Managing for the Future
The future ... in this industry, it is very hard for someone to see. There are so many obstacles that a manager has to deal with on a daily basis that it is difficult to see two inches in front of them. Yet, seeing the future is an imperative part of managing. Some would say that long-term vision is the main difference between a manager and a leader. Today, there it is more important than ever to have a long-term vision as a leader in this industry. For one, it is hard to see what this industry will look like five years from now. So many are discouraged by tight lending and regulatory changes that even good employees have left the industry. To summarize the issue, 10 years ago, an experienced underwriter could finish 10 loans in a day. Today, that same underwriter would be lucky to get through three loans at many lenders. That not only increases costs, it makes the industry very frustrating. With new regulations coming at us on a regular basis, it is hard to envision that things will get better ... but they will. What makes me so sure of that? This industry has been subject to cycles throughout its history, and for the past 30-plus years, I have witnessed them personally. Certainly the past two cycles have been as high and as deep as anyone has ever seen. The real estate boom and the financial contraction have no comparisons in history. And that is exactly why we have little vision for the future. During the deepest days of despair, many were questioning whether there would be a mortgage industry in the future as they left the business in droves. But how ridiculous a question is that? A hundred years from now, people will be buying homes and the majority will not have the money to pay in cash. Just take a look at the demographics and you will see how bright a future is ahead of us. We continue to add nearly 20 million to our population every decade. To give you some perspective, less than 100 million people lived in the United States when World War I took place some 100 years ago. Twenty million people would be 20 percent of the country back then. These people will need homes and even many of those who are foreclosed upon will still be housed in single family homes even if they are renters. Of course, many who are foreclosed upon will purchase again in the future. So we will have a mortgage industry in the future and it will be larger than it is today. The next question is ... will the underwriting standards loosen up? The answer is “Yes.” It will likely not go back to the sub-prime days in which we lent at 100 percent with low credit scores and stated income. But as the real estate market improves and real estate as an investment becomes more stable, the loans backing real estate will also become a better investment and the secondary market will return to strong form. Products will become more competitive—within reason. And that is all we are asking for—reasonable underwriting standards. Lenders are scared of buybacks now and they are underwriting scared. But when the foreclosure levels return to normal, that fear factor may not disappear but it will subside. So, this all is very nice, but how do you get your employees to see the future? This is a very difficult task, but it must be done. Use articles such as this one and focus on positive data. Remember, the current prospects of your loan officers are being told by the media that they must walk on water to get a loan. As you must lead your employees to see the future, they must lead their prospects to understand that those of them with credit and other issues can still get a loan. They may have to work much harder to get that loan—but it can be done. Successful managers are leaders, and so are successful loan officers. Loan officers who are mired in the trials and tribulations of the present will not be effective and you will lose them in the quicksand of the present without positive action. There is another reason that a vision of the future is very important today. Today, business is good for many because of rates and refinances. That is the good news. Of course, this comes with additional issues. Combine higher volumes with straining operations and obsessive documentation and you can guess what type of stress to which your staffs are being subjected. You will have to get them to see the future as these issues are temporary. Would they rather be facing a dearth of production as they have seen just a few years ago? Certainly, I would hope not. Remember that many of these issues can be solved upfront through quality submissions in the application process. If you are not focusing your efforts to help loan officers understand how a better application can lessen the stress they are facing, then you are missing a major leadership opportunity. The fact that this refinance boom is temporary tells us that we have another “future” issue. What do our loan officers do when this is over? For those who are not ignoring purchases, the future will be bright. For those who are feasting on refinances and ignoring Realtors, survival will be a question when the craze is over. Of all of the leadership issues you face today, this may be the most important. Again, it is tough to focus upon the future when you are buried in refinances today. Do your loan officers know how to turn refinances into purchases? Do you know how to teach them that? Opening their eyes to see future opportunities is what this is all about. If you have questions regarding how you might go about doing just that, e-mail me at [email protected] I will send you an article that will help you open their eyes. Dave Hershman is a top author in the mortgage industry with seven books published, as well as hundreds of articles. Dave has delivered hundreds of keynote speeches, seminars and schools for the industry as well. He may be reached by e-mail at [email protected] or visit OriginationPro.com.