Back in the early- to mid-2000s, virtually every marginally competent loan officer (LO) could open up an office … what we used to refer to as a “trunk of your car” mortgage company. Unfortunately, for these folks, compliance wasn’t as important as getting deals closed. Thankfully, in today’s era of compliance, the bar has been raised very high and only a small percentage of LOs will be able or even willing to try to clear that bar. For good reason, branch companies are very cautious about accepting new branch managers.
What does it take to start a branch office?
To answer this question, you have to ask yourself another question first: Why do you want to have a branch? The “WHY” fueling your motivation will tell you whether you have a chance of succeeding or not. The answer will be different from person to person, but this much is critical: Your answer to “WHY” must be inspiring enough to get you over, around, and through the many obstacles that will come your way. It must be inspiring enough to enable you to create a work space that will attract top talent in your area.
Once you have your “WHY,” and it’s strong enough to keep you focused on your goal, you need to take inventory of your existing skill set to determine whether or not you have the requisite skills to successfully manage a branch. If you don’t, you’ll need to find ways of acquiring the skills you currently lack, or hiring someone who has the skills you need.
So what are some of the skills that make an effective branch manager?
Having worked with companies all across America, I have observed some of the traits that make an effective manager. Here are just a few:
►Humility: Managers that display humility are able to establish a bond with their employees that is sincere and long lasting. Arrogance, on the other hand, will produce animosity and create a difficult work environment for all.
►Integrity: Managers who walk their talk and display true integrity are able to gain their employees’ confidence and influence them to have greater integrity themselves. The greater the integrity of the manager the greater the integrity of the whole branch becomes. The manager earns the respect of his employers and their customers.
►The ability to Empower: Great managers are able to implement management principles that help their employees feel empowered in their jobs. By empowering employees, managers are able to tap into the creativity and ingenuity of their employees, which in turn creates a culture of growth and keeps the energy in the office high.
►The ability to Empathize: The greater the manager’s ability to empathize with their employees, the stronger the manager-employee relationship. Everyone has challenges in their lives, and when employees feel understood by their manager, they feel more compelled to perform at a higher level. While, of course, no manager wants to be taken advantage of, the manager who has hired quality people and can cease from penalizing employees for being human or having lives outside the office will have loyal and grateful employees who are eager to please.
►The ability to Share Your Vision: Managers who work with their employees to create a shared vision for the branch are able to create a culture where everyone feels responsible for the success of the branch. Managers who don’t get their employees to buy into and to feel like an integral part of the realization of that vision will have a very difficult time actualizing that vision.
►Tenacity: Managers must be tenacious in their pursuit of the desired result. Many peaks and valleys come about when running a branch. Hiring and firing, maintaining a balance between comfort and respect, flexibility with responsibility, financial considerations are all part of the picture. Managers that grow from each challenge and create positive change for the future are in a much better position to move their branch closer to their goals.
Is starting a branch the right business move for you?
Once you’ve determined that you have what it takes in the way of the leadership qualities mentioned above, you need to then assess whether you possess the practical management skills necessary to be a successful branch manager. The most successful branch managers are those who understand how to create and implement workable business systems that move a business forward and will attain the growth required to thrive.
You must clearly understand that being a top producer does not always translate into a successful branch manager! In fact, this often becomes a scenario of “promoting to the highest level of incompetence!” Top producers will often fail as branch managers because each position requires a very different skill set―while some skills certainly overlap, and many individuals have both skill sets, not many do. Many top producers have never developed the skills needed to manage people―or simply don’t have the talent, patience or desire to do so!
Top producers are often very cavalier and strong individualists. They do very well as MLOs because their job matches their personality and/or skill set. But if top producers then decide they want to be their own boss and open a branch, without first evaluating the implications thereof and determining that they really have what it takes to succeed in this role, they may well find that they have no clue how to deal with disputes among employees. They have no patience for teaching others, or how to create a team spirit among employees. They have no clue how to create an office culture that people are attracted to and look forward to coming to be a part of every day.
They may watch longingly as their employees head out to land the deals while he needs to stay at the office and “rule the roost,” as it were. Top producers are so used to doing business for themselves, if they haven’t deliberately moved into a different modus operandi as branch managers, they tend to be prone to micromanaging. No one appreciates being under the microscope, and this can bring morale down and creates animosity and less-than-motivated employees.
The successful branch manager has a process and system in place for absolutely every aspect of their branch operations; from how leads are generated and how the phone is answered to how loans are processed, how the lunch room is maintained, and how past client relationships are maintained. Systems that are implemented to create clarity in what needs to get accomplished not only assures the required tasks get done but it also creates harmony among employees. When employees are unclear about their jobs this creates stress, hindered performance, and disharmony.
Are you going to be a producing manager?
This is a big question, one that needs to be carefully considered. I have heard countless MLOs complain about the lack of presence and leadership in their branch managers, often because he is too busy writing his own business. Notice I said “he” … I have never heard a complaint about a female branch manager in this particular regard. While there are exceptions to every rule, I suspect that this is probably because women tend to have a more natural proclivity to both multi-tasking and particularly to effectively relating to and managing people.
For the manager who decides they want to continue producing: I can sum up in one word what successful producing managers need to achieve not only personal production goals but branch goals as well: “Systems.” The most effective producing managers implement systems that remove them from aspects of the loan process in which they are not needed, freeing them up to be present for the needs of their employees while still doing his loans.
Does the company offering you a branch really do FHA loans?
I know this may sound like a strange question, but if you do a high volume of FHA loans with tougher credit profiles, this question is extremely important. I have seen too many income streams nearly obliterated because well-meaning MLOs opened a branch of a company assuming that they now had a good channel to close their FHA loans with … only to find out that it was near difficult to downright impossible to close their FHA loans.
If your FHA volume has credit profiles with high scores, and over 95 percent of your loans will receive Approve/Eligible findings, then this is a less important question. However, most MLOs have tougher FHA loans, and need to approach opening a branch with caution, to be sure that you truly have a good FHA channel. The most pertinent information you need is how closely they underwrite to the FHA guides, and what the minimum credit score is. You are looking for a company that has at least two wholesale channels, and that underwrite according to the FHA guides―meaning little to no FHA overlays. There is nothing more frustrating for an MLO than to be conditioned for items that are not part of FHA guides.
If the company claims to have these FHA channels in place, sorry to say you cannot take their word for it. Call other branches and speak to the MLOs; ask them to share their experiences. Find out the names of the FHA wholesale channels and call to these wholesalers; interview them about how they underwrite FHA loans. I also recommend speaking with some of the underwriters directly and sharing various loan scenarios, to find out what their underwriting thresholds are. Once you have this information from all these angles, you’ll have a clearer and more accurate idea of what to expect once you start putting loans into the system.
It should go without saying at this point, but just so that there is no doubt: If you are considering opening a branch but have never managed people, it is critical that you begin educating yourself in the best practices in people management. Perhaps more importantly, you should seek out a mentor who has years of experience, does his job well, has happy and productive employees, and who has achieved the success you want to achieve.
Go FHA!
Jeff Mifsud is founder of Michigan-based Mortgage Seminars LLC, a former FHA underwriter with 15-plus years of experience originating FHA loans, an FHA expert for LoanToolbox.com and creator of The FHA Originator, a monthly FHA newsletter. Jeff may be reached by phone at (248) 403-8181 or visit www.MortgageSeminars.com.
