One successful LO describes his customer follow-up campaign.

Excluding real estate investors, most people will buy somewhere between four and eight homes in their lifetime. With a few refinances and maybe a lake, mountain or beach house thrown in, that may equate to six to 12 home loans over the course of a 40 to 50-year period of adulthood.

Most marketers will tell you that it’s cheaper to keep an existing customer than find a new one, and that’s certainly true in the mortgage business. But mortgages are not like books, sodas, coffee or other products that people buy. In those cases, once you’ve gotten the customer to try your product and like it, habit alone may keep them coming back to you day after day. But people don’t buy homes very often. Even when you consider refinance loans, it can literally be years between the time you close a loan with a customer and when they need you again for a new purchase or refinance loan. With mortgage servicing sold so often, you can’t count on the monthly mortgage statement to remind the customer of your company’s name because your company may not be doing the servicing at the time your past customer starts thinking about needing you again.

The mortgage process can be complicated and most homebuyers know that a trusted advisor who gets the job done by building a comprehensive mortgage plan to match their overall housing and financial needs can be a great resource.

First Impressions
Building customers-for-life starts at the very beginning—creating that first impression as a great service provider. Our receptionists bake fresh cookies for our customers and once in my office, I offer them soda, water or coffee. These little things can help personalize the experience and cement you in your customer’s mind. Of course, the loan process itself and the closing must be smooth, so your company must have systems in place to make this happen. To back up HomeBanc’s promises of excellent service, our company offers an unconditional customer service guarantee. If after closing a customer is unhappy, we will refund their application fee. Less than one percent of our customers request this refund, but just having this guarantee is one more way I can distinguish my service experience from my competition and help create a brand impression that lasts past the closing table.

Ongoing Contact
So, you’ve made your customer welcome and you’ve closed their loan without a hitch, now it’s time to keep your name in front of them so they will keep coming back to you (and refer you to their family members and friends). During those intervening years, it’s important to keep your name in front of your past customers in a way that is effective, efficient and affordable without being too intrusive. Laws governing contact with past customers may vary by state. And the federal government also has things to say about direct mail, phone or e-mail solicitations. So in all the examples noted below, I’m assuming the customer has appropriately “opted in” to your communications with them. If you don’t know the federal and state laws governing customer contact, take the time to check those out so you don’t end up in any legal trouble.

Also, remember that you may not premium price your loans to recoup investments in marketing. If you’ve taken a customer to an event or made a donation in their name, you can’t quote them a different rate than you would quote a similar customer on whom you did not expend this marketing money. You don’t have to spend equal amounts of money on each customer, but you must give each customer equal pricing based on standard mortgage criteria. As you build your marketing plan, be sure to touch base with a lawyer or a mortgage banking association to make sure you stay on the right side of all RESPA, Fair Housing and other laws and regulations.

Use E-mail Sparingly
E-mail is a great and affordable way to keep in touch with your customers between loans. It costs nothing to send except the time it takes you to write it. With e-mail, I can affordably send important mortgage information, industry news, share mortgage and home financing tips, let past customers know about new mortgage products or just reach out from time to time to say hello (on a customer’s birthday, the anniversary of their closing or a holiday). All of these contacts will remind your customers of your name and company so you’ll be top of mind when they need a new loan. But be careful not to abuse this tool. Because it’s so inexpensive and easy, you might be tempted to bombard your customers with e-mailed information, hoping each time to create a brand impression. You’ll create an impression, but it won’t necessarily be the one you want. Customers across the board say they find junk e-mail just as offensive as junk mail. So use e-mail sparingly and only when you really have something important to say.

Snail Mail
Lots of people predicted the death of regular mail with the rise of e-mail. But traditional mailings can still provide an opportunity to touch base with customers in an efficient and genuine way. For my past customers, I send a variety of newsletters and postcards throughout the year to keep my name in front of them. These include an informational newsletter with mortgage tips, financial information and news related to housing and mortgages. This newsletter is branded with my name, company and contact information. I also send an occasional postcard mailer noting my contact information and reminding customers that I’m available to help them (or their family members or friends) with any home financing needs. I send personal “thank you” notes to customers for their business right after closing and if they’ve referred a family member or friend to me.

You can also send items like small calendars, sports schedules or important local contact information with your name and contact information on it in a business-card sized item or a magnet. These are items people tend to keep around for some time—they have a long shelf life—so they can be exceptionally good at keeping you and your contact information at the forefront of a customer’s mind when they need a new loan.

One unique item I send is a series of inspirational messages on CDs from HomeBanc’s Chief People Officer, Dr. Ike Reighard. Reighard is a nationally known speaker on work-life balance, workplace issues and living an extraordinary life. About once a quarter, he records a CD with a new inspiration message, which we make available to our own employees and to customers. Because Ike is so well known, many of my customers know he has this CD series and I will happily send copies to past customers or Realtors and builders I work with.

As with e-mail, use snail mail items sparingly. Monthly or quarterly mailings seem to be the most effective. Anything more often than that and you may start to seem like a nuisance. Again, with too-frequent mailings you’ll be creating an impression, but not one that is guaranteed to get you a customer-for-life.

Special Events
As customers come back to you time after time to do their loans, you’ll find some customers have moved up the economic food chain and are now buying very expensive homes. You should give all your customers the same level of service when working with them, regardless of the size of their loan. By law, you have to price the loans the same if the credit criteria are the same. But in marketing to these now higher-net-worth customers, you need to remember that it will take more effort to keep their attention because these people tend to be busier and have more marketing messages directed at them. By going above and beyond the regular mail/e-mail campaign with occasional special events, you can help keep your name in front of these busy, high-net-worth customers.

These special events might include inviting a group of customers to a concert or hosting a cocktail party or other gathering at an interesting location like a museum, art gallery, amusement park or local decorator show house. For example, we have invited a group of past customers to a well-known playhouse for refreshments and a performance. It’s another key successful way to show past customers that you want their long-term business.

The holidays are a great time to reach out to customers in a way that is more special than sending newsletters or branded items. Each year, I let my customers know in a holiday card that I’ve made a donation in their name to an Atlanta group called Children Have Rights in Society Homes (CHRIS), an organization for abandoned or abused children. In addition to my card noting that I’ve made this donation, the customer also receives a note from CHRIS acknowledging the donation on their behalf. Through this effort, I can touch my customers twice with my name and contact information but more importantly, help children in need and let my customers know about a great organization I believe in. It’s a win-win for everyone. If you do this, it’s important to pick an organization that won’t be offensive or controversial to some portion of your customer base. Charities involving children, local museums, local non-profit hospitals or other non-controversial groups may suit you better than picking a charity with a political or social agenda.

Monitor Your Efforts
All efforts at marketing and building customers-for-life will cost you money, time or sometimes both, neither of which you want to be spending if you’re not getting results. So it’s important to monitor your marketing results to make sure you’re investing wisely. This kind of monitoring doesn’t have to be expensive. For instance, I keep a database of past customers and note how many times they’ve come back to me. When I get a new customer, I ask how they heard of me. If they’ve been referred by a past customer, that’s proof that my customer retention marketing is working to keep my name and contact information top of mind with my past customers. I can also check my Web site hits and note if incoming phone calls spike after a mailing or e-mail campaign, which shows if my materials are getting through to my past customers and leading them to pick up the phone or visit my Web site. More sophisticated monitoring efforts could cost you much more than they’re worth, but a few simple things like those noted above can give you an idea if your efforts are working to develop customers-for-life.

Mortgage lending is still very much a relationship business. If you’ve done a great job for your customer, they will likely want to come back and do their next mortgages with you. But people are busy and have literally hundreds of marketing messages aimed at them every day. If years go by between a customer’s loan closing and their next house hunt or refinance, they may not remember your name, company name or how to find you when the time comes for a new loan. By marketing to your customers after the loan closing, you have a much better chance of building and keeping customers for life.

By Gary Welch

All I Want For Christmas

The Wish List Of Lending Professionals

‘Tis the season to be wary. It’s easy this time of year for things to fall through the cracks. While true that some things do slow down a bit in December, it is also true that the month-end is upon you faster than you can say, “Can I return this if she/he doesn’t like it?” It’s a time to celebrate the season with family and friends, but it’s also the time we take our collective eye off the ball until after the New Year.

So this year, when you ponder deeply about the things you would like to have for Christmas, consider some things that might not normally appear on your list. Sure, you probably want a zippier car and a sexier physique, but we at M.O.M. can only do so much. Something we can do is think a little more globally and strategically than you might be thinking at this time of the year, with all the distractions you are dealing with for the holidays. Here are five things that are probably on your wish list, even if you haven’t had a lot of time to think of them:

  • Have another big refinance market.
  • Be more efficient and reduce expenses.
  • Find profitable new products.
  • Have better relationships with lenders.
  • Attract and retain top talent.

These are all good things, but how realistic are they? Looking at them individually, we have good news to report – they are all achievable, if to varying degrees. Better yet, none of them will break your Christmas Club account (if anyone remembers those.)

Have another big refinance market. It may be on the way, at least to an extent. Projected adjustments represent as much as 40 percent in payment increases, which economists have cited as a chief indicator of an economic slowdown ahead. Consumers can’t spend what they are paying lenders to keep their first mortgages current. But it’s about the bond market, after all, and the bond market has been kind, lowering the yield on the 10-year Treasuries, in turn reducing the 30-year fixed-rates more than a half a point since summer. And a number of experts feel that we haven’t seen the bottom of the market yet. Back in September, the MBA saw an almost 10 percent increase in refinances and it’s a trend that should continue.

Jim Jubak, senior markets editor for MSN Money, said on, “All this means that 2017 could be a very different year than many of us— myself included—were expecting just a few months ago. Consumer spending could well be stronger than expected, due to lower interest rates and lower gas and oil prices. The economy as a whole could suffer less of a drag from a slowing housing market thanks to a wave of mortgage refinancings that prevent the housing correction from turning into a bust.”

This, of course, means good things for the mortgage origination sector. Things might be getting a lot busier in the new year, bringing tidings of comfort, joy and new opportunities just in time for Christmas.

Be more efficient and reduce expenses. If the business does in fact take off again for the new year, you’ll want to find ways to do more business for less. Fortunately, there are a number of folks out there who want to help you do just that. Among them are net branch companies who want you to join their networks in order to take advantage of economies of scale and enjoy greater income. At the same time, many of them will take some of the processing and technology burden off your shoulders in an effort to get more loans funded with less effort on your part.

This is a hot topic at industry meetings and one you will want to explore fully. Each branch network has strengths, and a number of them have weaknesses to evaluate as you consider them. The best due diligence you can perform is to talk to some of the branch managers personally, as they were formerly in your size twelves. Regardless of all the hype and representations made by net branch companies, the single most important indicator of their true nature are the responses you will glean from talking to people who have actually made the leap. If a network is reluctant to give you names and numbers, there is probably a reason. Before you ask if there is a “magic bullet” study that compares the pros and cons of all the branch networking opportunities out there, it is not making itself known. So do a good amount of Googling, visit the websites and most importantly, ask questions of branch managers.

Technology that can help you become more efficient is rapidly advancing as well. Hottest among these are paperless processing systems that are catching on with lenders. These advances are up there with the original LOS software offerings that have meant so much to originators over the last 10-15 years, easing the pain of repetitive document creation.

Paperless systems allow you to process loans on your office PC’s instead of using paper files, and the best among them make getting loans to lenders as simple as using email. Some of them also allow multiple people to view loans at the same time via the Internet, meaning that loan officers in the field can check status and workflow, and respond to customers immediately, without playing phone tag with the office. The office people can do the same with lenders without phone calls, a major time saver for origination offices and lenders alike. They are typically low in per loan cost and enable processors to handle more loans in the same amount of time required to process fewer hard-copy files.

Find profitable new products. The days of the 125 percent loan may be over, and the payment option ARMs may have gone out of fashion, but rest assured, there will be new products coming on the scene. Among these are the small commercial loans you may have been hearing about; they represent a significant income opportunity, though they require a somewhat different skill set among originators.

Small commercial loans are generally considered to run from $500,000 to $2,000,000. While this doesn’t get you much in markets like New York or California, they are still meaningful amounts in many parts of the country. The benefits of this market can be considerable, with several compelling reasons to get into small balance commercial lending. As Jeff Lucas, sales director of Silver Hill Financial points out, “First, there is considerably less competition for these borrowers. Additionally, the revenue opportunity is significant, with many originators earning two to four points. Further, you will enhance your perceived value to your customers when they learn that you offer both residential and commercial loans.” This sector is not without its learning curve. Jeff explains, “While these commercial loans require some additional knowledge, they are not difficult. Certainly, the appraisal differs from residential as do some other aspects.” He quickly adds, “However, learning the difference is not unlike learning non-prime, FHA, or other niche programs. Thousands of conforming originators have made the transition.”

Alt-A lending, once considered a specialty, has become mainstream. They are different borrower types from traditional refinance or purchase customers, and the niche requires some research and understanding. Still, many originators are finding Alt-A an important new direction toward rounding out their product offerings, allowing them to serve a wider base of customers. Big wholesalers like Argent have recently moved into the Alt-A arena, bringing a new level of competitive service to the sector. Sam Marzouk, Argent’s president illustrates this with, “Brokers receive an answer on their loan requests in 24 hours, or our fee is cut in half.” If you’re not doing Alt-A currently, you probably will be in the new year, and you may be looking at its cousins, Alt-A minus and Alt-B.

Have better relationships with lenders. This is probably the easiest thing to accomplish. Lenders understand your requirement for quick turnaround time and limited loan conditions. What they don’t understand is why so many brokers are less mindful of relationships over the long haul.

Industry leaders like Don Henig, president of American Brokers Conduit in Melville, New York, are eager to help create a lender/broker partnership with training and marketing assistance. “There are many ways to build relationships with brokers, but we believe at our core that we must help the broker build their business,” he says. His and other like-minded companies are cognizant that strong working relationships are built over time, and they are willing to invest in that.

Lenders are unanimous when talking about things brokers can avoid doing that harm their relationships. They don’t like spending time getting loans approved just to lose them to another company that responded 15 minutes earlier, they don’t like getting loans that go into EPD (early payment default), they don’t like having recent fundings churned and they don’t like fraud. All of these are easy to avoid, but a few of them tend to be “baked in” at some origination shops, such as small frauds—like pressuring appraisers to pad a value or switching borrowers into stated income programs because their W-2 came up a bit short. They may win the battle by getting a particular loan funded somewhere, but they don’t do much to advance the war. Greg Frost put it well when he said, “There is no free lunch. Our loan rates and costs will rise proportionately with the lost revenue of our lenders.”

Attract and retain top talent. Attracting top talent is a lot easier than keeping it. For promising newcomers, training and income opportunities float their boats, along with advancement potential. As they fulfill their potential, particularly among LO’s, they tend to be hired away, or at least prospected by other companies. According to Rainmaker Thinking, a management consulting think tank, the key to keeping people is good management. If a healthy, challenging and rewarding environment is created, people tend to stay. If not, they are more easily hired away by your competition. Rainmaker believes that most people are under-managed, not over-managed, which comes as a surprise to many. Companies that take five proactive steps in managing their people have the most success, they say:

  1. Provide clear performance standards and procedures;
  2. Make sure employees understand what they are accountable for;
  3. Monitor their work so you can evaluate them properly;
  4. Provide clear feedback on how they’re doing and on fixing problems;
  5. Distribute rewards, praise and detriments fairly.

These seem pretty common sense, but research has shown that companies of all sizes tend to lose sight of these simple steps, causing in-office politics and the loss of valuable team members who become dissatisfied.

A major satisfier for employees is training–making them better at what they do, which helps set up their future positions and advancement. M.O.M. comes to the rescue here with its seminar series, featuring some of the brightest minds in the business. Speakers have real-world, practical experience and share their insights at day-long seminars held all over the country. Seminars like these are extremely powerful tools to help your people become more successful and retain them.

As you celebrate the season this year, let visions of new opportunities dance through your head along with the sugarplums and other holiday goodies. There are pretty good chances for your wish list, and there may be other delectables on the horizon as well, such as federal preemptions and new, interesting loan instruments.

As always, M.O.M. will bring them to you as they develop, delivered to your mailbox more easily than St. Nick ever found his way down a chimney. For now, best wishes for a memorable holiday season, and “to all a good-night.”

By James Hennessy

Taking a More Strategic Approach

Like most salespeople, loan originators are tactical by nature. They operate on a “get-it-done” mentality, moving from task to task throughout the day, taking and making calls, putting out fires, handling issues and trying to pack as many activities as possible into a day’s work. This is why so many loan originators are successful. This is also way so many loan originators fail.
Imagine captaining a boat in a race around the world with no compass and no map. You could have a fast yacht, capable skills and an able crew, but without a course or a bearing, you’ll waste a lot of time sailing in the wrong direction. You may even get completely lost. I speak with many mortgage lenders who admit to me they are completely lost. They work hard and pour a lot into their careers; however, they are not quite sure where they are going (or if they do know where they are going, how they are going to get there.) These men and women are capable captains; they have a good crew of support staff and work for good companies with competitive products and services. The problem comes back to spending too much time in a “tactical” mindset and very little in a “strategic” mindset.
In coaching and training hundreds of mortgage originators across the country, I enjoy asking the people I work with some thought-provoking questions such as:

  1. Do you have clear, specific goals for this year?
  2. Do you have a written game plan for how you plan to achieve those goals?
  3. Do you review your plan on a weekly basis?
  4. Do you start each day with a to-do list?
  5. Do you spend most of your time on activities that generate the most important results?

As you can imagine, most loan originators answer an honest “no” to at least three of these five questions. They are focused on the tactical of today’s work at hand, and have little or no time to strategize what they are going to do tomorrow, let alone in six months.
There are several ways to think and act strategic and still be a successful salesperson executing the tactical activities your job demands every day. Here are five to consider:
Know the numbers behind your business. I hear originators say they want to make $100,000 a year or close $20 million in volume. But many of these same people do not know the strategy behind those numbers. Let’s say Beth wants to make $100,000 a year. Her average loan amount is $200,000 and she earns about $2,000 per loan. Beth must close 100 loans a year or eight to nine each month. Since Beth is successful in closing around 70 percent of the applications she takes, she must take 11-13 applications a month. If Beth converts about 50 percent of her prospects to applications, she must talk with 22 to 26 prospects each month, or an average of five to seven a week. That becomes Beth’s strategy; if she can talk with five to seven prospects each week, or one or two every day, she will earn $100,000 a year.
Do you know the numbers behind your business? You should. It’s not that hard to calculate your average loan amount, average commission per loan, pipeline conversion rate and prospect capture rate. All it takes is a little time studying your business. Once you know the numbers (the strategy) you can “chunk down” to activities (the tactics) you need to get you where you want to go.
Take control of your day. Few things will accelerate your success faster than becoming selfish with your time. Too many loan originators spend too much time doing what they should not be doing that they can’t get to what they should be doing. They move from task to task and fill each day with “stuff” that accomplishes very little (like a captain sailing in circles.) Without a clear map of how they want to navigate the day, they fall victim to other people’s problems, administrative duties and busy work. A group of about 75 loan officers I recently spoke with agreed that on average they spent 50 percent of their day doing things they shouldn’t be doing. When asked why this happens, one brave originator responded, “Because we don’t know what we are supposed to be doing, so we do whatever comes along!”
One of the simplest and best ways to get a handle on the day’s activities is to run your day from a specific to-do list. Five minutes at the start of every day listing the six to eight activities you need to accomplish will do wonders for you. If you are disciplined enough to keep, review and follow this list you will be amazed at how much more control you can create in your day. Your to-do list should detail specific tasks that lead you to your goals. (In our earlier example, one of Beth’s to-do activities each day should be: Talk with two prospects. If Beth achieves this on a daily basis, she will achieve her income goal.)
Abide by a “don’t do” list. Just as a to-do list will keep you focused on the things you should be doing, a “don’t do” list will keep you focused on what you should avoid. An example of your “don’t do” list might include things like:

  • Office chit-chat
  • Running personal errands
  • Driving out to take loan applications
  • Reading web sites and unneeded e-mails
  • Working with poor quality borrowers
  • Over-processing loans
  • Calling on low producing real estate agents

Keep this list posted at your desk. Laminate it if necessary. Review your “don’t do” list each morning to remind you where your time and talent could easily be wasted today. After a short time, you’ll be more consciously aware of those little time robbers that can creep into your day and keep you from executing your plan.
Look at your week first, your day second. This strategic activity will take you about 15 minutes every Monday morning. Ask yourself these three questions:

What do I want to achieve this week?
What events are coming up that I need to prepare for this week?
What steps do I need to take this week to get me closer to my goals?
Thinking this way from the 30,000 foot level, will help you formulate your daily to-do lists with a clearer strategy. Essentially, this step conducted 52 times a year on Monday morning breaks down your annual goals and game plan into five-day segments. For example, if Beth wants to grow her builder relationships and construction financing business this year, she should be thinking about one or two key activities for this week to move forward on that goal.
Track your leads. Do you know where your business comes from? Top producers do. They can show you reports displaying where every loan was originated from and which of their sources generate the most revenue. This allows them to make changes to their sales, marketing and prospecting activities on a month-to-month basis to yield the highest return.
Tracking your leads can be done on an Excel spreadsheet or using a scrap of paper and a pencil—whatever works for you. Each time you get a lead, jot down where it came from (such as a magazine ad, apartment complex letter, or Realtor sales call.) In just a few months you’ll have a much better idea of what is really working for you and what is a waste of your valuable time and money. Then, adjust your tactics to the strategies that work best.
Becoming more strategic with how you run your mortgage origination business will have great advantages for you. Even though you may still invest 95 percent of your day (7 ½ hours) executing the tactical part of your job, you’ll be investing five percent of your day (30 minutes) building, reviewing and improving the strategy of how you do things. Would you be willing to invest 30 minutes a day in simple strategic activities that may result in a boost of 20 to 50 percent in production and income next year? If that sounds good, then the time to get started is now.

Douglas Smith

Living in Interesting Times For Subprime

“May you live in interesting times.”
–Originally attributed to an ancient Chinese curse

In 1966, Bobby Kennedy made a speech in South Africa in which he quoted the famous line about interesting times, attributing it to an ancient Chinese curse. Chinese scholars have been unable to find its source in their culture, and think it may have origins in either America or England. Regardless of its source, it is apt both as a blessing and as a curse. The “interesting times” of recent years has enriched lenders, brokers and everyone else along the value chain of mortgage origination. But the times are interesting today for a less happy reason: the subprime party is over and it is time for someone to pay the bill.

It’s all about growing up. When you are young and irresponsible, it’s not surprising when you do things that might embarrass a more grown up person—unless of course you happen to be in Las Vegas, where what happens there, stays there. The subprime industry has been on a bit of a bender over the last few years, and Wall Street is playing a parental role in sobering things up. To illustrate just how interesting the times have become, consider these sound bites from single story in the Mortgage Ledger last summer:

  • Investment banks are routinely incurring losses on subprime and low-documentation loans, resulting in unprecedented numbers of loan repurchases by lenders.
  • Lenders are having to restructure their loss reserve strategies to allow for repurchases on problem loans, sapping profits. NetBank added $13.2 million to its loss provision expense in a single quarter. Fremont General Corp. repurchased $238.4 million during the second quarter of 2006, more than twice the level of repurchases in the previous quarter.
  • H&R Block added $11.6 million to its reserves, based on experience with buybacks caused by early payment defaults. A related story cited an H&R Block press release stating that it expected to “record a $102.1 million provision for losses in the current quarter related to its subsidiary Option One” to reflect an increase in loan repurchases caused by early payment delinquencies.

It’s not just Wall Street noticing an ugly trend in the subprime world. The New York Times, citing an MBA report, noted in September that, “The rate of subprime ARMs — representing lending to people with poor credit histories — that were entering foreclosure rose to 2.01 percent, the highest since the fourth quarter of 2003, the report showed.” Growing pains for subprime, or death throes? Clearly the capital markets are becoming fed up with the noise from the party downstairs, and have decided it’s time for the market to quiet down a bit.

As a point of order, the term “subprime” really isn’t applicable any more, as the segment no longer deals solely with below average credits. Alt-A and Alt-B are in the mix, along with stated and other low-doc programs that aren’t credit score-dependent. Things became fast and furious there for a while, but thankfully we never got to the ultimate program an industry wag predicted would be upon us: the “stated FICO” loan. Think of the market segment not as subprime, but as nonprime, since Wall Street tends to look at it that way.

Industry experts are concerned. Sam Marzouk, CEO of Argent Mortgage, believes that the current environment is a natural evolution of an industry fueled by competition. “What we’ve seen in the last few months is lenders adopting various strategies to address challenging market conditions,” he says. “But the changes in the market go beyond current market conditions. The non-prime market is fundamentally changing—it is maturing.” A good word, maturing. And it is happening at a good time. “As the market continues to mature and margins become thinner,” he continues, “it is the low-cost, high-quality producer that will be successful. Companies that are able to use technology and other innovations to drive efficiency and service are going to be the winners in the new, more mature nonprime market.”

Look for lenders to offer a variety of new ways of doing business involving new technologies—not overly-aggressive loan programs that end up being of no good to anyone, including borrowers. Among these technologies are document management systems and other ways to reduce paper handling in the process, coupled with automated workflow, Internet portals and continuing advancements in automated decisioning capabilities.

Many industry leaders believe the core problem is in early payment defaults, often but not always an indication of borrower fraud. Howard Wegman, CEO of CreveCor Mortgage in St. Louis, Mo., notes, “Previous to the last six months, investors might find one or two EPD loans (in a pool) to push back to the lender, but today we see 10 to 15 at a time. This type of strain on the capital markets will eliminate a lot of mid-level producers.”

Debbie Rosen, immediate past-president of the National Home Equity Mortgage Association (NHEMA) and one of the nonprime industry’s best-known executives believes part of the problem is a result of lenders trying to accommodate marginal deals. “Common sense tells you that repurchases would not be an issue if loans were underwritten in perfect alignment with lender guidelines,” she observes. “I believe that in a strong market, lenders may think that volume covers a few mistakes and might tend to overlook some of what might be considered ‘minutiae.’ When markets change and delinquency, fraud and credit risk increase, every loan is scrutinized more closely, thus loans that may have sold and survived in pools are now being kicked to the curb.” She feels that the best way to avoid the buyback environment that has cost big mortgage banks hundreds of millions of dollars is for lenders to make good guidelines and use them. “We are in an environment where loans have to be perfect,” she explains. “The critical issue is fully documenting your underwriting guidelines. If your underwriting guidelines claim you only make loans up to 95 percent LTV, then you cannot make a 96 percent LTV loan, there is no wiggle room. And make certain you have a process to ensure that appraisals are sound—don’t cut corners on the appraisal. At the end of the day the driver behind a nonprime loan is (the property’s) value.”

So brokers can expect to see less flexibility in the more mature environment when it comes to accommodations and exception handling. Jim Buchanan, Wells Fargo’s national sales manager for its Wholesale Alternative Lending Division, echoes that expectation. “We adjust credit criteria as needed to balance risk, responsible lending and our desire to be competitive. Risk management and responsible lending rule at Wells and we all agree on that. If Lender “X” wants to walk over the edge, we’re not going to be holding their hand.”

Are we in a “flight to quality” in the nonprime space? “I certainly hope so,” says Buchanan. “We want to keep our AAA from Moody’s and our AA+ from Standard and Poor’s.” Rosen responds to that question with, “Absolutely, but that does not mean that credit-impaired customers with temporary problems are out of luck. It means that documentation is everything.” The market has been moving away from documentation for years, offering “stated everything,” and originators have certainly used all the tools with which lenders have provided them. Expect many of those tools to disappear from the mainstream lenders, and to become far more expensive from the boutique shops that will continue to support them. Given the rising delinquencies and early payment default problems, you certainly can’t blame the lending community for backing away from those loan types. Brokers have jokingly referred to stated incomes as “liar loans” since their inception. That nickname appears more apt now than ever before, as more of them go delinquent soon after closing.

Having said that, it should be noted that there are still plenty of creative programs available out there, including Alt-B, sometimes referred to as “Alt-A minus.” It is an illustration of how Alt-A lending is inching closer to a classically subprime product, but with several notable differences. “The Alt-A product is less flexible than nonprime,” says Wells’ Buchanan. “We grant virtually no exceptions in Alt-A, as opposed to nonprime, where we are more likely to consider compensating factors.” He adds, significantly, “The capital markets drive that.” Ultimately, Wall Street drives everything, and in more ways than one, as we will see. Regarding the Alt-B product, Buchanan describes the category as covering FICO’s 600 or 620 through 660 or 680, but with stiffer guidelines than nonprime. “Our Alt-A minus program sits between nonprime and Alt-A prime,” he says. “It’s there to capture a slice of market that we might miss if we only offered nonprime and Alt-A, and gives us more flexibility in rate and credit criteria.”

Argent made that move last summer, announcing its Alt-A program at the NAMB conference in Philadelphia, feeling the need to expand beyond the dimensions of nonprime alone. As Marzouk observes, “It’s about finding innovative ways to expand our relationships with brokers,” a constant challenge in the wholesale arena. Lenders are always trying to find ways to add value to their relationships at the point of sale, and offering more products is only one approach. “At Argent, we’ve done this by expanding our product line through Alt-A and by developing innovative ways such as our broker marketing program, Argent University and our recently launched Purchasing Express program.” An interesting development, Argent University is a co-offering with MBA, making those formidable resources available to the broker community at vastly reduced costs.

Speaking of the Mortgage Bankers Association, it was announced last summer that NHEMA, the longtime trade organization for nonprime lenders, would be merged into the MBA to provide a unified voice for the industry. A decade or two ago, the organizations were poles apart in their membership and objectives. Mainstream MBA members were typically not part of NHEMA, and vice versa. Much has transpired in those intervening years to bring the interests of their members closer to convergence. “B and C” lending, later to become known as “subprime,” is now firmly part of the mainstream. If you have been in the industry more than 10 years, you probably remember the days when most brokers did conforming credit loans only, leaving the B and C stuff to specialists. No more.

The merger of NHEMA and MBA is significant for lenders and brokers alike. For the first time, nonprime lending will have the horsepower of the entire lending industry behind it, critical in these days of onerous legislation and statutes that seek to protect borrowers by denying them credit. Rosen, last year’s NHEMA president, is bullish on the merger. “The MBA has enormous industry respect and a very strong governmental affairs track record. I believe NHEMA will greatly benefit, and combining the two trades strengthens the ability for the mortgage industry to act ‘together’ rather than allowing special interest groups to fragment responses and confuse the message.” It will also bring greater standardization to credit grading, due diligence and other aspects of the lending side, as well as to another critically important aspect of the business, she feels. “It sends a strong message to the investor market,” she says. “Through unification of goals and by combining the considerable intellectual capital residing in both organizations, we are showing Wall Street and others how serious we are about responsibly serving this very large, very important market.”

And that’s critical. At the end of the day, investors will be the ultimate arbiters of what makes a “sensible” loan, based on the ultimate indicators of success: loan performance. If they don’t pay, they don’t stay. As CreveCor’s Wegman puts it, “I think Wall Street is deciding as we speak what makes sense. Thinning margins and less demand make everyone sit up and wonder how we got in this position,” a position he describes as “self-inflicted.” Having closer ties with the capital markets is a good thing, he feels. “I believe today there is better communication between The Street and lenders, which will help build a better and steadier platform for the future.”

Experienced mortgage originators will agree that “steady” is a good thing, as long as the market keeps the ability to create new programs to meet new needs. Wall Street has historically “gone along” with most new programs the industry has created, but has taken a lot of shots over the years from programs that didn’t perform as expected. Gray-haired lending types were scratching their heads years ago when the 125 percent LTV loans were hot because those loans went counter to their training, but the Wall Streeters soldiered on until the delinquencies soared and the programs were dumped. The “stated era” has probably run its course by now, at least when low FICOs are involved.

The most historic recent development is the decision by the capital markets to get closer to the point of sale than ever before. Wall Street firms are spending like sailors on shore leave, buying mortgage banks right and left. This consolidation, most recently including upper-tier firms like Saxon, National City and First Franklin, is widely viewed as a good news/bad news scenario by mortgage bankers. In some respects, it is cutting out the middleman between the originator and the investor, but it is unlikely the consumer will benefit through lower rates. It is more realistic to expect that the investment bankers will simply pocket the mortgage banker’s share of the transaction. Still, it is reasonable to hope for greater stability in the marketplace going forward as Wall Street learns and understands the lending business to a greater degree. Their captive firms will presumably be less likely to let competitive trends dictate the making of loans that don’t make sense, and ultimately, that’s good for everyone.

The most feared influence on nonprime’s future is also the one that knows the least about the business—your state and federal governments. Their understandings are many miles wide, ranging from sea to shining sea, but are only a few inches deep. They respond to pressure from consumer groups and activists who feel that every lender who insists on being paid every month is a predator. To make matters more incendiary, the movers and shakers within those governments are people who benefit from crusades, from prosecution and from news conferences about their crusades and prosecutions. For many of them, it is about the votes, not what is best for consumers, and most of them don’t begin to understand the circular, self-replenishing dynamics of our capital markets system.

“Legislation will continue to increase, but if the industry handles it correctly it will be no different than in the past when regulation threatened lending in general,” according to Rosen. “We survived TIL changes and many other things that seemed onerous. The real issue in my mind is a way to simplify the process. Simplification would go a long way to help everyone believe there is not a hidden agenda to push someone out of a home.” Most will agree that our industry could use a lot of simplification, and not only to help consumers, but to provide relief from endless disclosures and processes that confuse borrowers and waste trees by the acre.

Looking astern, we see a nonprime market that would have been not just under-served a decade or two ago, but one that would have been completely non-existent. The nonprime industry has truly stepped up and made credit available to people who otherwise would never have seen their name on the mailbox out front of their own home. This has been accomplished at surprisingly little expense over and above the vanilla agency loan, and thanks to our capital markets system, the money has flowed very consistently and well, other than the occasional Wall Street bout with indigestion such as this one and the little dustup in 1998 that restructured the major industry players.

Looking ahead, we can expect a nonprime market that is a little less excited about offering hyper-aggressive products, but probably a bit more reliable and consistent. As far as future-gazing goes, Marzouk says, “Over the next 12 months, I believe the trend toward efficiency and high-quality service will continue. Lenders who can innovative, be extremely competitive on price and provide outstanding service will succeed.”

Debbie Rosen predicts that, “It will continue to be a tough market. The light will be shining brightly on credit quality, property values and margins. Affordability is key for borrowers, and as interest rates rise, consumers need products that allow them to service their mortgage debt.” Taking the theme of innovation a bit further, she adds, “The mortgage industry in the United States has been brilliantly conceived and I’m never surprised by new products. I believe they will continue to develop to ensure we provide homeownership opportunities to as many families as possible. These might include a good portable loan and a hypothecated loan allowing investments like 401ks to work as down payments.”

Buchanan sees more consolidation ahead. “I think the biggest issue is simply the market size and the hold-over of excess capacity among all mortgage players. In tough times we see irrational pricing and credit criteria, and we are likely to see more of that before we see less.” He adds that ancient Chinese curse—the one that actually might be more American than anything else, with “May we live in interesting times… but not as interesting as 1998.”

James Hennessy

The Gatekeepers of the American Dream

“The Mortgage broker has become the gatekeeper of the American Dream.” — John M. Robbins

If, as Diderot said, “Only great passions can elevate the soul to great things,” we can expect great things from the Mortgage Bankers Association (MBA) in the coming year, for no one has the passion of John Robbins for the mortgage finance industry. A lifelong mortgage banker, he has worked in all aspects of the business over a career lasting more than 30 years, and founded both American Residential Mortgage (sold to Chase in 1994) and American Mortgage Network, which recently sold to Wachovia. Along the way he has served on numerous boards and chaired multiple charitable committees to benefit his community and industry. His mentoring personality has helped scores of newcomers over the years (including at least one who came to write monthly for an industry-leading magazine in the mortgage origination business). In Chicago this month, Robbins becomes the chairman of the MBA, and he has strong feelings to share regarding the state of the industry, the priorities for the coming years, and the role of the mortgage originator in the business continuum of our real estate finance system.

First and foremost, he has an abiding respect for the point-of-sale professionals in the system, and it shows in his perception of them as the “gatekeeper of the American Dream.” This isn’t mere rhetoric—he has walked the talk over several decades, and he intimately understands the symbiosis between broker and banker. “It’s simple,” he explains, “The MBA and the NAMB share a common goal. We want to help people buy homes. Consumers use brokers because they are a great resource in finding the right loan for a family or an individual.” He sees a close working relationship between the two associations in the coming year because each has critical issues that threaten the integrity of the industry. “Mortgage brokers and mortgage bankers work together on many issues,” he said. “A good example is combating fraud. Instead of reacting to fraud, I encourage mortgage brokers to take a proactive approach. Many tools have been developed to raise fraud’s red flag, including fraud detection software, electronic reviews of property data using automated valuation models and loan-performance models, to name just a few.”

Tools are great, but they alone won’t get the job done: “Training is another means of combating fraud,” he noted. “Many firms are developing seminars and resource guides that help industry professionals understand what defines fraud, how it can be uncovered, how to stop it from recurring, and what lenders can do to mitigate losses if they become victims of mortgage fraud.” White-collar criminals discovered the ease with which mortgage fraud could be committed a long time ago, but law enforcement yawned until the stakes rose to unignorable heights in recent years. If allowed to grow unchecked, investors will simply leave the arena, making capital scarce and guidelines onerous.

The MBA is looking at all kinds of approaches. “Communication between the industry and law enforcement is also vital to fraud prevention,” John says. “The MBA has told Congress that some type of ‘safe harbor’ provisions for brokers, lenders, appraisers and other mortgage professionals could help protect the industry and consumers from fraud.” Not forgetting our friends and neighbors in Congress, he adds, “The enactment of national legislation is another possible solution to fighting mortgage fraud. Much has been said about implementing a national mortgage professional database that lists who has been approved by state or federal regulatory agencies, as well as who has been convicted of fraud in the past five years or had their license revoked in another state.”

In another example of the “Big Two” associations working together and in parallel, he notes, “Both the MBA and the NAMB have put together initiatives that foster training and education. MBA held its first National Fraud issues Conference this past May. This keeps everyone aware of industry changes, new legislation and enhanced means of tracking fraud. The NAMB is dedicated to providing programs that support the ongoing education, training and professional development of its members.”
Fluctuation in market size has kept many in the industry guessing over the last year or two. This is old hat to the baby boomers, who have lived with cycles since entering the business, but it is unsettling for newcomers. We are in a consolidating market at the moment, for both mortgage banks who are being acquired by bigger fish, and for mortgage brokers who are looking for strength in numbers by joining net branch companies. None of this, in Robbins’ view, stands to endanger the number of options and programs that will be available to mortgage brokers in the coming years. As to the health of the market, he feels, as do most of the rest of us, that the doom and gloom the newspapers like to talk about, including stories about bursting housing bubbles and rampant foreclosure scenarios, are more than a little overstated.

“This has been an unprecedented era in the housing market,” he says. “We’ve never seen a 13-year cycle before; the volume of the last three years cannot be sustained. However, what we are seeing now is a gradual return to ‘normal’ in that price appreciation is slowing and inventory is rising. As long as we have a healthy economy, housing will be healthy as well. Every young person I talk to wants to own a home and is figuring out how to make it happen.” The statistics regarding Generations X and Y buyers bear out his statement, since they are buying homes younger than their parents did, despite the increased prices. So even though those generations are much smaller than the baby boom, they will be making up for it by entering the market earlier.

The MBA chairman always has a full plate of things to accomplish during his or her time in office. Every third-year chairman is tasked with completing a three-year plan, and this is Robbins’ year. His plan is going to refocus the MBA’s efforts on a number of areas, especially in working with regulators and lawmakers to both understand and accommodate the realities of the marketplace.

Perhaps the most important effort he sees, since it affects so many of the others, is to correct a false impression: “Politicians have painted the real estate finance industry as one with ‘flawed integrity,'” he explains. “Newspaper articles are heralding mass foreclosures and other calamities. I want to self-regulate as much as possible to avoid more regulation forced upon us, because it’s always punitive.” Key to self-regulating is proposing legislation and regulatory language that is less onerous and more realistic that the verbiage we have come to expect from legislators. Or better yet, preempting legislation by adopting standard operating procedures that are more consumer-friendly, even if they intimidate the broker or banker.

The hottest potato in this basket involves the “D” word—disclosures. “How is the industry going to address issues like borrower risks associated with products like pay-option ARMs with negative amortization and advising borrowers appropriately about them?” he asks. “When you go to the pharmacy and pick up a prescription, either the pharmacist, the container or both tell you about possible side effects, right?” While he’s not saying we need to advise borrowers to “Discontinue use if payment shock develops,” or “In the event you experience an ARM-adjustment that lasts more than four hours, call your doctor,” but you get the idea. Disclosing is not a bad thing if it makes your borrower feel better about the transaction long after it is done. That borrower becomes a return customer.

The toughest example he cites deals with yield spread premiums. Brokers don’t like line items that tell borrowers how much they are making, which is somewhat understandable. Still, the fees are readily explainable, especially if the borrower understands they would be charged the same fees by a lender, even though they may not be disclosed the same way. YSPs are different, Robbins feels. “The issue is not the amount the broker has earned, but rather how much the upsell may cost the borrower in interest over the life of the loan.” He goes on to explain, “You may be dealing with people who won’t be in the house long, and paying the higher rate won’t have as much meaning to them. But if they are going to raise a family and stay there as empty nesters, the borrowers may prefer to pay the premium at $3,500 today rather than pay $26,000 over the life of the loan.” Fortunately, today’s borrowers have often experienced multiple refis and are far savvier than they used to be. That kind of borrower won’t have any trouble understanding the difference between “pay me now” and “pay me later,” and that’s what Robbins is talking about communicating to them.

A huge priority will be getting the FHA bill passed by the Senate. As described by Ken Harney, “The bill, which now awaits Senate action, would allow the FHA to offer zero-down-payment loans for the first time, increase permissible mortgage amounts substantially in high-cost markets, and provide low-interest rates and consumer protections that are rarely available from subprime mortgage lenders.” The new revitalization bill would, as Harney explains, “Effectively open the FHA marketplace to mortgage brokers, who are by far the largest source of home mortgages originated nationwide. With brokers able to offer both private-market subprime and FHA-insured mortgages, buyers with less-than-perfect credit will be able to directly compare FHA’s rates, fees and consumer protections with competing subprime loan offerings.” Robbins believes this is “incredibly important as we look to the future. We are looking at markets that are huge in size, and minority loans will be extremely important to those markets. FHA revitalization will be a key component in our ability to house low to moderate income Americans, and that’s our job.”
As the “gatekeepers of the American Dream,” mortgage brokers must have a clear path to the capital needed to keep loans funding, and that means having a good working relationship with the nation’s mortgage banks. What can each party do to help the other? Robbins cites several things. From the mortgage banking side, he says, “Introducing technology to make the broker’s job more efficient is essential. We work with our broker customers so they can be more productive and spend their time helping customers, not doing paperwork. We also try to make them aware of shifts in the marketplace and give them the products that address changing demographics.”

From the mortgage broker’s side, he echoes a familiar theme: “Mortgage brokers and mortgage banks are partners,” he says. “This partnership is based on sound business practices, trust and integrity. Mortgage bankers want to fund the loans that brokers send them. Give us the documentation to do that.” Building relationships with your mortgage bank for the long term has other implications, as well, such as not shopping loans to a dozen different lenders. In this day and age of lenders having huge product menus it is far less necessary, anyway, and it drives mortgage bankers to distraction.

It will be a busy year for MBA, with RESPA reform, FHA revitalization, fraud control and GSE restructuring all on the table. Despite all there is to do, including mapping out the MBA’s efforts for the next three years, John Robbins expects to bond more closely with his counterparts at NAMB in order to create a more perfect relationship with that association. As John puts it, “The MBA and NAMB’s paths are undeniably intertwined. We’re on the same page on 90 percent of the issues, and old attitudes of exclusivity on both sides have all changed.”

Passion abounds in the hearts of the NAMB leadership, as witnessed in Philadelphia this last summer, and it lives in the marrow of the Mortgage Bankers Association, as will be demonstrated this month in Chicago. And if great passion truly elevates the soul to great things, expect that the funders of the American Dream and the “Gatekeepers of the American Dream” will accomplish much in the coming year. Their work is certainly cut out for them.

By James Hennessy

Can a Blog Help Your Production?

Blogging (derived from Weblog) is an online journal that maintains a continuing narrative of information. This is the basic definition, but like the rest of technology today it is evolving as fast as you can type the word “change.” Blogs are utilized for anything and everything: breaking news and commentary, business, personal journaling, educational resources and political observations. I personally have a marketing blog to maintain a running dialogue of marketing tips and strategies. There are many reasons to utilize a personal blog for your origination business.

Quickly becoming a mainstream method of communicating, blogging is a dynamic, flexible tool that requires minimal technology know-how and little to no cost to maintain. Many in the business world are now using blogs as an essential part of growing their networks. Where a website is fairly fixed and somewhat boring, a blog allows you to become personal with those you want to do business with. You become more visible and gain credibility as an expert in your field. Blogging is a way to differentiate yourself from the competition and reinforce your reputation as a mortgage expert.

Mortgage blogs are becoming popular with originators that want to educate their clients as well as increase business. Dan Green has developed a fantastic blog. He didn’t fully realize the marketing potential until one day a borrower came to Dan and said, “My Realtor gave me five lender business cards. I read your blog first and decided then that you were the lender I would use.” Pretty powerful marketing. Ronnie Roach is another lender that has been blogging for three years. He now offers free classes to Realtors, teaching them how to set up and maintain a blog for their business.

According to Michael Sippey, general manger of TypePad, people read blogs to find out the point of view and connect with the writer. This is key to those in relationship businesses, as a blog can take an informal tone yet still pass along valuable information to the reader. Your passion and knowledge will translate into loyalty from those that read your blog. This value, along with your enthusiasm, is what will sell your services.

There are two main components to a successful blog: interesting content and getting the right people to look at it. Most of us in sales are good at talking, that’s why we are good at sales. So don’t get hung up about the writing. Use this talent to speak in your blog, describe what you specialize in, products and services you offer and how you can benefit your customers. Post tips that will be valuable to those you are trying to attract to your business. You can include success stories and testimonials from happy clients. Post links to articles you liked (or didn’t like) with just a few comments from you.

Also, use your blog to answer questions or concerns you receive from clients. Most likely, if one person has a question, many more will also. Blog about local housing issues, developments and forecasts.

To get your blog read, invite everyone you speak with to visit and comment. Add the URL address to your business card and e-mail signature. Put a link on your Web site. Once you talk with a potential client, send a follow up e-mail with a link to an interesting article on your blog. As blogs have become more common in the business world, customers are using this as a shopping tool. They want to feel connected with those that will be helping them with their real estate and financial needs.

You can also register your blog for free with many blog-specific search engines. Post comments on other blogs related to your field such as Realtors and financial planners and your comment will link back to your site. The more you can utilize this cost-effective, public relations tool, the quicker you will see an increase in clients and production.

The best thing about it is that you can set up a blog in a short time with little to no cost. WordPress and TypePad are two well-established blogging services that can walk you through the process of setting up your own blog and both offer many tools to make your blog successful. It is recommended that you post to your site frequently, giving people a reason to check back often.

Do you love what you do? Are you good at it? If the answer is yes, then starting a blog is one of the best ways to let the world know. And the fact that it is so simple and easy to maintain makes it all that much sweeter. Blog away!

By Bliss Sawyer

Net Branching Strategies: Is There Safety In Numbers?

An overview of net branching and the factors to consider when selecting the right options.

Americans have always liked to go it alone, at least in theory. We’ve lionized John Wayne, who never needed anyone, and every detective movie seems to have a lone wolf, high-testosterone type who refuses to be saddled with the inevitable partner, insisting, “I work alone.” It is Theodore Roosevelt-styled “rugged individualism” that is at the core of every American, and everyone knows it, don’t they?

Not even close. The national psyche understands there is safety in numbers, and nobody clumps together faster or better than we do. Who willingly goes without health insurance, self-insures their auto or shuns the concept of mutual funds in favor of going it alone? Where did labor unions gain their first large-scale economic influence? Why are trade groups like NAMB so critical? We talk a good game about being mavericks and lone wolves, but we’re really conflicted on our mindset. The idea of being part of a “herd mentality” is not attractive, but we’re smart enough to know its advantages when we see them.

Which makes it wholly appropriate to discuss net branching strategies, since they are all about maximizing the power of the little guy by making him part of a more powerful whole, a network. During the refinance boom, there were far fewer compelling reasons to worry about safety in numbers, but that was then, this is now. With the current conditions, there are a lot of good reasons to consider a net branch strategy to remaining independent, all of which flies in the face of James Thurber’s cynical observation, “There is no safety in numbers, or in anything else.”

Is Net Branching For You?
For many who have pursued net branching, there is not only safety in numbers, there is stability, growth and better prospects for long-term success. For others, there have been pitfalls, so careful due diligence is necessary for independent originators looking for such arrangements. So where does one start? As usual, just as in any sales situation involving a multitude of alternatives, one starts by asking questions.
But what questions need to be asked of my own situation, you wonder? Some good starters would include:

  • Is this a good time for me to consider becoming part of a net branch network?
  • Is there risk in staying a small and independent broker, or are there benefits?
  • What alternatives are available?
  • What are the benefits of net branching?
  • What kinds of questions should I ask net branch providers?
  • What are some specific pitfalls I need to look out for when considering net branch opportunities?
  • What is preferable, a large net branch system or a smaller one, and why?
  • Can a net branch affiliation help my business become more durable over the long term?
  • What technologies should I look for from a net branch provider, either now or in the future, that will enable me to maintain or improve my business?

As expected, the answers and their relevance will vary according the individual broker’s specific needs and depending on which net branch companies are asked. To provide a range of responses and rationales, several companies were consulted for this article.

Daniel Jacobs, CEO of 1st Metropolitan Mortgage, of Charlotte, N.C., weighed in on several of these questions, and offers a few questions of his own for brokers to use in their due diligence process. As to whether it is a good time to consider the merits of joining a branch network, he says, “Yes, this is an excellent time. Many independent brokers are experiencing a decline in volume while fixed overhead is increasing. Regulatory compliance is becoming more and more cumbersome and more time is being spent on non-revenue generating activities than ever in running a mortgage company.” Regarding the ways in which a net branch arrangement can help, he adds, “The back office infrastructure that a branching company offers allows the branch manager to focus on revenue generating activities, while sharing the costs of basic infrastructure with many other branches, lowering the per branch cost and increasing sales opportunities. At the same time, large branching companies are able to negotiate significant pricing incentives with lenders, enabling even small branches that are a part of their company to be far more competitive in the marketplace than the small ‘mom and pop’ brokers.”

Hunt Gersin, CEO of Interactive Financial, a Troy, Mich.-based network, agrees it is a good time to consider branching options. “In our experience in growing our branch network, I have yet to see as much interest as there is today. With competition rising along with the rates, having the opportunity to reduce operating costs, become an overnight turn key mortgage banker, be able to lend in multiple states, offer all types of products, receive accounting and support services, and never-ending marketing support and training, the branch network is the right place to be in this market.” In a nutshell, that’s the major compelling reason there can be safety in numbers—to allow originators to originate more loans by minimizing the administrative and negotiating associated with the fulfillment stages of the process. But there are others, especially when considering the risks of remaining independent.

Steve Hops, senior vice president of San Diego, Calif.-based Guild Mortgage believes that it’s a good time for considering net branching, but advises against hasty actions. “These are difficult times for the mortgage industry, and originators are looking for ‘lost magic.’ Since adopting a net branch strategy will not reproduce the magic of a five percent, 30-year fixed rate loan, looking at change should be done with a ‘clear lens.’
Understand why you are looking at a net branch model,” he says.

Back to John Wayne, there is a certain amount of comfort knowing you are the captain of your own ship, controlling your own destiny. But as John Donne observed, “No man is an island, entire of itself; every man is a piece of the continent, a part of the main.” Even the most independent-minded businessperson needs advice from time to time, particularly in a business as closely observed and regulated as mortgage lending. Daniel Jacobs feels that a significant strength of belonging to a network is having that advice a quick phone call away—especially powerful when dealing with compliance issues and a plethora of laws from multiple states. It’s not a bad time to be a “piece of the continent.”

Questions To Consider
Okay, so it makes sense to you to look into net branching. There are a lot of companies out there for you to ask questions of, but what questions? Here are some suggestions from Interactive Financial’s (a branch network) Hunt Gerson:

  • How long has the company been in business?
  • How many states is the company licensed in?
  • Does the company have reverse mortgages and commercial mortgages available?
  • What type of marketing support does the company offer?
  • Does the company offer a “Flat Fee per Month Option?” (This is my favorite question. If the answer is yes, the broker should leave at once, end the conversation at once. What motivation would a branch corporate office have for you to close loans or give any service if they just collect a monthly fee?)

Jacobs adds several to the list:

  • Are they compliant with HUD Mortgage Letter 00-15? (If they are not they are also likely violating various state net branching laws and may have compliance and licensing issues in the future).
  • Have you been sanctioned or fined by any regulator in the past three years and if so, why? What have you done to correct this problem going forward? (It is important for people to know that they are going to a company that will continue to be in business and treats its regulators and licensing authorities as partners rather than adversaries).
  • What types of support systems do you have in place for branches with questions ranging from compliance to human resources to business planning and more?
  • What charges and fees are allocated to the branch beyond the standard revenue split? (Everyone has small fees that are passed on to the branch and the candidate should be well aware of these before signing on the dotted line.)
  • What type of orientation will be required of me to open a branch? (Anyone not conducting an in-person, multi-day orientation is likely not serious about maintaining any sort of quality standards.)
  • What type of ongoing sales training will be available to me and to the LOs in the branch?

These questions offer a good place to start before deciding what companies are worth your time for a second date (Also see “Net Branch Resource Guide” on page xx for detailed information on several companies). At that point, you will doubtless have many other questions, most centering on product array, specific services offered, such as loan processing, and types of technologies either supported or required. Not to mention, of course, the all-important financial WIFMs (“What’s in it for me?”) surrounding the financial arrangements.

Hops advises originators to look inward and really understand their situation. “What are your needs?” he asks. “Do you just need licensing and accounting, with your funding arrangements with your wholesalers left unchanged? Many firms offer platforms with these features. If you and your loan officers have a long history of brokering loans, these companies would be the best match.” He is quick to caution about overly high expectations, and even to view lofty promises from companies with a bit of healthy skepticism. “Don’t go into the relationship thinking it will change your business in large degrees. You may be given access to funding in other states, but your world will stay the same. If you have good relationships with your lenders, they will stay intact.”

Does Size Matter?
There are lots of answers to this one and they’re all correct—depending on what is important to the asker. For some, a monolithic giant is comforting, but others might be concerned they will get lost in the shuffle. Jacobs is partial to a large net branch provider, saying, “But then again, we have more than 250 branches.” He notes that the only way for a branch company to provide effective services is to have a good revenue base, and that requires a lot of volume. “This is a slim margin business,” he says, “and without volume the home office can’t afford to offer a value proposition that would justify a [prospective] branch manager to associate with a branching company. I think the larger branching companies are the only ones that will thrive long-term.”

Gersin has a different opinion. “Certainly, a smaller, more personal relationship focused branch system is preferable,” he feels, harking back to the “lost in the shuffle” concern. “Most of the large systems do not create the smaller company feel, and treat the branches as a number, not as an important relationship that is mutually beneficial.”

A good amount of this may be cultural, not strictly tied to size alone. Companies that give off a certain vibration that it is “all about them” may actually be saying they are impersonal organizations that will indeed treat branches as numbers. Others won’t have the issue, just as many of the Fortune 500 firms are among those cited as great places to work. They have cultures and values that reflect the importance of the individual, and they can usually be found using the “sniff” test. In this case, it means asking the company for a list of branch managers you can contact as internal references.

Guild Mortgage’s Hops echoes in importance of chemistry with the culture. “The most important ingredient is the people involved,” he says. “It’s easy to just meet the management people and have friendly discussions, but you must meet the people who do the work every day.” He stresses the “every day” factor. “Who would you interact with the in the finance, personnel, underwriting, compliance and secondary departments? You need to meet them and ask a lot of good questions, and become comfortable.”

What are the Benefits?
Both Jacobs and Gersin agree that the benefits of net branching are many and diverse. “Tremendous economies of scale for better pricing, marketing and branding will increase overall productivity and longevity in the business,” Gersin explains, citing some specific reasons the strategy will make network members stronger over the long haul. Since he feels we’re in for continuing competition for a smaller market, Jacobs concurs, feeling that “Industry branding and clout, as well as cost savings and support, help more in the lean times than in any other [market environment].”

Collectively, Hops, Gersin and Jacobs present an impressive list of potential benefits for adopting a net branch strategy. They include:


  • Offering every possible product
  • Pricing incentives to branches
  • Input on product development


  • An integrated technology platform far superior to those available to independents.
  • Continuing technology development
  • Training on technology and ongoing support
  • Faster processes, reduced time impact for branches


  • A strong support team with complimentary disciplines and expertise, allowing branch managers to focus more attention on revenue production
  • Consistent underwriting from one team
  • Overload processing assistance from the corporate office
  • Advice on staffing and financials
  • Outsourced back office administrative functions, such as licensing, legal, HR, payroll, lender sign ups
  • Sales and business training for inside staff and sales team
  • Consistent financial reporting


  • Mass marketing initiatives to increase production throughout the branch network.
  • The better branching companies supply advertising manuals, advertising review committees, pre-made customizable advertisements and marketing libraries, as well as full service marketing and creative services departments available to its branches.

Secondary Marketing

  • The opportunity with limited risk or operational expense to be a mortgage banker for better pricing/more profits without disclosing the yield spread premium.
  • Access to economies-of-scale pricing and credit policy not available to small-volume companies

It is a remarkable list of good, even compelling reasons to consider joining a network. The overall theme is clear: for very little effort aside from doing what you are already doing, which is originating and closing loans, you can look and act like a big company. Different companies do things different ways, but you can generally count on next-level marketing, legal and compliance assistance, much improved financial execution through more sophisticated secondary marketing, and significant lift in technology and support.

Certainly the majority of these benefits are available for the branches of a traditional mortgage banker. The big difference lies in the flexibility and autonomy that the net branch office has, most importantly the ability to retain their company name, and very often, a larger portion of the profits.

What are the Pitfalls?
Some branch networks require you hang out their shingle and remove yours, while others want you to leverage your local brand while adding their own, a tactic used by real estate companies for generations. Are these pitfalls? Probably not. But that doesn’t mean you don’t have to be on your toes as you evaluate the opportunities out there. Hops, Gersin and Jacobs on the important subject of things to look out for:

  • You will be linked to a company that expects to fund the majority of your loans. If this will be a problem, net branching may not be for you.
  • If the company has been in business for a short period of time, beware.
  • If there are few or no quality requirements to become a branch, beware. A company is only as strong as its weakest link, nothing substitutes for the quality of the affiliated branches and their loans.
  • If the company isn’t eager for you to contact their branch managers, beware. This is the single most important part of your due diligence process, by the way. You should talk to no fewer than three or four branch managers from different markets within each company.
  • If the deal sounds too good to be true it probably is. We’ve seen several branching companies come into the market with corporate fee splits that seem too small to earn a profit. We are now seeing them go out of business because their business models failed.
  • Ask the recruiter if out of state deals can be originated using another branch’s license or the corporate license. In most cases this is a major regulatory no-no, yet a common practice that companies allow and get sanctioned for. The reality is that when a company allows this they are putting everyone’s licenses at risk. Too many branching companies are afraid to set strict standards out of fear of losing a deal or a branch to a competitor. Brokers should align themselves with only the best.

Complex Issues
In every complex decision there are complex issues to be considered. To most independent originators, few decisions will be more important or complex than deciding such trivialities as the future of their businesses and the ongoing welfare of their families. Net branch companies are pretty smart about this. They want you to fit culturally and business-wise, and want to keep you affiliated for the long haul. As a result, some of them offer ownership incentives and other financial considerations to reward productive branches. An example of this is Interactive Financial’s “Model Branch” program, coupled with its stock option plan. “Along with (all the other benefits), we have recently announced our Equity Sharing Incentive (ESI) plan,” according to Gersin. “It was designed to create massive net worth for successful branch managers throughout the company and attract successful independent brokers to join our growing team.” There’s a good chance this will be a trend among the more successful net branch companies for the simple reason that the universe of available brokers is not growing, it is shrinking. They’ll need more tools to land the better candidates.

Another trend to look out for is the growth of technology’s role in the business models of better companies. For example, mortgage bankers understand that paper is the enemy, and they will be looking for and adopting technologies to reduce paper in the process, from application to securitization. E-mortgages are something different, and most agree they are a ways off yet, but paperless, electronic loan files that multiple viewers can access simultaneously will certainly become a mainstay.

Likewise, more technology is being applied to CRM, or customer relationship management, to keep the lender in the customer’s mind. Predictive marketing concepts have yet to take firm hold in the mortgage industry, but they will. Lenders will be able to use CRM technology to trigger offers and communications with predicted “life events” of borrowers, and their branches will benefit from the outreach.

Will becoming a net branch change your life? Certainly. Will it rock your world? Hopefully. You will find safety in numbers in becoming “a piece of the continent, a part of the main.” But as Hops says, after you do your research and make a commitment to become a net branch, “Don’t expect miracles. While you can expect to improve production by shedding some of the many accounting and personnel functions you are performing as an independent mortgage broker, you still have to produce the business,” he says. “No company is going to give you loans. You still have to be the rainmaker.”

John Wayne would have liked that.


Due Diligence Review

When evaluating branching opportunities, there are a few key points to consider. First, some organizations don’t refer to themselves as “net branches,” instead using such terms as “branch network,” “affiliate branch,” “model branch network,” “interactive partners” or “branch affiliates, in part to distinguish themselves from the competition. Doing a thorough analysis will enable you to evaluate the various benefits or business structures of each—regardless of the name.

In addition, other companies have made the distinction more for compliance issues that have arisen over the years. As George Allen, senior vice president of Business Development at Superior Mortgage, Tuckerton, N.J., noted, “As the net branch concept grew in popularity, many companies joined the party and this caught the attention of investors and state regulators, not to mention the FHA. The branding of net branching began to take on a negative stigma.”

One of the most critical issues of net branching—discussed at industry conferences and elsewhere—is the occurrence of business practices that fall out of compliance by failing to adhere to state and federal guidelines/statutes. If you’re planning to join a net branch (or similar “partnership”) organization, be sure that it meets the legal criteria. For example, a state’s “in compliance” steps might include:

  • Don’t transfer or assign your mortgage broker or banker license to “branch managers” or “owners.”
  • Don’t require branch managers to pay for branch start-up costs, including, but not limited to, the cost of branch office licenses, bank account deposits, background checks, accounting fees, HUD license fees, security deposits, training, payroll fees, and loan software fees.
  • Don’t fail to maintain a uniform settlement service fee structure among all of your branch offices. Borrowers should be able to pay the same fees at any office. You should not allow branch managers to set their own fee structure.

The best advice—do your homework. Consult your attorney, state and federal licensing agencies and other regulatory bodies to ensure the net branch candidates are compliant with guidelines. Failure to comply could result in severe fines and legal action.

Saying Goodbye to a Business Partner

Sometimes exiting a client relationship is the right thing to do.

Think about the referral clients with whom you are now working. Perhaps you are calling on a few real estate agents, builders, CPAs, financial planners, attorneys, and affinity partners. Are all of those relationships positive and profitable for you? Probably not. If you are like many mortgage loan originators, you are spending some of your time with people that send you little or no business, tax your sanity, and waste your time. Oddly enough, you continue to contact them and return their phone calls. Why?

It’s tough to exit a client relationship, even if it is non-productive. You survive on the hope that maybe things will improve, or perhaps the client will change their ways, or you have a fear of not wanting to alienate anyone. So you go back again and again, all the while wasting your precious time and energy. The result? Your business suffers, your loan referrals are few, and you have little or no time to pursue other quality, profitable relationships that can help you achieve your goals. If that sounds familiar, now is the time for you to step forward and make a change for the better.

When is it time to exit a relationship?
There are five primary scenarios when it is necessary for a mortgage originator to exit a referral client relationship:

  1. The client sends you little or no business. This type of client is either referring his mortgage leads to someone else or has no mortgage leads to refer you. Your sales calls and marketing efforts are falling on deaf ears. You have spent many weeks or months putting your best effort forward and have gained nothing.
  2. The client sends you extremely poor quality leads that never or almost never close. Her leads include hard money loans, horrific credit problems, unusual circumstances, and other challenging borrowers. Every loan you look at takes enormous amounts of time and costs you and your office staff a great deal of research and effort with little or no return on investment.
  3. The client is a “time sucker.” This type of client is constantly talking with you; asking questions, testing scenarios, telling war stories, discussing politics, the weather, and pontificating about the economy, market conditions, and on and on. Although you may receive a few leads and loans from this client now and then, he drains your sanity as well as your time with his ranting and incessant phone calls throughout the month.
  4. The client is overly-demanding. She thinks you work for her and presents you with unreasonable expectations and last-minute emergencies. You may get some leads, but those leads are typically rush deals and nightmare closings. She tells you where to be and what to do. Every loan is filled with unnecessary stress, and seldom does she appreciate your extra efforts.
  5. The client asks you to do something illegal. Perhaps he is requesting kick-backs for his referrals, or wants you to pay for his advertising, or asks you to “overlook” some derogatory information about his client. He claims that other loan officers comply, and to get his business, he insists you’ll have to do the same.

Are any of these five scenarios happening to you right now? If so, the longer you wait to exit the relationship, the more time and money you waste. The time has come for you to break free!

How do you “fire” a customer?
There are three ways to exit a bad referral relationship. The nature of the relationship, the client, and your personal style will dictate which option works best. Here are a few ideas other originators who have been in your situation have used:

  1. Send a message. Some loan originators choose to break up with their client via a “Dear John” letter. That email or letter might read something like this: Steve, I will not be contacting you further about mortgage referral opportunities. We have been in conversations for nearly three months now and I have yet to receive any leads from you. I do not wish to waste your time and have chosen to pursue other avenues of business. I wish you success and the best of luck in your career. This action ends the relationship on a more formal level and lets the client know where you stand. If you are uncomfortable with this, go back to idea #1. If your style is more personal, then you may want to consider this next step.
  2. Confront the client. Sometimes a face-to-face meeting is the best solution. It takes courage to consider this step, but remember that this is your business and you are in control of who you work with. In confronting your client, let her know how you feel and why you have made a decision to discontinue the relationship. For example: Karen, I want to thank you for the mortgage leads you have sent me so far this year. That shows a lot of faith and trust in me. However, your clientele is a challenging one, and I have had little success in helping them. This has been very time consuming and costly for my team, and frustrating for both of us. Since I will be unable to help you moving forward, I’d like to suggest you find another lender who is an expert in working with these unique situations. If I come across anyone, I’ll be sure and give you his or her name. Few of us like this type of confrontation, but in some cases it is the best way to move forward.
  3. Disappear. Immediately stop all contact with the client. Make no more sales visits, take the client off of your mail, email, and fax distribution lists, and do not return any of his calls. Forget about what he might think. You are through. Make a clean break…fast. For many originators in a bad relationship, this is the preferred option. However, if you think that is a bit cowardly, you can try the previously listed methods.

Why would you want to do this?
The better question is: Why would you not want to do this? Those who come up with answers to that question are usually disguising their own discomfort about breaking up with a client with excuses. They are more afraid of what the client might think or say than they are about failure. (Strange but true!) Rather than take action or face the client, they choose to continue to waste time, money, and energy on dead end relationships. Does that sound like a smart idea? Certainly not.

Breaking free from a bad client relationship means you’ll have more time for the more important and profitable things you have been wanting to do like:

  • Targeting new, high potential customers
  • Creating a FSBO marketing campaign
  • Delivering homebuyer seminars
  • Following up on leads and borrower opportunities
  • Mining your database of past clients for referrals
  • Attending client, community, and industry functions
  • Expanding your knowledge base and selling skills

Time is the most valuable commodity you have at your disposal every day. Each minute you spend with a low-payoff client is one more minute you could have spent with a high-payoff client. It is time to exit those relationships that are holding you back from becoming the successful originator you want to be!

By Douglas Smith

Staying Busy in a Slower Market

Adapt to a changing economy and marketplace.

During the last five years, we have enjoyed the benefits of an amazing market. Record low interest rates, record high home re-sales and record new housing starts have fueled originators to produce some stratospheric numbers. Thousands have entered the business, all seeking that “get rich quick” fame and fortune opportunity. Banks, brokers and mortgage companies have made fortunes, invested in new technology and expanded into more territories. What a ride it has been.

We are back in a good, old-fashioned, competitive purchase loan market where to get business you have to go out and earn it. Some loan originators and broker/owners are worried. They have seen a significant drop-off in phone calls, loan production and office morale. They are cutting costs, cutting support staff and perhaps even cutting themselves out of their own future by not immediately adapting to a changing economy and marketplace. I speak to dozens of originators and sales managers every month, and their concerns are valid. Business has slowed in the past 12 months and more originators are out there vying for the business that’s available. If you are a mortgage originator and your business has slowed, you have basically three options at this point:

Exit the business, which many have already done. Some loan originators don’t know how to solicit purchase mortgage business and frankly others don’t want to. We are seeing a true separation of the long-term industry professionals from those who were in it for a few easy bucks. Surviving and succeeding in a competitive purchase mortgage market takes sales prowess, marketing investments and plain hard work. To be frank, if “hard work” isn’t a part of your vocabulary, exiting the business now is probably your best bet.

Remain in the mortgage business and complain about how bad things are. This involves consoling other frustrated peers at long luncheons, holding gripe sessions with your manager on pricing issues, demanding more loan products and even filling your day with non-productive activities because you have lost your focus or your motivation. This, of course, is not the desired option. It puts you on a “self-destruct” course as you worry and wait for rates to come back down and the phone to start ringing again. Many originators have so far chosen this option and it shows in terms of their attitude and their own production results. Their pipelines and their paychecks get smaller each month until they just fade away.

Recognize that the market has changed and quickly change with it. The activities you engaged in over the past few years were well-suited for a refinance market but won’t work in today’s “normalized” environment and higher rate purchase loan market. For nearly five years, many loan officers have fallen into the habit of working their refi deals. They have most likely shut off their marketing efforts—stopped making sales calls, sponsoring events, attending closings and participating in any of the other high-visibility activities that good originators engage in to generate leads, contacts and loans. Option three requires you to get back to basics and get moving again. Option three is the only real option for true career mortgage professionals who still plan to make this a good year.

So how can you make this “course correction” quickly? First, make a firm commitment that you will be successful in this market, not just survive. While many originators are singing the blues, we still see a lot of top producers across the country consistently closing $2 million to $5 million each month. How? These people refuse to acknowledge that the business is suffering. They are working their referral clients, creating opportunities, putting in a lot of hours every day and not getting caught up in all the doom-saying that’s going on around them. You know what they say—”when the going gets tough, it is the tough that get going.”

My guess is that you are one of the tough LOs who want to do well this year and are ready and willing to get to work to make your success happen. So where do you start? Here are six good ideas for the last six months of the year:

  1. Fire up your marketing engines. Sit down today and create your marketing game plan for the next six months. Any good loan originator in times like these should be engaged in at least five solid marketing activities on a weekly or monthly basis. Remember that the business isn’t going to just come to you any more. You must find avenues to reach it. Those avenues are directly through your referral and client sources. Consider all the available marketing activities. There are sales calls, newsletters, sponsoring open houses, and making first-time homebuyer presentations. You can run ads in magazines and newspapers, mail apartment complexes, contact your database of leads and attend trade shows just to name a few. Loan originators who are looking to grow their production now should invest as much as 50 percent of their time each week in solid marketing and outreach activities. That’s right, 50 percent. If you only have a few loans in your pipeline, what else do you have to do?
  2.  Select new targets. Ask yourself who represents the greatest potential for business in your market. Maybe it is the Realtors. Maybe it’s the builders. But maybe it is also the CPAs, financial planners, accountants, attorneys, church groups, area employers, your database of past clients, FSBOs, community organizations, relocation companies or so many of the other new and emerging sources of business smart loan originators are tapping into. These are all potential sources of business. Pick three or four new key relationship targets now and begin to strategize your plans for approaching them…fast!
  3. Get out of the office. During the refi crush we all spent a lot of time in the office working up deals. We got into the habit of being in the office most of the day. It was productive then but it isn’t productive now. Make a commitment to spend at least 10 hours a week in the field making sales calls and visits, attending meetings, delivering presentations, sponsoring events, getting involved in industry activities and so on. Loan officers who are out of sight are quickly out of mind. The available opportunities can’t find you if no one knows who you are. Take your business back to the streets. Get out of your office and in front of prospects, every day.
  4. Know the products people want. I read that less than 35 percent of the loan business written last year was vanilla 15-year and 30-year fixed products. With rising interest rates, the market has changed. Now programs like ARMs, interest-only mortgages and other specialty programs are growing in popularity. Smart loan originators will learn these products and market them wisely and often. They will create visibility and opportunities for themselves because they have and sell what today’s customer is looking for. Start investing two to three hours each week learning and studying new products and leverage this knowledge into more loans.
  5. Set new goals. When the market slows, some loan originators throw their goals out the window thinking that, “Oh well, I’ll never get there now anyway!” It is okay to make goal adjustments to your business when the market changes. Set challenging but achievable goals to accomplish during the second half of the year and be committed to reaching them. Just because others have thrown in the towel doesn’t mean you should too. Goals create the passion and desire to achieve something. Make sure your goals are crystal clear and reachable, and that you are serious about bringing them to life.
  6. Learn from the best. As I mentioned, there are still lots of loan officers producing some great numbers, many perhaps in your own branch or company. Seek out these successful originators and learn from them. Take a superstar to lunch or call him or her up and ask for helpful ideas and advice. Find out how they do it and mirror productive habits and practices in your daily routine. Go to seminars and listen to successful speakers share their great ideas. These people are making it work with the same market that you have. Learn how they are doing it.

Staying busy in a slowing market really has to do with you—how you see yourself, your career and your chances for success. It all starts with your motivation and your true belief that you can be successful no matter what the market does. Next, it takes a goal that you want to accomplish; an income goal, a production volume goal, a company recognition goal or other important milestone you want to achieve this year. Finally, it takes work. It takes effort. It takes persistence. Staying busy in a slowing market means getting busy and creating success, not just waiting for it to happen. There are still plenty of loans out there for those who really want them.

By Douglas Smith