As I sit back and think about the training programs and initiatives for loan officers in the mortgage industry, it is difficult to write about how to teach salespeople to become better salespeople without first teaching them about leadership. Don’t get me wrong; I believe many benefits can be derived from a good sales training program. But before anyone starts talking about sales training, a different conversation needs to take place. As leaders our industry and community, we need to muster the inward strength and integrity to first address a different kind of training—values training. You start by asking yourself questions like, “What are my values?” and “What the values of my organization?”
Recently, I was speaking at a state mortgage industry convention to a large group of mortgage professionals and “Murphy’s Law” showed up. As soon as I stepped on stage, I started experiencing technical difficulties. My laptop wouldn’t communicate with the projector. As I quickly tried to resolve the problem, I could feel some restless tension begin to stir in the room. Knowing the importance of keeping the attention of the audience was way more important than getting the presentation working, I made the decision to just set the laptop aside with all my notes and slides and just started visiting with everyone in the audience as if they were sitting in my living room. I began to speak from my heart about two topics I am so very passionate about, LEADERSHIP and VALUES. The technical difficulties I experienced turned out to be the most convenient inconvenience that could possibly have happened because I began to expound on what I think is the most pressing leadership issues in the mortgage industry today.
I spoke from the heart about the importance of homeownership and how integral it is to our economy. By this time, an audio/visual person fixed the problem and I was able to step back into the slides I had prepared. It was perfect timing. The slide that first came up in my presentation was a slide that showed how the level of homeownership had fallen to alarming new lows. The trend lines were showing how we were fast becoming a nation of renters.
At another conference where I was the keynote speaker, I asked the audience to raise their hands if they thought they could afford to buy a new home in the next few years. The vast majority of people in the audience raised their hands. Then, I asked another question. “How many of you,” I pressed, “actually plan on buying a home within the next few years?” Like a receding tide, over half of the hands slid slowly downward—confirming the data on the slide. Fewer and fewer Americans plan to buy a home in the near future. Why?
As I ask more and more people that can afford to buy homes, as to why they are not doing so, I consistently get the same answers:
►Because, I don’t see the benefits in owning a home.
►It is a long-term financial commitment, and I honestly don’t know if my income will remain at this level or if I will even have a job this time next year.
►In spite of homes be very affordable, I don’t want to run the risk of losing my home to foreclosure … I’d rather play it safe and rent.
This fear of being foreclosed on pervades our culture today. Since the end of 2006, the U.S. has added 4.8 million renter households and lost 1.7 million owner households. Just as this trend began, a survey by Harris Interactive of 1,334 U.S. homeowners revealed the following answers to the question, “If home foreclosure were likely for you, what best describes how you would feel?” Here are the results:
►Scared (38 percent)
►Depressed (35 percent)
►Angry (nine percent)
►Embarrassed (eight percent)
►None of the Above (nine percent)
The Mortgage Banking Association (MBA) estimates that roughly one million new families each year enter into foreclosure, and that one out of every 200 home purchases will end in foreclosure. This trend is a systemic problem that feeds on itself. When homes are foreclosed, fewer people buy. Prices rise and more foreclosures occur. It’s a vicious cycle filling the country with fear. When people lose their homes, they aren’t just losing houses. They’re losing a piece of their foundation/roots. They are losing a sense of stability and confidence in the future.
During a brief period of insanity, from 2001 to 2007, many mortgage professionals enabled buyers to buy homes they could not afford and failed to properly educate them on what they were getting into, much less how to make responsible homebuying decisions. Those who didn’t participate in the insanity did little or nothing to try and stop the madness. If you have ever heard me speak at a conference, you will hear me make this statement, “When we fail to regulate from within, we will be regulated from without.” The Consumer Financial Protection Bureau (CFPB) is all the evidence we need to realize just how painfully true that is.
Great leaders don’t need regulation. They are built with internal regulation. They have integrity instilled in their core that emanates from their being. Those are the mortgage professionals we need rising up in the industry. Those are the loan originators we need in the field. We don’t need people selling houses, but need people to teach others how to responsibly buy homes. Only when that happens will we see the industry bounce back.
Why complain about the regulation? Instead, let’s turn it on its head. Let’s set the bar even higher. Let’s become teachers.
According to a survey conducted by Freddie Mac and Roper Public Affairs, six out of 10 homeowners wished they more thoroughly understood the terms and details of their mortgage. Moreover, even more than six in 10 homeowners who were delinquent were not aware of the programs offered by lenders to help them find solutions to paying their mortgages. What does this tell us? Two very important things:
►Buyers are not properly educated; and
►Buyers want to be more educated.
That’s where great leadership in the mortgage industry comes into play.
How do we alleviate the fear? How do we restore confidence to the marketplace? How do we turn this thing around? The solution, as with many other things, lies in education. We need to work with local builders to create programs that foster a more educated community of homebuyers. We need to take the responsibility of making sure people know what they’re doing when they enter into mortgage contracts.
We need to teach people financial/fiscal literacy. People need to understand what they can and cannot afford and why. People need to understand how interest works. People need to understand how property taxes work. And we can no longer have a "that's for us to know and you to find out mentality." We must take responsibility for our customers' understanding of the mortgage finance industry. If they don't understand how it works, it isn't because they failed to learn; it's because we failed to properly and effectively teach them. I believe that the future leaders in the mortgage industry will be those offering seminars and workshops through local churches, community centers or libraries to teach the public how to manage their finances, especially as it relates to buying a house. The more educated homebuyers are, the less fearful they will be in entering market. People are afraid a great deal because they don't understand how mortgage finance works. Let's take that fear off of the table and teach them!
We need to remind people of the benefits of owning a home. More and more, as the market recovers from the recession, people are beginning to be able to afford homes. But we still need to remind them why they would want to own a home in the first place! We need to remind them that, according to research done by Ohio State University for the Journal of Housing Research, homeowners tend to be healthier—mentally, emotionally, and physically—that homeowners tend to have higher participation in civic life and that children of homeowners tend to reach greater levels of academic performance. In short, we need to remind people that owning a home is a good thing.
Almost everyone knows the Biblical story of David and Goliath. Most people view it as an underdog story—the small boy David taking down the giant Goliath with nothing but his faith and a single stone. But there's more to the story. It's also a story about fear and how unrealized leadership can overcome it.
Most think David killed Goliath with a single rock slung against his forehead, but in reality, it was that he believed in something beyond himself. As a result, he overcame “giant” odds and turned the tide of that battle. David probably didn’t see himself as any kind of leader, but the net effect was that he demonstrated more leadership than the entire Israeli army. What amazes me is how the Israelites—his people, who moments before were "dismayed and greatly afraid," reacted to the victory. The Bible says in 1 Samuel 17:52, "The men of Israel and Judah arose and shouted and pursued the Philistines …" Just like that, the fear was gone. How? David restored confidence through a single act of bold confidence in the face of seemingly gigantic adversity.
Just as David restored confidence in his people, we must restore confidence in homebuyers across the nation. All it takes is the strength of character to step up and do what no one else is doing. It's time to become leaders by educating Americans in the basics of financial management and responsible homeownership. Mortgage professionals are the “Davids” of today, and homebuyers are the Israelites. Fear is the Goliath of the mortgage industry and education is the stone that slays it. Go forth and lead your people into homeownership and achieve success regardless of what market conditions.
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 email@example.com or firstname.lastname@example.org.