Well, we are in the middle of another refinance boom—unless rates went up before this article is published. That means many loan officers are feasting and it also means most wholesale companies are deluged with business. The focus is accommodating the business and not the future. They are adding reps and operations staff as fast as they can, and many are inexperienced or were not working for a company for a reason. However, this article is not about the quality of the staff … it’s about what happens when this particular boom is over.
So, what happens when the refinance boom ends?
No one knows when it will end—but it will end. Refinance booms always end at some point. If a particular mortgage wholesaler is focusing on delivering rates and thus serving the lower end of the broker spectrum in terms of experience and/or quality—the end of boom times is likely to hurt that much more for those companies.
So what are the wholesalers doing about it?
It appears to the neutral observer that next to nothing is being done to position the typical wholesaler to succeed after the boom times. If a lender is focusing upon rates, they are likely to be attracting brokers who are selling based upon rates instead of relationships. These brokers are also more likely to be those who are less experienced.
In reality, those brokers who are executing broad-based relationship business models are the ones upon which every wholesaler should focus their attention. However, that strategy requires a long-range business model and I don’t quite see that happening today. That requires the delivery of what we call “added value” instead of hawking rates, programs and service. Not that rates, programs and service are not important, but to be a great wholesale company and a leader—these factors must be a given instead of the entire focus. In other words, if you don’t have the “basic three” down pat—don’t even bother trying to become a leader.
What represents added value?
For one, wholesalers should be trying to improve the careers of their targets. If they provide training, it is typically on their products and procedures. This is akin to a loan officer speaking at the office of a real estate agent and talking about their great rates, programs and doughnuts.
Wake up wholesalers.
Support efforts to improve the careers of your targets. Not just to become better salespeople, but to become experts within the industry. It is the experts who will survive. It is the experts who will thrive after the boom. Loan officers cannot service real estate agents by solely promising the best rates, as opposed to having extra value to help enhance agent business through synergistic relationships. How are you helping the loan officer, your clients, deliver this value? Certainly not by buying them golf or drinks. I cannot imagine how these things will help your clients become higher quality customers.
Training is one way to deliver value to your customers—either by delivering this training through your company or supporting industry-wide efforts. Unfortunately, there are not enough alternatives within this industry for broad-based financial training that resides well above the basic level. Personally, I really thought training would become more important in this industry when licensing became a requirement. However, licensing just covers basics and compliance. It does not help a loan officer succeed. More than 50 percent of the loan officers aren’t even required to get that because they work for banks. Banks are uneven in what they deliver and you can be sure compliance is part of the package.
There are other ways to provide such value, including marketing support.
How many wholesalers are helping brokers focus upon increasing their ability to provide purchase leads to their real estate agents or helping their business-to-business clients such as real estate agents, financial planners, CPAs, etc. expand their own sphere of influence?
I have focused upon two things in my career: Helping loan officers become experts in the industry so that the can be expert mortgage advisors, and showing loan officers how to market like an expert. If you think I am focused upon the word “expert,” you are right. Experts earn more. Experts don’t sell—people come to them for advice. Experts become leaders and will survive the end of the refinance boom. Wholesalers, are you experts? If you are not, how can you teach your most important clients to become experts?
Expert knowledge and expert marketing.
One without the other is worthless. Experts who cannot market like experts will not position themselves the right way. Those who market well but are not experts will similarly fail. Those who can show loan officers how to provide value to the real estate community as well as alternative referral sources will position themselves differently within this industry. If this is not part of your business model, then you will be missing the boat when it sails without refis.
The benefits being an expert and furthering expertise goes beyond marketing success.
Wholesalers around the country complain that a typical broker does not know how to put together a decent package and they are re-processing loans for them. How expensive is it to reprocess loans for brokers who are supposed to be processing loans before they are submitted? Will you be able to afford to lend this help when the business is not so profitable? Where will this leave your clients when you have to withdraw this level of support? And badgering them to do a better job is not enough. Experts understand that the job they do in application not only makes the process smoother for all concerned and saves time, but also leads to true opportunities for more referrals. It is not just about asking for referrals. It is about putting yourself in position to ask.
Lack of quality training is quite expensive for all the players involved—from the homeowners we are serving to the brokers’ employers and the wholesalers who service the brokers. In the long run, not delivering this training will be deadly. I should point out that it is not only the loan officer who needs to become an expert—so must the wholesaler who is serving this loan officer.
Is your company helping you with this worthy goal?
Without this important component you will unfortunately be in the position of the blind leading the blind. If it leads your clients down the wrong path, the end of the refinance boom is going to be very painful. Granted it will be painful for all—but especially for those who are not in the best position to deliver value. Wake up and think about it because the clock is again ticking …
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.