time to do that anymore? With the high turnover in new home sales, and the lower upside on personal income on a per loan basis, this method of generating loans is simply too inefficient. And don't get me started on the "preferred lender" situation; we can address that in a later article!
Generating business from Realtors has always been tricky. Many Realtors simply haven't wanted to involve themselves in the loan side of the transaction. Others simply do not fully understand the importance of the loan, and therefore, have little desire to work with a talented loan officer. But when we tried to build those relationships, what did we do? Drop off flyers or muffin baskets, take a Realtor to lunch? These were all very common methods of reaching out to the real estate agent community. And half the time, we actually succeeded in meeting and getting to know a Realtor, we would find out they were only part-time and closed five transactions a year. Again, not an efficient use of our time, especially in today's climate.
So given the diminishing returns in most of the typical production strategies, we now must adapt how we attempt to grow our business. The first step is to take a look at our personal business plan. Don't have one? Then get one, fast! Okay, maybe we should start there. Business plans are an essential part of the success of any business. A loan originator is a one-man business and should be treated as such. When all is said and done, your success or failure will depend on YOU! If you are depending upon your company, processor, or a lead generation source, to keep you afloat, you are doomed to fail!
Begin by setting some goals for yourself in areas other than volume or number of loans. This is the biggest mistake I see loan officers make. They often center everything on how many loans can be closed. A quality business plan might finish with a goal of “X” number of loans, but it doesn't start there. You need to start by building a plan on how to increase your referral base. Developing a strategy to double or triple the number of real estate professionals that consider YOU their primary source for all things loan related. A sound and detailed plan to build these relationships will generate the desired volume of loans, provided you are committed to following that plan every day. Simply waking up and taking what comes your way will not keep you in this business very much longer. Adapt or die!
When working with a classroom of loan officers, I give them a little test at this point. I ask everyone to list the two main things they would "sell" if given three undivided minutes from a potential referral source. The short version of this test is the following: If either of your answers include the following: Low rates, great turn times or closing loans on time, or the age-old “I give great service and will always answer my phone, etc.,” then you fail!
First off, that is the same old message that almost every loan officer delivers every day. How do those messages set you apart from your competition? Everyone says the same things and most Realtors simply don't believe you. Even if you are the very best, how can you prove you really are different from the rest?
Secondly, the biggest risk you face with those messages, even if they do work from time to time, is that you cannot control the level of success. You might have the best rates today, but what about tomorrow? Turn times might be great today, but if your rates are really low and your company's volume spikes, what happens to turn times? And what happens when you finally let yourself enjoy life a little and go to a movie? You don't answer your phone and they move on to someone else. If you are currently out there selling those value propositions, you will eventually fail on one or more, most likely through no fault of your own. Sell something you can keep in your control. Adapt or die!
Recruiting is a more important part of the mortgage business than ever before. Companies need successful branches, branch managers need quality loan officers and originators need referral sources. I often ask the question, “What is your value proposition?” I am consistently amazed at the blank stares I receive when I ask that question. It's not that nobody has a value proposition, it's usually that they never bothered to think about things in those terms. But why would a branch join your company over the many others out there? Why would a loan officer join your branch over the hundreds of others? And finally, why would a Realtor send business your way over the thousands of others out there? Your value proposition is what sets you apart from almost everyone else. Great rates and good turn times are not value props that set you apart, a lot of companies can offer those. You must develop your own personal value proposition and then work to deliver on that every day. There are competitors out there right now working overtime to take away your production. Adapt or die!
Production is the lifeline of the mortgage business. The job of increasing production falls to everyone within an organization, but it all ends up with the loan officer. Companies must, and many are, providing new and successful methods to help their employees grow their personal production. Choosing which company to work for can make or break your ability to succeed. Many branch managers are working hard every day to help their loan officers succeed, and in turn, they earn their override or margin. Those who don't will lose those originators (and their production) to a new branch manager or a company that caters to loan officers, allowing them to run their own one-man branch. And finally, those referral sources, the gold bars of the mortgage world, will find a new loan officer who can show a value propositions that help increase the sales of the real estate agent.
So, build a plan and work to execute that plan each and every day. Don't be afraid to ask your branch manager or company for help. They should earn your business just like you must earn the loans you generate each month. If they cannot or will not help you, maybe you are working in the wrong place. Realtors fire us every day when we don't deliver the best, so can you. Believe in yourself, work hard, and ADAPT OR DIE!
Article was co-authored by Jon Traver.
David Lykken is president of mortgage strategies and managing partner with Mortgage Banking Solutions. He has more than 35 years of industry experience and has garnered a national reputation, and has become a frequent guest on FOX Business News with Neil Cavuto, Stuart Varney, Liz Claman and Dave Asman with additional guest appearances on the CBS Evening News, Bloomberg TV and radio. He may be reached by phone at (512) 977-9900, ext. 10, or e-mail
[email protected] or
[email protected]. Jon Traver is production consultant—branching, recruiting and LO training for Mortgage Banking Solutions. Jon has spent 12 years forging referral relationships with builders and realtors for his own mortgage company. He has extensive experience working with branch companies to grow their businesses through branch and LO acquisition, as well as building long-term business development plans. Jon trains executives, branch managers, and loan officers how to redefine who they are and what they do. He then helps them build a game plan for taking that new knowledge to the streets, including the execution. He may be reached by phone at (512) 977-9900, ext. 112, (972) 467-3990 or e-mail
[email protected].
