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This month, we are introducing a new column for questions relating to starting a business, managing a business, training, networking, tax-related issues, corporate security policy, fraud alerts and compliance. All answers are for informational purpose only, and are not intended to practice law, or are meant to provide tax advice or tax opinions. After reviewing our information, we both recommend seeking legal counsel or the advice of a tax professional. Please e-mail us at [email protected] to voice any questions or problems. We are here for you!
Sean in Ronkonkoma, N.Y. asks …
Thank you for the quick response! I ordered the Zig Ziglar book. I have been a sponge and absorbing all that I can the last year in all the areas of operations. I’ve been learning and memorizing all of the different types of loans and their ratios, especially while I was studying for tests.
Also, I have been talking to the other loan officers about their loans and some of the problems they are having. You can publish any of the questions I have as time goes on that will be great for helping anyone else learning the business. You can even use my name it’s not really a big deal to me.
I do promise one day that I will help the next 23-year-old because everyone needs someone to mentor them and help them along the way and guide them in the right direction. I really appreciate you reaching out to me so quickly.
The main problem I have been having is actually getting a chance at doing someone’s loan and gaining their trust. I have been networking the last few months, going to Realtors’ open houses and making them flyers, and keeping in touch with them.
It seems like some of the real estate agents have been giving out my cards, but some of them have marketing agreements and such. I do have a shot, but I haven’t really gotten a referral yet.
I have also been trying to go to different networking events. I just recently join the local board of realtors as an affiliate member last week and went to a meeting a few weeks before that. I plan on joining the women’s council of realtors and the Young Professionals Network as well. I have just joined a charity networking group of about 25 professionals who meet every other Friday for breakfast.
Another thing I’m joining is the Chamber of Commerce in the village I live in (they don’t have a mortgage person in the Chamber). In the meantime, one of my father’s friends is a developer in town and he has a new development that he is just completing and is giving me a shot at the mortgage loans along with this credit union I’m competing with.
The first loan he gave me, I lost out to the credit union that offered a five percent down conventional 7/1 ARM which we cannot do with guidelines. I offered her a great fixed rate FHA loan and a 5/1 ARM that had a better rate because she makes a lot of money, but didn’t have any saved (she’s younger and it’s also a high-cost FHA loan). I kept trying to convince her to go with the fixed-rate that was about a half point more than the ARM since rates are still at historic lows, but she decided to go with the credit union. I was speaking with her and answering all of her questions for a little over a month and lost the loan.
The developer is giving me three more loans this week, and hopefully, I can make all of them work and outbid the opposing credit union. My manager sits down with me just about once a week and we go over what I’m doing and he gives me stuff to do.
Right now, I’m trying to get my sphere of influence of my top 20 referral sources that I will be going after and be in contact with every week. I read the article you sent me about how you got started and how you started up your company and I thought it was a great idea. I also like how you didn’t take all the money for yourself and took care of your co-workers and treated them like friends and family. Greed seems to be a lot of people’s downfall.
The bullet points at the end about not getting mad and angry at your underwriters and processors: I will keep in mind especially because I have been on their end already as well. I do really appreciate you reaching out and contacting me Eric I know, I’m really young in the industry and I can tell that just from networking and being around everyone in my industry but I’m hungry and want to really get my business started. If you have any other advice you can give me or anything else you think I should be doing please let me know.
I have been taking everything one step at a time, and I have a fantastic operations team and management supporting me. I really do believe what you said if you’re a good person happiness and wealth will follow and I have been following that my whole entire life. Hope to continue speaking with you and learning from you.
Eric’s reply to Sean …
One of the hardest things when you are first starting out is getting business (it’s not all that easy when you get going, in fact). It sounds like you are doing all the right things … seeing real estate agents, farming your sphere of influence and networking. Unfortunately, sometimes it can feel like you are taking a shower under a slow drip faucet. You need business and you need it now to pay the bills. I can associate with that. I think most people don’t make it as a loan officer because in the first year you starve. All I can tell you is what I did. It worked for me, maybe it will work for you.
Make about 1,000 flyers, drive around and put them in people’s mailboxes around your neighborhood. Okay, by federal law, they cannot touch the mailbox, but many mailboxes have a small cubby for newspapers and the like. Say something like, “I am a loan officer who lives in your neighborhood. If you are interested in buying or refinancing, give me a call.” This builds an instant trust with your target market. They know you are a neighbor and they can throw rocks at your window if you do a bad job. The biggest dilemma in advertising is building trust at first glance. These are people that are giving you very personal information that they wouldn’t trust to a computer hacker. You want them to know you are local and you are a friend.
One of the best ways to get in good with a real estate agent is to put money in their pocket. No, I don’t mean a flagrant violation of RESPA bribery law, I mean, things like:
►Go jointly on advertising. This cuts their advertising outlay in half. As long as you are mentioned equally in the ad, no violation.
►Refer new customers to the real estate agent. A new deal is money in their pocket. By nature, they will feel the need to reciprocate.
►Do an especially hard deal that other loan officers in their office have already turned down. I would advertise, “Give me all of your turned down buyers.” If I could do it, they would love me forever and eventually start giving me their good customers.
The second tip is the one of which you compliment me. Respond to people quickly. If they have to wait for your call, they will start dialing the next loan officer. Jump on things right away. I do it because I have a horrible memory, and if I don’t do it right away, I will forget. You are probably much smarter and have a better memory than me, but it is a good habit into which to get.
Whenever I get slow, one advantage I have is that I can price real low. Get the deal no matter what it takes. This does a few things.
►To make a little money is better than making no money when you have nothing else to do.
►It gives you another satisfied customer who which you can market, get referrals and sing your praises on Yelp!
►It boosts your confidence which helps you sell the next deal. Sometimes you have to prime the pump to get the water flowing.
This last idea is not for everyone, but I will throw it out to you. I once had this same situation and asked another loan officer his advice. This is what he said. “Pray.” I believe the Lord is infinite and open to our prayers. Even if you asked for a million, billion things, that is nothing compared to infinity. Personally, I have been known to give a small donation and ask for continued business to help support my family and keep doing good things for his creation. I can only tell you, it has worked for me. Like I said, it is not for everybody. Business can be like war. You won’t find too many “naysayers” in the trenches.
Laura’s reply to Sean …
Sean, you have a lot of questions, but it also seems like you also have answered many of your own questions, or Eric has done that in a previous conversation with you.
When I started in the business, no one would hire me because all they wanted was an experienced loan officer. I was a real estate agent who decided I liked the finance side better. It took me months, but I finally got into a small bank that never had a loan officer before, so basically I told them what a loan officer would do for them. They loved the idea, and they used to say I was out hawking loans for them!
I had a very small base salary, plus commission, but hey, it was a bank with a great office and my foot was in the door. They didn’t ever have the best rates, or even that many products to offer, but what they did have was a weekly meeting of four or five top level executives, and my boss who met to underwrite the loans. So my niche was simple, I had direct access to the underwriters and I could often participate in their weekly approval meetings. We obviously did not sell our loans, we kept them in-house. So with that being said, did we have strict credit guidelines? No, not really, but criteria were always open for discussion. Ratios, time on the job, everything was a discussion. If it made sense, we did the loan.
The bank also had to meet CRA requirements and lend in all areas in which the bank had a presence. So since I was to hawk their loans, I also had to hawk their home equity loans across a very expansive area. Fortunately for me, I was lucky to have gotten into a position that allowed freedom. Also within one week of my starting, one of the office girls quit and they needed help covering her duties. Thus I had to be in-house two to three days a week. I learned home equity loans, auto loans, student loans, insurance side and commercial lending as we were your small local family run bank.
I did all of the same things you are doing, joined organizations, committees, etc. I wrote an article “Knowtworking: Beyond Networking,” which I will also send you a copy. But here are key elements when networking you can use:
►Be yourself, no one likes a phony, different than “faking it til’ you make it!”
►Find a niche, and use it! Not to say you don’t do anything else, but as a new loan officer, you cannot possibly focus on all products. Find what your company has to offer that is unique and capitalize on it. An idea for you could be target first-time homebuyers, as they will relate to you. Find out what products and programs your company offers to first-time homebuyers and know what credits your state and the VA also are offering.
►Have a signature statement: Which is a one-minute statement of what you do, make it your best byline and mention your niche.
►Always ask for the referral and give two business cards, one they can keep, and one they can give away.
►Lastly, it takes time, so just keeping doing all the right things (planting the seeds) and the fruit will come, first the plants, then the blossoms and then the delicious fruit!
Cyndi from the Frisco Bay Area asks …
I am trying to make a decision as to whether I should make the switch from broker to banker. Any suggestions for me? I live in California, and I am contemplating going with one of the big lenders, before I make my final decision, I was looking for some insight from both of you.
Eric’s reply to Cyndi …
Having owned a large mortgage broker operation, I am a bit biased. Like Laura, I have worked for both. We had a saying at my old broker shop, “You don’t start here. You finish here.” That means, indeed, you learn a lot being a banker, but you pay for that “tuition” via a lower commission split. Mortgage brokers tend to be more experienced because you end up doing a lot yourself. It is more work, but it always ends up to be more money.
Cyndi, I don’t know where you are in your career to give you informed advice. That notion that you are even thinking about it tells me you may be going there for a lack of business. Being a broker is hard and if you don’t have a good following, or are missing experience or just need a hand, then being a banker is your ticket. If you know what you are doing, have good referrals coming in and love the ability to shop hard deals, then why are you even questioning the idea?
Laura’s reply to Cyndi …
Great question Cyndi, it also happens to be one of the focus topics this month, so I will briefly address your question here, and will go into more detail in my article.
First, I want you to know I have been both, a banker, a broker, a broker/owner, and back to banker. It’s a merry-go-round, sometimes you’re a lion, sometimes a horse, but most importantly, is that you go around and around continuing to make money, which is your living.
Both have advantages and drawbacks, but it also depends on timing as well. I will point out upfront that a banker is most definitely the way for a newbie to go. They offer structure and training. It can seem like they offer reduced commission splits, but it is an offset for what you get in return.
As a broker, you have more autonomy and freedom, but you may have to be disciplined. The number one advantage of being a broker is having the ability to submit different types of loans to different lenders, allowing you to offer a wider variety of products to your clients and real estate agents. There is a gray side to being a banker that allows the brokering of certain loans.
Eric & Laura welcome your questions, please send your inquiries to [email protected].
Disclaimer: All answers are for informational purpose only, and are not intended to practice law, or provide tax advice or tax opinions. After reviewing our information we recommend seeking legal counsel or the advice of a tax professional.
Eric Weinstein worked in banking, on the commercial real estate side until 1991, when he fell in love with residential lending. He may be reached by phone at (703) 505-8692 or e-mail [email protected]. Laura Burke is an author and trainer with 20-plus years of experience in the mortgage marketplace. She may be reached by e-mail at [email protected].
This article originally appeared in the October 2015 print edition of National Mortgage Professional Magazine.
