Branch development is a bit like Indy Car racing—lots of fun and full of twists, turns and challenges. Like Danica Patrick, Michael Andretti or Al Unser Jr., successfully navigating the competitive course and building a viable network of branches requires strong planning, laser-like precision and nerves of steel.
The best branch developers, those who consistently add new talent, look at recruitment much the way Chip Ganassi Racing or Team Penske view their operations—as team efforts requiring strong knowledge of the myriad rules and regulations that impact our business, the latest technology, and of course, the ability to communicate regularly and meaningfully.
Tips to rev up your business
So, what should mortgage professionals do to build their business and grow their networks? Here are some suggestions based on my personal experience and that of my firm, Inlanta Mortgage, which has 25 branch offices nationwide and is always looking for more:
Run the course
Weather, track conditions and the like can contribute to a driver’s success or spinout. Similarly, knowing the mortgage landscape is essential if you want to grow your network. The environment has changed over the last several months. My company has been telling clients there are still tax credits available for homebuyers, the rates are still historically low. Bottom line … this is a great time to get out and buy!
To keep from spinning your wheels, you have to go out and develop your business.
That means becoming an expert in the mortgage industry, learning the rules and regulations, being a true resource to your clients, and helping to steer them in the right direction. Those are keys for winning.
Know where the bumps are
Just as Indy drivers familiarize themselves with the tracks at Watkins Glen, St. Petersburg or Long Beach, mortgage professionals must know the ins and outs of regulations and regulatory changes. While “knowledge is strength” may sound cliché, it’s true: The more you know, the more you’re seen as a “go-to” person. A couple of recent regulations illustrate this.
One is the Home Valuation Code of Conduct (HVCC). As you are aware, HVCC establishes standards for solicitation, selection, compensation, conflicts of interest and appraiser independence. Since taking effect on May 1, 2009, it has had a dramatic impact on conventional, single-family mortgages sold to Fannie Mae or Freddie Mac. Under HVCC, real estate professionals and mortgage brokers are prohibited from selecting appraisers. Lenders may use “in house” staff appraisers to conduct appraisals, but the loan production staff is prohibited from selecting, retaining, recommending or influencing the selection of an appraiser; and conducting any substantive conversation with an appraiser or appraisal management company regarding the appraisal assignment.
For consumers, the appraisal process has remained largely intact. However, they may find the process takes longer and may be more costly than in the past. For appraisers and mortgage firms, it’s a different story. Some appraisers now earn less money and many mortgage firms have had to change the way they interact with appraisers or risk not being in compliance with HVCC rules.
Another regulatory change that has raised yellow caution flags among loan originators and independent brokers is one involving Good Faith Estimates (GFEs). Lenders are required by the federal Real Estate Settlement Procedures Act (RESPA) to provide you with a GFE of the fees due at closing. The GFE is supposed to be provided to the potential buyer within three days of applying for a loan. Smart shoppers obtain GFEs from two or more lenders, compare their costs and ask questions about any large discrepancies.
According to a February article in The Washington Post, “if the quotes are made on a GFE, they've got to be accurate because, under new federal rules that took effect Jan. 1, any significant excesses must come out of the lender's wallet at settlement.” Clearly, knowing those rules and what they mean to you as a lender can be a matter of survival in today’s complex and highly competitive mortgage industry.
Consider expanding your pit crew
The HVCC and GFEs are only two of the new regulations that have caused confusion among many mortgage professionals. That’s why it is important to keep your finger on the pulse of the industry and stay on top of rule changes. It’s also why you may want to consider entering into a branch partnership. After all, the best drivers not only have a vision for where they’re going, they also have a qualified crew to back them up and keep them running at full speed.
In this difficult and changing environment, a branch partnership can provide you with many of the benefits enjoyed by mortgage bankers—without having to invest the time and money necessary to develop and manage a full-service operation. Such benefits include lower overhead, administrative support, licensing in additional states, the ability to write other types of loans, and more. But, branch partnerships aren’t for everyone. So, as you look at potential business partners with an eye toward choosing the best pit crew possible, be sure to ask the following questions:
Do they have a banking division?
A partnership with a mortgage banker will give you more options; you’ll have the choice of closing loans within your own company or brokering them outside.
How much administrative support will you receive?
Many of your everyday functions should be taken over by your branch partner, including payroll, marketing, information technology, human resources, processing and compliance. This will enable you to focus on originating loans. Too many branch partners, however, can result in less-than-effective service, so it’s important to find out how many branch offices your prospective partner has.
Are there compliance experts on staff?
The right partner will have the procedures in place to provide background checks, brand and loan officer licensing, file reviews, and loan audits, as well as ensure that your promotional materials are compliant. Such procedures also ensure the compliance of your other branch partners—an important benefit since their actions can reflect on you.
What products and services do they offer?
Your partner should enable you to provide a variety of options, such as Federal Housing Administration (FHA), U.S. Department of Veteran’s Affairs (VA), U.S. Department of Agriculture and Rural Development; and 203k loans; reverse mortgages; and more. In addition, a good partner will also provide training so you can quickly get up to speed on products that are new to you.
How long have they been in business and what is their reputation?
Once you enter into a partnership, your partner’s reputation reflects on you. That’s why it is crucial to find out how your prospective partner is viewed both locally and within the industry. It’s also important to find out whether they ever been suspended or fined by the U.S. Department of Housing & Urban Development (HUD). Generally, the longer a company has been in business, the more stable it is. It also will have a longer track record, which will help your decision-making process.
Do they offer multistate licensing?
A business partner that is licensed in multiple states can enable you to expand your business and close loans on out-of-state prospects instead of turning them away.
Are they committed to technology?
The demand for information just continues to grow. It is important to have a partner that embraces technology so you are able to price loans quickly and accurately, register and lock loans online, and monitor the pipeline regardless of time of day.
What is their ideal branch set-up and is this a good match for you?
The reality of a branch partnership is that you are choosing your own boss and co-workers. So it’s imperative that you meet with recruiters in person and visit the corporate office. Discuss both your future plans and theirs to make sure you’re headed in the same direction. Take a look at the most productive offices in your prospective partner’s organization and compare it to how you operate. If you work differently than they do, discuss those differences beforehand to ensure you won’t have conflicts later. Finally, put the details in writing so that everyone involved moves forward on the same page.
Keep your foot on the pedal, eyes on the road
Whether you’re developing a branch network or looking to become a branch partner, the process, at times, can be as challenging as driving 500 miles at Indianapolis. There are no shortcuts to success. But with vision, focus, drive and, like any good Indy driver, the ability to anticipate changes and change gears when necessary, you’ll find yourself in the position for the checkered flag and that much anticipated victory lap.
Joe Ramis is branch recruitment director for Inlanta Mortgage, a Waukesha, Wis.-based mortgage banker and broker since 1993. He may be reached by phone at (262) 513-9853 or e-mail [email protected]