National Mortgage Professional Magazine is pleased to select American Financial Resources Inc. (AFR) as its “Legend of Lending” for October, 2013. AFR has reached legendary status one family at a time. They are so focused on families that they refer to all loans by the name of the family obtaining the financing. Laura Brandao, director of operations for AFR put it like this:
“Instead of referring to a transaction as a loan number or a borrower, we refer to it as the ‘BRANDAO FAMILY,’ for example. This really hits home with our team members to remind everyone that their job is extremely important because there is a family behind every loan and in every file.”
Brandao was described as “… the hardest working person I have ever met in my life” by Corey Dubnoff, president of AFR and one of seven equity partners. Dubnoff takes this commitment to families further when he says, “… we have the ability to lend people money that gives them the opportunity to go and get shelter for their family in a community they want to live in, in a house they want to live in, and in the country that they want to live in … that’s why we do this.”
Founded in 1997 as a mortgage brokerage firm, AFR has used that focus on the “why” of what they are doing, and the hard work of dozens of long-serving employees to create a formidable, multi-channel mortgage banking operation. Simon Sinek, in his book Start With Why, based on his viral Ted Talk of the same name, puts the importance of focusing on “why” this way:
“Very few people or companies can clearly articulate WHY they do WHAT they do. By WHY I mean your purpose, cause or belief—WHY does your company exist? WHY do you get out of bed every morning? And WHY should anyone care? People don’t buy WHAT you do, they buy WHY you do it.”
AFR has made the “why” behind their business clear to employees and customers alike. This focus helps explain how a small New Jersey mortgage broker in 1997 has grown to become a major nationwide retail, wholesale and correspondent lender. But a focus on a greater purpose alone is not sufficient to keep AFR moving forward through all the market upheavals and regulatory changes witnessed since its inception. It also takes risk-taking, trust and teamwork, and the already mentioned hard work to manage through the difficulties.
AFR features a unique management model that includes seven partners, but for teamwork, the success story that is AFR could not be told. Dubnoff says that it all started with his father—the educated risk-taker and company CEO, who saw an opportunity to build that small brokerage shop into something bigger: “He knows how to trust the people around him to get a job done and be part of a bigger thing. He was always thinking of making it bigger nationally. He is always thinking big picture, as opposed to just somebody who wants a small little business.”
But how do seven partners function? Dubnoff explains: “The seven of us—are all in different aspects of the company. You have the CEO and the president—that’s me. I am in charge of wholesale buying, sales and marketing. You have another partner who is in charge of all of ops. You have another partner who is the CFO. You have another partner in charge of all the retail sales. You have another partner who is in charge of all the secondary and funding. And you have another partner who does broker services and risk management.”
Dubnoff continues, “We trust in each other’s ability. We know that everybody has a buy-in. It’s something that we have been building for 16-plus years. We all trust each other immensely. It is of the utmost importance to have that. We don’t have to look behind our shoulder to see if somebody is throwing a dagger. We all make mistakes, but then the seven of us pick each other up and dust each other off. We figure out the good, the bad, and the ugly and discuss ways to improve the company and each other.”
Henry Ford, founder of Ford Motor Company and the godfather of U.S. manufacturing, had this to say about facing challenges and adversity:
"Life is a series of experiences, each one of which makes us bigger, even though sometimes it is hard to realize this. For the world was built to develop character, and we must learn that the setbacks and grieves which we endure help us in our marching onward."
Any individual or firm that has remained successful in the mortgage industry since 1997 has faced their share of adversity. AFR has been no exception. Dubnoff recalls the difficult days when he says: “The biggest challenge—it’s managing the ups and downs, and the ebbs and flows of the market changes. It is of the utmost importance to be staffed correctly, to have the proper balance, and to know where your market is. There is always going to be ebbs and flows in this business.”
Obviously the greatest challenge in the modern mortgage era was the period between 2007 and mid-2011. Unlike many of its competitors and larger banking organizations, AFR saw opportunity in the midst of great adversity. According to Brandao:
“AFR has always been able to predict market changes before our competition. We are continually monitoring the market to see what our clients need and we are not afraid to offer the programs/products that our competition is either afraid to offer, or are not willing to learn. An example of this would be manufactured homes. Back in 2007 when many companies were pulling out of the manufactured arena, we jumped in deeper, and that decision has contributed to much of our growth.”
Challenges continue to face lenders to this day. The wholesale space is facing the advent of the three percent cap rule which many have predicted will force brokers to become retail branches, or force them out of the business altogether. But, just like it did in previous periods of challenge, AFR is responding with aggressive options for its broker clients. First, they are offering a mini-correspondent program that will provide warehouse lines of credit for qualified brokers to enable them to capture more income. Second, they have recently launched a program called Wholesale Direct, a program which Dubnoff describes as:
“Wholesale Direct is a program where we do all of the back-end processing for the originator, which means they tend to reduce their costs by a substantial amount if they don’t require processing costs on a particular loan. We are doing that for free for them. It’s been a tremendous success. What we found is that not only is it a cost savings, but it’s actually a time savings as well. Obviously, many brokers prefer it.”
This innovation in the face of adversity is further described by Brandao who states, “I love the fact that we are constantly changing, when the market shifts, we move with it. While other companies are still trying to come up with ideas, we have already implemented the change and are closing loans.”
Risk-taking, teamwork, trust and managing through adversity have all contributed to AFR’s earning of its legendary status. But let’s get back to the reason we started with—a focus on improving the lives of the families that work for the firm and with the firm. No aspect of this commitment is reflected more clearly of AFR’s unique characteristic than the sentiment expressed in this quote from Corey Dubnoff: “We will never, ever, ever, close a loan that will put a family in a position that they shouldn’t be in.”
He explained further, “We have a commitment to our applicants and their families to have their best interests at heart. It really comes down to that. If they do not have the ability to repay the loan, we do not approve the loan. It’s really of the utmost importance to stick to that.
Building and protecting families, while also building a strong and successful mortgage company that reflects positively on the industry as a whole are the reasons WHY American Financial Resources Inc. has been selected as our October 2013 Legend of Lending.
David J. Coster is senior editor of National Mortgage Professional Magazine. He may be reached by phone at (919) 559-2171 or e-mail [email protected]