Two keys to success in mortgage lending

Here is some good news for those of you struggling to find success in the mortgage industry. There are hundreds of ideas out there on how to become a rich and successful loan officer, but you really only need to focus on two!

People enter the mortgage industry for a number of reasons. There are few jobs available where you have both the income potential and the freedom that the mortgage industry offers. If you were attracted to the industry because of the freedom to spend more time with your family or the ability to set your own hours, then working for a Mortgage Broker is a great place to be. Most broker shops allow you to come and go as you please, as long as you are achieving some level of success. Banks tend to be a bit more rigid, they may expect you to work regular hours. But if you, like many others, became a loan officer to make greater income than you ever have before, I believe there are only two simple steps to achieve great success in this business. Treat your business like a job, and treat your job like a business.

Treat your business like a job
If you were to have gone to work for a large corporation and wanted to make a six-figure annual salary, you would be expected to do the following:

•Show up to work on time;
•Dress appropriately;
•Work a minimum of eight hours per day;
•Learn your job and seek out additional training; and
•Act like a six-figure income professionalclassy, honest and knowledgeable.

In my years as an account executive, I was dismayed by those who would show up to work at 10:00 a.m. dressed in shorts and t-shirts, take a long lunch and leave by 3:00 p.m. These were the same people who complained the most about the new continuing education requirements, and never once attended any of the free training offered by wholesalers and title and mortgage insurance companies. Now, to be fair and honest, some of these loan officers made tremendous incomes during the mortgage boom. Most, however, complained about how high rates were on the stated income loans they automatically put their borrowers into because they couldn't begin to figure out their clients' tax returns. Many of these loan officers talked borrowers into loans they didn't truly understand themselves. They created much of the image problem that Mortgage Brokers suffer from today.

I was truly lucky when I started originating. I worked for a mortgage bank that required me to take regular classes on everything from the Equal Credit Opportunity Act (ECOA), Real Estate Settlement and Procedures Act (RESPA), and analyzing both income and tax returns to reading appraisals and title reports. I often complained about having to spend time in those classes, but they forced me to really learn my job. Soon, I was seeking out additional training on everything from construction loans to reverse mortgages. I was one of the first reverse mortgage professionals in my state ... although I never actually closed a single one.

Learn your business and you will close more loans. Prepare yourself to win arguments with underwriters because you understand tax returns and immigration laws better than they do! Learn how to structure loans rather than throwing them to the underwriter and hoping they stick. Dress like a professional. Dress for what is appropriate in your area—in Boise, Idaho that is a dress shirt and slacks, in New York it may be a suit and tie. Be a professional!

Treat your job like a business
No matter who you are working for, as a loan officer, you are really running your own small business. You are responsible for the profit and loss of your business. In most cases, you are the one deciding how much origination and yield spread or overage you need to close the deal. Ultimately, you make decisions on where to spend your limited time and money to grow your business. Successful small business owners in any industry have a few traits in common. They:

•Treat their customers with top notch service;
•Keep a very close eye on income and expense;
•Understand the "customer for life" theory;
•Create systems that allow them to do what they are best at, not the other stuff; and
•Invest at least 10 percent of their income back into the business for training, marketing and growth.

Successful small business owners treat each client like they are their only client. Have you been to a small hardware store lately? The service in most small, privately-owned hardware stores will blow you away! They are in competition with the big box stores that are on every corner, so they fight for every sale. They greet you at the door, they help you find what you are looking for and then they are happy to carry it to your car. Imagine if Wal-Mart got into the mortgage business with pricing and loan programs you couldn't match. How would your customer service change? Don't wait; take a lesson from the "Ma and Pa" hardware store down the street, and change your customer service today!

When you close a loan for a borrower, do you expect to see them again? You better—your career depends on it. The best source of business you will ever have is the loan you just closed. If they are happy, they will tell friends and family. If you keep in touch with them in a consistent and professional manner, they will return to you again and again. The average consumer gets a new mortgage loan once every five years. If you're in this business for 20 years, that's four loans from an average customer and 10 or more from an above-average borrower. And the best feature of a returning client is that they are convinced you are making them a good deal, so they aren't shopping you.

Small business owners also figure out, over time, what they are good at and what they are not. They might be the best widget salesperson in the world, but be horrible at keeping books—so they hire a bookkeeper or farm that task out. If they can build the perfect product, but cannot sell it, they will hire a sales team. What are you good at and what do you need to farm out to others? If you can bring in the loans, but hate details, pay your processor a bonus to take the application and do the follow-up. Go get more loans. If your strength is in structuring loans, but you don't like to market, get a marketing system in place. Do what you are good at—find people or systems to handle the rest.

How much money do you invest back into your business for training and growth? Do you have a set percentage you invest back into your business? If you invest 10 percent of each commission into a good marketing system, you will realize tremendous growth within months. If you invest one percent of each commission into training, you will become the smartest loan officer in your market. One of the top reasons small businesses fail is they fail to reinvest into their future.

So there it is! It's really that simple to make significant amounts of income in this industry. Talk to the loan officers around you who are making it and look at those who are struggling. I guarantee the successful loan officers are employing many of the traits above. Shouldn't you?

Dan Sullivan is the vice president of sales and a managing director for Velma.com. Dan has served on the board of directors for the Idaho Mortgage Lending Association and is a current board member of the Idaho Association of Mortgage Brokers. He may be reached at (208) 854-7905 or e-mail [email protected].