I have written before about the changes that have taken place in recent years with Fannie Mae and Freddie Mac and the negative impact those changes have had on the prevalence of wholesale and correspondent lenders in the mortgage banking market. I have pointed out, as the wholesale channel has fallen from a peak of controlling as much as 65 percent of all loans originated, to less than 30 percent, and eventually, dipping below 15 percent, the greatest impact has been felt—not by the big banks—but rather, by the independent mortgage bankers. The health of independent mortgage bankers of all shapes and sizes is directly correlated with the health of competitive secondary markets. Make no mistake; times are tough for the independent mortgage banking industry.
On the surface, the outlook is bleak. If there was ever a time an independent mortgage broker could fall prey to seeing themselves as the victims, it is now. It can be easy to point to the changes that have befallen the industry and bemoan our helplessness. It can be easy to throw up our hands in defeat. It can be easy to give up. We have every reason to do just that. But, as the overused saying goes, "When the going gets tough, the tough get going." When backed into a corner, great leaders don't surrender to circumstances … they fight their way out. If the dismal outlook for the industry has been created from the top down, it is most assuredly going to be reversed from the bottom up.
For this article, I don't want to write about secondary markets, per se. I don't want to discuss how and why things are worse than they were before. Instead, I would like to take the next few paragraphs to discuss how independent mortgage bankers might adopt the attitudes and behaviors necessary to revive a hurting industry. Change starts from within. What needs to be happening on the inside for that change to occur? Let's explore it.
The first reaction we might have to changes in the mortgage banking industry is to adopt the belief that there is only so much money to go around. We may begin to say to ourselves, “If I am to succeed, I must overcome my fellow independent mortgage bankers.” We may begin to think that the business is a zero sum game and that, if we are to survive, there simply needs to be fewer competitors.
There are two ways of looking at the world: Through the lens of scarcity and through the lens of abundance. Scarcity is the "zero sum game" mentality. It is the belief that the pie is shrinking and the only way for us to have more is to take a bigger piece of it. We see this mindset, not just in the mortgage banking industry, but also in the world at large. Every day, we are bombarded with news about things that are going wrong with the world. It is a rare thing to hear something good on the news. As the old media saying goes, "If it bleed, it leads." The stories we are told are those consistent with the idea that the world is getting worse off and there is less for us to live on. We go into panic mode and begin to think that we must grab all we can to survive. That's the story we're told, and we so readily buy into it.
Abundance is the opposite. When we adopt an abundance mindset, we believe that the pie can become bigger and, therefore, we can all be successful. It is the belief that there is plenty to go around and that one person becoming successful does not necessitate another failing. When we look at the outside world, despite the fact that everything we hear on the news is entrenched in negativity, the world has indeed improved in many respects. As author Peter Diamandis has pointed out, the last century has brought us a large number of improvements as human beings: The average human lifespan has doubled, the average per-capita income has tripled, and the child mortality rate has decreased by a factor of ten. The costs of food, electricity, transportation, and communication have all declined dramatically in the last century. In many ways the world is better than it ever has been.
If we look hard enough, we can see the same thing in the mortgage banking industry. There are things that have improved. The world has gotten better. As Proust has said, "The real voyage consists not in seeing new landscapes, but in having new eyes." Perhaps we need to start looking at things differently. Perhaps we need to start looking at how the pie can grow, rather than how we can get our piece of it. That's where true leadership begins.
Great leadership breeds great leadership! As independent mortgage professionals who want to see our industry thrive, we must be willing to help others succeed. We must be willing to share best practices and teach one another how to grow our businesses. The true leader doesn't seek to create followers; the true leader seeks to create more leaders. That's where renewal begins.
Think of an outstanding athlete. How does he or she react toward his or her fellow athletes? Does the star athlete attempt to inhibit the performance of competitors, or to strengthen it? We've all heard inspiring stories of great sportsmanship. There's a story about a college softball player who hit her first home run in a league championship, but tore her ACL while rounding the bases. Rather than taking advantage of their opponent's injury to win the game, the members of the opposing team lifted her up and carried her around the bases. Then there's a recent story about high school track meet in which a girl helped another girl, who had begun to faint in the heat, cross the finish line to finish the race. And who can forget golfer Bobby Jones' famous remark after receiving praise for counting a questionable stroke against himself in the 1925 U.S. Open, "You might as well praise a man for not robbing a bank?"
Why do we find these examples of sportsmanship so inspiring? It's because these great leaders care more about the legacy they are creating than they do their immediate personal gain. They know that, if they don't exemplify the best leadership possible, it is not only going to hurt them in the long run, but it is going to be detrimental to the game itself. They do these great deeds, because they love softball, track, and golf. They want to see the sport succeed. That's what it means to be a true leader.
As leaders in the mortgage industry, we need to adopt the same mentality. We've got to be willing to value the industry above ourselves. That's what leadership means. There are a number of ways to be leader who inspires others to become leaders in the industry. A simple gesture like sharing a referral with a competitor is a good place to start. If a customer is not a great fit for your business or if your business is not a good fit for the customer, pay it forward to someone else. In doing so, you set the bar higher for the industry. Remember, you're not giving up your piece of the pie; you're making the pie bigger.
Another way to demonstrate leadership is to start and/or join networking groups of mortgage professionals. There is nothing that more quickly and fully generates growth than collaboration. Get together with one another, swap stories, and share ideas about how to manage and grow your businesses. You have plenty to teach and plenty to learn. Why not get together with others in your industry and take advantage of the mutual education? For example, check out the LinkedIn discussion group, “Loan Originator Compensation & New Rule” which now has more than 6,000 members.
A third way to demonstrate exceptional leadership in the mortgage banking industry, and to encourage others to become leaders in the space as well, is to engage with the industry on the social web. You can start a group on Facebook or LinkedIn to serve as a hub for questions surrounding the mortgage banking industry. Encourage everyone you know in the industry to join in the discussions. Encourage them to ask questions. Encourage them to offer answers. Be the one who gets the conversation going. You can also create a blogging community. Write about the industry for your customers, encourage others to do the same, and then share one another's blog posts on Twitter, via e-mail, and however else you distribute your information.
I am a student of leadership. I love studying great leaders throughout history. Personally, I believe the greatest leader that ever walked this earth was Jesus of the Bible. When he left this world, He instructed his followers to go into the entire world and basically become great leaders as well. It is the best example of the “Law of Reciprocity” to the positive. In the mortgage industry, we need to adopt the same mission. We need to be willing to become leaders who create leaders. We need to adopt a mindset of abundance—striving to increase the size of the pie rather than developing a strategy to just take our piece of it. Great leadership breeds great leadership. Let's all do what we can to be better leaders today. That's the only way to save our industry.
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
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