SIX SHOPPING RULES THAT WILL GET YOU THE BEST LOAN

Pulling teeth, death, public speaking, and getting a mortgage – some of life’s greatest pains, and greatest fears. The first three will be with us forever, but that last one can be conquered with an understanding of the inside workings of the mortgage process.

Every hour, of every day, an applicant for a mortgage is lied to, poorly serviced, generally abused on rates, and many times forced to take a loan they really don’t want. As one who spent twenty years providing mortgages to borrowers, and as one who is retired and therefore has not any other motive for writing this article other than the removal of consumer abuse, I am going to give you a few “secrets” of getting a loan that if you use them, will help in getting the mystical “Best” loan for your clients.

“BEST LOAN SYNDROME.” Everyone, in fact it is virtually “The American Way”, wants to pay the lowest price for anything they buy. But in the world of mortgage finance, with rates and fees that change almost as often as a new-born baby’s diaper, searching on the basis of “What is your rate and fees?” is the most dangerous method of getting the best loan. With rare exception, most providers of mortgages access the same source of ultimate financing – Fannie Mae and Freddie Mac. Loans of $202,300 and below most certainly fall into this category, and the quotes given to you should be close to each other based on competitive factors in your marketplace. RULE #1: If you are quoted a rate and fee significantly lower than all others – Run, don’t walk, away from that company. There is a strong probability that they are “Bait & Switch” artists!

“DO YOU QUALIFY?” One of the greatest abuses that takes place is where a borrower applies for a loan and weeks later is told they don’t qualify – often after they have made a financial investment in an appraisal and credit report. If you have all your income, liability, and credit information available, and you are dealing with a knowledgeable individual, then you will experience RULE #2: You can find out in one day, in writing, if you qualify for a loan!

“RATE & FEE LOCKING POLICY.” The saddest abuse in mortgage finance is when after a borrower has given the financial version of an ounce and a half of their blood to a mortgage provider, apparently have climbed the mountain of the approval process, but are then confronted by closing documents that do not resemble in any way the quote that was the basis for their making application. The choices are to start over with someone else or close the loan, with most using the “life is too short” concept and closing the loan. RULE #3: Get in writing, at application, the mortgage provider’s policy concerning the locking of the rates and fees!

“WHAT’S THE BEST PROGRAM FOR YOU?” The advent of hyper-inflation in the late 70’s brought with it the evolution of a multitude of mortgage products. Fifteen year and thirty year fixed rate loans have been joined by “30 year amortization, Due in 5 years”, “30 year amortization, due in 7 years”, “10 year fully amortized fixed”, “20 year fully amortized fixed”, – each with a virtually unlimited variations of fee structures! Then, of course there are the wide variety of Adjustable Rate Mortgages (ARM’s) – also with unlimited fee structures. The “Best” one for you can only be determined by answering and obtaining professional counsel to some key questions, including the following:

  1. “Do you expect to remain in your home more than __ years?”
  2. “Is your primary motivation to pay off your loan or to lower your payments?
  3. “Is your income fixed, stable, or will it be increasing?”
  4. “Do you have an accountant or tax advisor?”RULE #4: Any mortgage provider that does not ask you any of the above questions in all probability does not possess the experience necessary to provide professional mortgage consultation. Keep dialing till you find them!

“THE TRUTH ABOUT LOAN FEES”. Noted economist Milton Friedman gave us all the first rule of economics: There is No Free Lunch. Nowhere is that validated more than in the concept of loan fees. Loan fees are supposed to be prepaid interest charges, so the concept is very simple: THE LOWER THE LOAN FEE THE HIGHER THE INTEREST RATE. The ultimate example of it today is the so-called “No Cost Loan” where by raising the rate a mortgage provider will “pay” all your closing costs. What is often never explained is that these closing costs, which may average over $4,000, are added to a higher loan than you would normally need, and in the case of a 30 year mortgage, would cost you an additional $9,600 in interest that must be factored into any lower rate scenario that is being considered. RULE #5: Obtain at least three fee samples from your mortgage provider on the selected loan program showing the total of payments, total interest paid, and loan balance after a selected life of the loan, (e.g. 5 years, 10 years, etc.)

“WHO DO I GET MY LOAN FROM?” Like loan programs, the choices of who to get your loan from have increased as well. The current favorites for providing loans are: Mortgage Brokers, Mortgage Bankers, Savings & Loans, Banks, and Credit Unions. Ideally, one should obtain referral of three lending sources from real estate agents who are involved daily with the mortgage industry, and it is in their best interests to only do business with mortgage providers that perform consistently and professionally. Otherwise, one should talk to at least six possible sources from advertisements that are readily obtainable. Regardless, one should always remember RULE #6: The “entity” is not important. The individual that provides information you requested in a timely manner, that communicates a genuine interest in being your mortgage consultant and not just say “I’ll get you the best loan”, is the person who you should entrust your mortgage needs to.

As surely as the sun will come up tomorrow, there will be those that will continue to shop for the best loan on a “What are Your Rates & Fees?” basis. And as surely as I have no financial gain from providing you the above, you will get the “BEST LOAN” if you follow the blueprint provided, leaving the abuses that will be suffered to the rate and fees shoppers who do not possess the vision to understand that shopping for a mortgage requires real professional consultation. AN ENJOYABLE MORTGAGE EXPERIENCE IS NOW YOURS FOR THE ASKING!

By Chris S. Salazar

Maximizing Your Lead Conversion Rates

Whether you’re generating leads from a direct-mail campaign, or purchasing them from a lead generation company, the same general rule always applies: to get the highest conversion rates from your leads, you’ve got to be prepared.

You’ve likely invested considerable time, effort, and expense into the lead generation process.  By following a few critical steps, you can ensure that these efforts are not wasted, and that you obtain the highest return on investment possible.

Handling Your Incoming Leads
The first step in many lead generation programs will be getting your office ready for a surge of incoming calls.  Some lead generation services provide you with pre-qualified leads—customers that meet your loan qualifications, and have already defined their interest level in a certain program.  But if you’re not dealing with that sort of a program, or have developed your own lead generation campaign, you’ll need to set up a qualification process for your incoming leads.

The first thing to decide is who the best people are to handle your incoming calls,  and what they’re going to ask the consumers. This is going to vary based upon the type of leads you’re dealing with. Let’s assume you’ve placed an advertisement in your local newspaper.  In the case of this unqualified lead, it might be appropriate to have a secretary or junior staff member qualify consumers on the initial call. You’ll also need to develop a script for these team members to properly handle the customer’s call. Develop a loose script, or list specific questions that will allow these team members to determine a base interest level, qualify the consumer, and gather contact information for a more experienced loan officer to return the call.

You’ll want to take a very different approach, however, if you’re receiving leads that have been pre-qualified either from an inside telemarketing department, outbound telemarketing service, or a lead generation company.  These leads have already been partially qualified or “heated up” by the telemarketing service, and should probably be sent to a more senior team member who can provide specific product information. You must also adequately prepare your loan officers for this, or other, incoming leads—if they aren’t ready to properly handle these “hot” leads, they can easily flub the incoming call.  The best way to go about this is to hold regular strategy meetings with your loan officers to discuss what types of leads they’ll be receiving calls from during the upcoming the week, and the best ways to handle each lead source.

Another critical step that cannot be overlooked is setting up a 24-hour/7-day answering service to handle any calls that come in outside of normal business hours—you’d be amazed at how many people want to learn about refinancing at 10 a.m. on a Sunday morning. And if a consumer can’t reach a live person, and is directed to a voice-mail, the chances are high that they’ll simply to go one of your better-equipped competitors. An answering service is a worthwhile expense that will help increase your return on a lead campaign.

With any sort of incoming leads, the best idea is to sketch out a brief “workflow” diagram that traces a lead’s progression through your firm.  While this is a straightforward exercise, it will enable you to visualize who exactly will be handling the leads, and develop appropriate action steps for each step.

Getting Organized
If you’ve developed your own campaign—such as a direct mail piece or a radio advertisement—you’re going to need to keep accurate records of your incoming calls.  Be sure to develop a spreadsheet or note-taking system for whoever will be handling incoming traffic; the worst thing you can do is not get complete information from potential clients.  It’s probably easier to take this initial step before inputting any information into your CRM software of choice—this way you don’t clutter your computer with those leads that look unlikely to pan out. If you’re purchasing leads from a reputable supplier, your leads should ideally be delivered into some form of contact management system, eliminating the headache of dealing with the spreadsheet process.

In order to convert the largest number of leads, it’s also crucial to keep track of your leads diligently and take frequent notes. Organize your leads by their level of interest or status of any loan application to easily send effective follow-up communications based upon their status.

Needs-Based Selling

When it comes down to it, the easiest way to sell a loan is simply to understand your client’s needs, and then provide a solution to meet those needs.  Once your lead-based call has gone through an initial qualification, try implementing the following needs-based selling concepts instead of your usual sales pitches to drastically improve your conversion rates:

Keep It Conversational: Use your initial call to introduce yourself to the potential client, and feel out their reasons for getting in touch. Unless a lead expresses a real level of urgency, you shouldn’t press for the sale on this call—doing so will only turn your leads off, and cause them to look elsewhere for their loan

Ask The Right Questions: Avoid open-ended questions, such as “Why did you call about refinancing?” or “What are your needs?” Instead, ask the client specific questions about the type of house they want to purchase, their current mortgage payments, their current income, or if they’re looking to do home improvements.  Questions like these will help you truly get to know your client, enabling you to offer them a product that can best meet their needs.

Plan for The Future: An alternative to ending your initial call by going for a close, is simply trying to get your lead to the next stage in your relationship. If you’re handling the client strictly over the phone, tell them you’ll run some loan scenarios to find out specific information, and then call back to try and set up a time for an appraisal.  If you’re in more of an outside sales environment, try to set up a time to meet with the client to discuss their options.

Sell Your Service, Not Rates: The first question that many consumers will ask is “What’s the rate on that loan?” Unless you know for sure that you’re going to be the lowest in the marketplace, you don’t want to get into that battle. The best way to handle this type of question is with a “pivot” technique—one where you answer the consumer’s question, and then ask a question to shift the focus of the conversation.  An appropriate answer might be:

“The rate varies between five and seven percent, based upon a variety of factors.  When we get together, I can explain exactly how your rate might be determined, and what your payments will be.  Let me ask you something, are you thinking of doing any home improvements?”

In doing this, you’ve answered the consumer’s question, set-up the potential of a future meeting, and allowed yourself to shift the topic of conversation. Based upon the consumer’s answer to your “pivot”  question, you’ll be one step closer to providing the loan ideally suited to their needs, ensuring that you come across as a knowledgeable mortgage originator.

Following-Up With Your Leads
 So, now that you’ve organized your leads, made the initial contact, and sold to their needs, how can you maximize your return-on-investment by converting as many leads as possible? If you get a meeting with a prospect and they still “need to think about it” before committing, your follow-up will be the most important step toward capturing this customer.

Follow-up is the key to success with any lead generation program. The easiest way to follow-up with your leads is by taking the time to create a suite of re-usable communication pieces.  Remember when we talked earlier about lead status? It’s important to create a set of materials that deals with each particular type of lead, and begins to overcome any objections this lead may have. For example, you would send one type of letter or e-mail to those leads that you have simply held an initial conversation with, and a completely different type of correspondence to a lead that has already gone through the appraisal process.  A lead that has been “dead in the water” for three weeks would warrant a very different letter from one that is about to close on a loan.

You’ll need to develop several effective forms of communication for each stage in the loan conversion process. If your firm has the resources, you can also consider producing professional postcards or flyers that can be sent to your leads.  If not, it’s perfectly acceptable to use direct mailing and emails to stay in touch.  Whatever the medium, make sure that you’re regularly following up with all of your leads – even if they aren’t ready to close the loan. Potential clients will be impressed with your commitment, and will have you in mind when they are ready to move ahead.

There are some basic rules to keep in mind when crafting an effective follow-up letter:
· Remind the lead who you are, and the status of your interaction: “Thank you for calling me last week about your loan refinance. I’ve had the chance to come up with some great options for you.”
· Communicate the value of your services: “Please feel free to contact me for a free analysis of your situation and to see if we can start saving you money.”
· Explain how you/your firm is best suited to meet their needs: “At Company Z, we have access to over 1,000 different refinancing programs, so I’m confident that we can find the perfect one for you.”
· Create a time-sensitive response: “Rates are changing daily, so be sure to contact me as soon as possible to secure the best possible deal.”
While the telephone is also an effective way to follow-up with your clients, don’t overlook the potential response to a personal letter or email.  It conveys an old-fashioned, personal touch that your clients will appreciate.  When using the telephone to follow-up, be sure to follow the “needs-based selling” concept. It’s important to be aggressive in following-up with your leads – but you also have to take care to not be annoying or irritating.  It’s a fine line to walk.

Using Your ROI
The bottom line for any lead generation campaign is, of course, your return.  As your campaign progresses, be sure to keep a careful eye on any associated costs, and track the income that you bring in from closed loans. While a positive return is essential, the degree of your return is also critical.  Depending on your initial investment, the difference between a 20 and 30 percent return can easily be thousands of dollars. By running multiple types of lead generation campaigns and purchasing leads from different services, you can determine which sources are generating the highest returns.

You can also easily boost your return on investment through some careful marketing techniques.  It’s almost guaranteed that some of your leads will have relatives or friends who are also in need of home financing services. By using your existing leads as a referral base, for example, you have the potential to vastly improve your conversion percentages. When you a close a loan, send each customer a thank-you note and gift – and specifically ask them to refer anyone who could also be helped by your services.  Many people overlook this basic, common-sense step. By doing so, they’re giving up the potential for thousands of dollars in referral revenue.

Wholesale Lending RoundTable

In this RoundTable, three wholesale lender reps discuss the foundations of successful relationships.

Steven R. Rosko is a senior wholesale account executive at Bank of America, Brea, Calif.

John Naclerio is regional branch manager at American Mortgage Network, Newhaven, Conn.

Debbie Grimm is branch manager at First Magnus, Overland Park, Kan.

What is the key to a mutually beneficial wholesale lender rep/broker relationship?

Rosko: The key areas for productive and long-term relationships are effective communication, product knowledge, consistency, and sincerity. There are many pieces involved in creating a business relationship beneficial to both parties, but these four points are really important to me. I have found a group of brokers, some of whom have been in business for 15 or more years, and its their stability and wide-reaching knowledge that has helped cultivate a long-term business relationship.

I worked on the retail side of lending many years ago, and I remember how frustrating it was when a lender didn’t return calls, didn’t know their own products, or wasn’t efficient with their loans. It makes you feel like they simply don’t care about you or your customers. I have been able to draw on that experience—every one of my brokers knows that I will “go to the mat” for them. I’ll make their problems my problems and internalize those issues until I get them resolved.

Naclerio: Mutual respect is one of the most important aspects of doing business with brokers. As wholesalers, we have to understand that the brokers have to solicit business, and that there is a customer at the end of every transaction. We know that our performance reflects directly on the broker, and effects their relationship with the consumer.

On the other side, brokers have to understand that we run a business as well. There has to be a fair balance, where we understand each other’s business, and I think that’s something that is often missing. Ultimately, the consumer is the most important part of the equation. If we can provide good service to the borrower via the broker, the broker closes more loans and they come back to us in the future. Everyone wins.

Grimm: A rep should be able to identify a broker who is a good fit for them and a broker must see the value in establishing a relationship with the lender. For me, a good fit is a broker who appreciates a consistent price, sees the benefits of our technology, and values a true partnership with their lender.

Additionally, a good wholesale rep should be able to educate brokers not only on program guidelines, but also to help them identify which borrowers the programs are designed for and how to effectively sell the programs to their clients. If they can do that, the rep should be able to help the broker develop new business, which can add significantly to the relationship. When a broker is not being communicated with on a regular basis, it puts both parties at a disadvantage and opens the door for problems. Within our constantly changing industry, communication is a major key to a successful relationship.

A rep must also be able to deliver bad news to the broker as soon as they are made aware of the problem. A rep who procrastinates on delivering bad news will leave the broker with limited time to find a solution and potentially cost them the loan.

How do you go beyond the basics of offering the best product and price to add value to your broker relationship?

Rosko: Our top producers all use electronic marketing, not just to the broker, but also to the individual originators. Outside of traditional gifts and presentations, another way of going beyond the basics, when geographically possible, is to have a face-to-face meeting with my and my brokers’ entire teams. Involvement with the staff is one of the most important aspect to forming strong relationships, and being able to put a face with a name is crucial. I organize events where both of our teams can meet—processors to processors, assistants to assistants—and bring lunch in to the office for a casual meeting. I always have lunch brought in because it cuts down on travel time, usually for both sides, and because I want the broker’s team to see and get a better understanding of our work environment and our challenges. It strengthens our relationships across the board—it works like a charm.

Naclerio: One of our best programs is product training on a national level with Web-X, a phone meeting that features a particular product. For example, we started a “Pay Select” program recently; I marketed the phone meeting to all my brokers through e-mail, the Web site, and in person, and invited them to call the 800-number to participate. The  host speaker usually kicks off the meeting with some marketing tips, and then educates the brokers about the product. Afterward, the brokers have the opportunity to ask questions and get additional information. For our “cream of the crop” brokers, we also offer a yearly “broker round table.” We bring in the best brokers from each market and they meet with our senior management to discuss their business and goals.

We also offer perks online, such as a training program where brokers can learn about products, and then get quizzed to test their new knowledge. The site also features marketing materials that brokers can customize and use to promote special programs.

Grimm: With the changing market (interest rate environment) I can’t rely on simply providing the basics. Lenders must show our brokers that we are interested in helping them grow their business. Each quarter I offer seminars (through my company) that are designed to help my brokers fine-tune their skills in getting and keeping clients. This kind of service is more important to our brokers than taking the gamble for an extra .25 with another lender.

I  also provide “lunch and learn” group presentations with brokers and loan officers, covering a variety of topics such as how to save time by accessing our Web site, automated underwriting systems training, product/program training, first-time homebuyer seminars, and how new loan officers can best add value to their business. I also coordinate “meet the underwriter” sessions, where brokers can bring files in for an underwriter to review in person. Earning business from brokers is a team effort and it helps strengthen the relationship if the brokers are able to spend time with a few of the operations employees who work so hard to create a positive experience for their borrowers.

What is your policy on “converting” a broker’s borrower to eventually become the lender’s client?

Rosko: As a wholesale rep, my customer is the broker. Period. I respect the relationship between a broker and their borrowers, and I don’t market to the customer. I feel that it would be a violation of the covenant I have with my brokers. That said, the bank has a separate retention program (outside of my department) and they do, of course, try to preserve the lending relationship with borrowers. I know that many of the broker’s customers will be long-term borrowers, and I let the brokers know that I appreciate repeat business from them, but I wouldn’t approach a broker’s customer on my own.

Naclerio: No, I don’t try to reach the borrower, and I think the fact that we don’t market to the broker’s customer give us a competitive advantage. The wholesaler’s customer is the broker, and there’s no reason to infringe on that. I know my brokers appreciate our stance on this.

Grimm: I never market to my brokers’ clients. That policy is part of my company’s “broker-for-life” program. I’m aware that not all of our competitors share the same philosophy, however, nearly 65 percent of all loan originations are handled by brokers and the last thing we want to do is disrupt that origination source. I want my brokers to be my customers for life, and if I succeed at that, then the borrower will automatically be my customer for life.  My broker is my client and I will do everything in my power to help the broker retain their customer.

What are your biggest concerns or “pet peeves” when it comes to brokers?

Rosko: My biggest pet peeve is when I go into a broker’s office and I find that they are getting approvals from multiple lenders and withdrawing loans for small profit margins, rather than closing the transaction and moving ahead. These brokers are spread too thin, opening their door for every gimmick lender and companies they’ve never worked with, and their funding ratios will usually prove unacceptable for us.

I prefer to work with accounts that have selected five major lenders and concentrate on building business with them. They’re more knowledgeable about the guidelines and processing requirements of those main lenders. Most importantly, their approval and pull-through ratios are much higher.

Naclerio: One of the biggest problems I’ve seen is not respecting the importance of rate locks. If rates go down even after the rate lock, brokers (whether driven by the customer’s needs or not) usually want the lower rate. But if the rates go up, they don’t want to pay the increase. Another concern is with the few brokers who aren’t looking out for the best interests of their client. That includes submitting poorly packaged loans on a regular basis. It wastes my time when I have to wade through the forms, it adds expense, and in the end, the borrower suffers.

Grimm: One pet peeve is when I go above and beyond, meeting and exceeding expectations on a loan, only to find out that the broker has sent the same loan to other lenders. There are often legitimate reasons that a broker has to submit a single loan to more then one lender, but sometimes I run up against a broker who appears to do this for all the wrong reasons. My goal is to offer the highest level of service at the best possible price, and it can be disheartening when a broker works against me.

Another big concern is brokers who don’t deliver on their locks. It’s funny that a lock committment is the only “one-sided” contract in America. The lender is obligated to honor the contract but the broker isn’t.

What are your suggestions for enhancing the relationship between wholesale lender reps and brokers?

Rosko: Wholesale lender reps can’t rest on their laurels—we have to stay in the field and make our presence known. We also have to be good about swift problem resolution, letting our brokers know that we understand their concerns and will do everything in our power to fund their loan and meet their borrowers’ needs.

As far as what brokers can do, I know I’m spoiled with my own customers, but like I said, focusing on five to 10 primary lenders is key. Just maintain the volume with those select companies—that’s the basis of a wholesale/broker relationship.

Naclerio: Form a partnership based on mutual respect. Our job is to please the consumer; when I understand the broker’s business and how I can help them make more money, we get more business, they look good to the borrower, and the customers are happy. That’s the bottom line.

Additionally, I’d recommend that brokers use the tools and technology available to them.  For example, they can lock loans online, getting approvals faster and impressing the customer, therefore creating a basis for referrals. Brokers also need to let us know what they need to help their business grow. It helps when they keep us informed about our competition and tell us what we need to be doing to ensure that we’re their preferred lender.

Grimm: Brokers should seek out a lender that is dynamic and consistent at the same time. My brokers have come to rely on my consistency in terms of both price and operational support, while also appreciating our ability to adjust our model based on the feedback they provide us with.

Lenders must listen to what our brokers are saying and understand what their needs are. We need to learn who they are and how they run their business before we can begin the process of helping one another become more successful.

Once the relationship is established, we need feedback. Feedback is a critical component of our mutual success. I can only benefit by listening to what my brokers have to tell me. Brokers should also let their rep know when someone in operations does an outstanding job. There’s nothing better than being able to let the operations staff know how much of a difference they’re making.  It also makes them that much more receptive to staying late the next time the broker needs a favor.

At the same time, lender reps must communicate with their brokers, set realistic expectations, and deliver on those expectations. Reps must also deliver honest answers, which may not always be what the broker wants to hear. Honesty is key for the broker as well. It doesn’t do anyone any good if a broker only gives enough information to get the answer they want, only to hit a roadblock down the road.

They Make it a Referral Business

Many loan originators rely solely on referrals. They have been successful with other marketing strategies, including advertising, seminars, and direct mail, but subsequently developed such a loyal customer base that they no longer have to search for leads.

Of course, top producers work at creating an ongoing referral stream. It takes a commitment of both time and money to reach the point where past customers and Realtors routinely refer borrowers to you. The benefits are obvious. Not only do referral specialists receive a steady supply of potential customers, these borrowers are generally pre-sold on the originator.

Following is a look at what several successful originators are doing to create an effective referral business.

Starting Place
Nancy Deane emphasized that the time to begin asking for referrals is when you start originating. A former supervisor shared with her a basic but often forgotten strategy. “He told me to make a list of everyone I knew, including my hairdresser, attorney, dentist, doctor, and everyone else,” said Deane, a senior loan officer with Colorado Express Mortgage in Denver, Colo. “I started to talk to them about my new career and asked for referrals.”

Of course, loan originators and their teams realize the importance of the point of sale, the initial transaction with the customer. If the borrower isn’t sufficiently impressed with the originator’s product knowledge, attentiveness, reporting techniques, and, of course, emphasis on a speedy transaction, creative follow-up tactics most likely won’t help to generate future referrals.

Jim Schmidt, a loan originator at Poli Mortgage Group, in Northfork, Mass, believes that being willing to meet with customers at their home or workplace helps cement the referral relationship. “I meet with almost all of my customers personally, because I believe it’s essential for building trust and rapport,” he said. “We often have the closing for refis at the customer’s home as well (with the attorney present). I’ve found that by providing this type of service—in addition to an efficient closing—I have a stronger overall relationship with the customer, which makes it easier to ask for referrals.”

Originators also find other ways to make an impact. For instance, after borrowers return their applications, Deane sends them a flier answering “12 Commonly Asked Questions,” addressing such areas as the Good Faith Estimate, Truth in Lending, loan-closing timeframes, and other areas, which customers have found to be helpful. Prior to closing, she sends customers a thank-you letter, along with a copy of their appraisal and a pair of movie tickets. “I’m telling them how important they are to me,” Deane noted. “By providing these value-added items, I’m setting myself apart from other originators and the customer keeps me in mind when they’re ready to refer a potential borrower.”

John Bell, president of Citizens Trust Mortgage in Maitland, Fla., provides borrowers with a gift pack as soon as they’ve been approved. It includes coffee, crackers, and cookies, along with a card (from him and the Realtor) that thanks borrowers for the business and asks for referrals. The basket is sent to the customer’s office so that the customer’s peers will see it. “This generates interest among other people and we get more exposure,” he said. “I know that the gift basket and referral reminder—coupled with a timely closing—influences the additional referrals we receive.”

Referral Dialogue
The most successful originators have learned how to consistently solicit referrals without seeming desperate or pushy. They ask for referrals at the first meeting, once the application is completed, at closing, and various other occasions. Many referral specialists have a formal schedule for their requests. For example, Deane asks three times during her first telephone meeting:

1. At the beginning of the conversation, she asks who referred the borrower and states, “I work by referrals.”

2. During the subsequent discussion of the GFE, expenses, and related areas, she will ask “How do you think the process is going so far?” and then reiterate, “Keep in mind that I work by referrals and I’d love to roll out the red carpet for your friends and associates as well.”

3. When she’s done, Deane asks if there are any questions before she sends the application to the customer for review, and concludes with “I’d appreciate knowing anyone you encounter who is looking for a loan, especially if they have the same qualities as you.”

Deane emphasized that she’s never had a customer complain about being asked for referrals three times in one conversation. “Typically customers will see it as a challenge, wanting to give me referrals as soon as they can. They want to be on the team.”

Schmidt has his own routine for requesting referrals. “During my initial meeting with the borrower, I give them five business cards and explain how important referrals are to my business,” he said. “Then I say that if at the end of the process they are pleased with the way I’ve handled their loan, I’d appreciate it if they shared my name with anyone they know in need of a mortgage or refinance.”

Ongoing Visibility
In addition to asking for referrals at the appropriate time during and immediately after the loan transaction, you must stay in front of customers in the post-closing phase. The competition is approaching your customers on a regular basis, so you need to stay in contact with past customers, Realtors, builders, attorneys, and any others from whom you’re expecting referrals.

Rick Stern, president of The Stern Mortgage Company, Palo Alto, Calif., uses direct mail to remind customers of his quest for referrals. His mailings range from 4th of July and Memorial Day cards to humorous greeting cards and postcards that detail how loan products have helped clients achieve success. The referral reminders include:

“If you or anyone you know could benefit from our expertise, please tell them and tell us. We value your help and referrals.”

“Your referral of friends, family, neighbors, and co-workers is the highest compliment you can give us.”

“With each mailer we remind our client base that we depend on their referrals for our business,” he said. “Not only have our clients returned, they have referred their parents, children, friends, neighbors, business associates, and others. Referrals are golden, especially in a down market. It’s so easy to ask, and it always produces results.”

Deane sends a series of mailers, including a letter that highlights the referral process. It includes a definition of referrals and concludes with “As always, when you come in contact with friends, colleagues, or family members who are thinking of purchasing or refinancing a home and who would appreciate the same level of service that I provided to you, just give me a call with their name and number, and I will be happy to follow-up with them.” Deane added that, “This always gets a positive (referral) response.”

Originators also use the telephone to maintain contact and ask for referrals. “I will call many of my customers just to say hello and ask if we can do something for them, while also asking for referrals,” said Steve Hines, president/originator at Southern Capital Resources in Birmingham, Ala. “Unless you’re in contact with people like this, it can be ‘out of sight and out of mind.’ I’ve received many deals just by asking on the phone.”

Twice a year, Deane calls customers to make sure that her Customer Appreciation Program is still beneficial and to ask for their referrals. “It’s a great way to touch base with them, to ask how I can help and see if there is anyone they know who might need my service. Nearly 60 percent of them will say, ‘I was just talking to someone who needs a loan and I’ll give them your name.’ They become an extension of our team.”

Of course, e-mails can be an effective means of generating referrals. Lindsey Hall, a mortgage consultant with Alternative Mortgage Funding Corporation in Winter Springs, Fla., adds the following to her e-mails: “Oh by the way…if you know of someone who would appreciate my services, call me with their name and number and I will be happy to help them.”

John Weller, a senior loan officer with NexGen Lending, Denver, Colo., includes a similar phrase at the end of his e-mails: “If you know of anyone who is looking to buy, sell, or refinance a home, please call me with their name and phone number. I will be happy to follow-up with them and will honor the fact that you put my name to yours.”

In addition, business cards are a prime opportunity to get your message across. Michael Bischoff, president of Biltmore Financial Bancorp in Palatine, Ill., has the following note on the reverse side of his cards: “By Referral Only. Our company dedicates 100% of its energy servicing our referred clients. You will receive our undivided attention and dedication that you have come to expect from us. What this means to you is the highest possible level of service from us. In response to this we ask for your heartfelt endorsement to family, friends, and work associates.”

“The greatest compliment we can receive is a personal referral,” is the simple statement on the business card of Steven Marshall, president of Bellevue Mutual, Bellevue, Wash.

Enhancing Referral Networking Opportunities
Most successful originators are constantly seeking new opportunities to develop non-traditional referral relationships. Hines has established successful business affiliations with branch managers of large banks and private banking representatives. “Customers frequently asked us about car and equity loans and I would refer them to the larger banks. I saw the potential for forming mutually beneficial relationships,” he said.

Hines also has a referral network with financial planners and CPAs, which has been aided by his own background as a CPA. “We got to know many of the key people by participating in their organizations, attending monthly meetings, and speaking at luncheons,” said Hines. “To make this referral exchange work, there has to be a give and take, a sharing of referrals. It can’t be a one-sided situation.” However, Hines pointed out that the exchange doesn’t have to involve an equal sharing of referrals. “Sometimes, part of the giving can be acknowledging your appreciation of their efforts.” In addition, he noted that referring partners are also appreciative that their clients have been well served.

Larry Montani, a mortgage officer at First Interstate Financial Corp. in Shrewsbury, N.J., concurs that a reciprocal arrangement is essential, and has taken extra steps to ensure he is providing value. Montani has a file of business cards and brochures for all types of vendors that he distributes to clients. “I am constantly asked whether I can refer a mover, plumber, landscaper, financial planner, or accountant,” he said. He is adding a networking section to his Web site that will eventually have 50 vendors from 50 different professions.

Stern advised that originators shouldn’t overlook their community organizations when developing referral relationships. He has been involved in a number of different organizations and has seen first-hand the value of associations formed with other volunteers. “My relationships have been the cornerstone of my success,” he said. “Part of this has been the ongoing associations with stockbrokers, attorneys, Realtors, and others. I see them at events, on the street, and elsewhere and they refer me to borrowers. This has been very effective for me over the years. They’ll think ‘he’s a good guy (because of his involvement) and he’s also a broker I should call.'”

As these and many other originators would agree, it takes time to create an effective referral business. However, the payoff is substantial. Once the system is in place, originators often can dedicate most of their time to cultivating relationships with past customers and referral contacts. Deane stressed, “It takes a while to develop this program, but you’ll see amazing results.”

Stop the Leaks in Your Sales Pipeline

Turning prospects into customers:
How to increase your conversion rate

How many people do you talk with who actually become customers? While no originator converts 100 percent of their sales opportunities, some do far better than others. Some loan originators talk with dozens of people every week, yet at the end of the month, their closed loan results are poor. If there’s one thing that top producers have learned is that strong closing volume every month is the result of effectively managing your leads and your pipeline from start to finish. How do they do it?

When it comes to borrowers, there are three major stages in your sales pipeline, as illustrated below:

Prospects == Applicants == Closings

Prospects to Applicants
The first step in your sales pipeline is moving as many prospects to actual applications as you can. A prospect is identified as someone genuinely interested in home financing and is in a position to take action by either purchasing or refinancing a house now or in the very near future.
At each stage of the sales pipeline there is fallout. Not everyone who contacts you as a prospect will evolve into an application. Some don’t qualify, aren’t ready to take action, are “just looking” or go elsewhere to borrow money. It is not uncommon for many loan originators to convert only about 20 percent of their prospects into applications.

Your job in this first stage is to weed out mere contacts from real prospects as quickly and efficiently as possible. Time spent discussing the intricate details of buying and financing a home with someone who is just window-shopping is often time wasted. The same can be said for hours invested in attempting to help repair someone’s damaged credit or to help them find just the right property. I’m not suggesting you should be rude or unhelpful—I am suggesting that you are a professional mortgage loan originator, not a credit counselor, or a real estate agent. As high performers in our business know, the more time you invest every day in originating good quality loans, the more successful you will be and the more money you will make.

There are some effective “filtering” questions you can ask your prospects at this stage. Questions like: “What is your time frame for moving?” and “If we can lower your payment, are you ready to refinance now?” and “What is your current financial situation?” are great questions to help both you and the prospect decide if your services will be needed. If so, move the prospect forward quickly by recommending the next step of meeting with you, visiting your Web site, or getting pre-qualified or pre-approved to start the mortgage loan application process. Many top producers employ assistants or junior loan officers to take or make these initial contact calls. These assistants are well trained in screening prospects for you, thus freeing up your time to work with real clients as their trusted advisor and home financing expert.

Speed and diligence are critical here. Your skills in convincing a prospect that you have the best home financing solution will make or break your chances of getting him or her to apply with you. Some originators try to set up face-to-face meetings as quickly as possible, knowing that once they get the prospect in their office, they can sell him or her on their financing solution, their service, and their professionalism (and even their charm!). Others like to direct the prospect to their Web site to begin filling out the application right away. As one loan officer recently told me: “If I can get prospects to my Web site and completing the online loan application, I’ve given them the feeling we are already at work on their loan. That way they are less likely to go somewhere else and start all over.” These tactics, as well as things like follow-up letters, e-mails, or a brief phone message let the prospect know that you truly want his or her business and are ready and waiting to serve. At this stage, persistence and follow-up increase your ability to convert prospects to applications. Remember, if this is an interested and qualified prospect, he or she may also be talking with other lenders or might get a referral from a real estate agent to speak with a competing loan officer. They’re not your customer until they actually apply with you.

Applicants to Closings
Step two is moving loan applicants to closings. Unfortunately, not every application closes. Among the number of things that can keep an application from closing are appraisal issues, title problems, failed property inspections, or loss of employment. Some things like these you can’t control or predict. But there are some events that torpedo your potential loans that you can ward off. For example:

  • Get permission to pull the credit report before starting the application. If serious credit issues exist, you know about them before you invest time on an application that will likely never close.
  • Use alternative documentation processing whenever possible. Ask your applicant to bring in their W2s, tax returns, bank statements, and paystubs up-front. This saves time, effort, and surprises down the road.
  • Consider collecting fully applicable but non-refundable application fees. It’s a lot easier for a borrower to walk to another lender if he or she has no money down. Even $200 paid up front can keep your client from straying to the competition.
  • Move quickly! When an applicant feels that nothing is happening on his or her loan and is getting no phone calls or updates, he or she will start talking to other lenders.
  • Make sure your Good Faith Estimate is exactly that. Low-balling your GFE to get clients up-front can cost you a closing when they realize they’ve been bamboozled. Borrowers walk away from closings every day because of this. Make sure they aren’t walking away from yours.

Most loan originators I speak with say they average about a 75 percent conversion rate of applications to closings. That means that three out of four applications in their pipeline fund. Congratulations if your results are better, say 80 or 90 percent. If they are much worse, consider making some distinct changes in your application to closing pipeline process.

The Flow of Business
“Closings are everything!” a successful mortgage broker once told me. “That’s what we get paid for and that’s what the mortgage business is all about. If it doesn’t close, it’s a waste of everyone’s time.” With that good advice in mind, let’s do a little exercise to figure out the flow of business you need in your pipeline to get paid the income you want to earn.

Let’s again assume that you convert 20 percent of your prospects into applicants. Let’s also assume 75 percent of those applications actually close. From there the math is pretty easy.

If you talk with two prospects a day, that’s 10 a week and about 40 a month. If you are successful in converting 20 percent of those prospects into real applications, that yields eight new applications a month. If 75 percent of those applications actually close, you’ll close six deals a month. If you make $1,000 a loan, you can expect to earn $6,000 a month or $72,000 a year. In effect, to earn $72,000 a year you must talk with two people every day.

If earning $72,000 a year isn’t enough for you, then you’ll have to either: a) talk with more prospects every day, or b) improve your conversion rates of prospects to applicants, or c) improve your conversion rate of applications to closings, or d) all of the above. As you increase the amount of prospecting contacts you make every week and work to patch up some of the leaks in your sales pipeline where opportunities fall out, you can improve your monthly closed loan volume and substantially grow your income along with it.

Expanding Your Product Horizons

How loan originators have branched out into other niches.

As the lending industry continues to shift to a predominantly purchase market, more originators are looking for ways to increase their revenue stream. In addition to specific products, many originators also have taken a broader approach—adding loan categories such as subprime, home equity lines, and reverse mortgages.

These market niches require more planning and ongoing attention, but they can be profitable and provide a valuable service to customers.

Following is a look at what several loan originators have done to expand their portfolio.

Subprime Market
The subprime market has experienced a series of peaks and valleys during the last few years, but many lenders and originators consider it to be a mainstay of their business. There will always be a pool of borrowers who are in need of a subprime loan, because of their “bruised” credit or other circumstances. According to a recent report, subprime loans account for one in every nine mortgages in the U.S. “There’s never a time when subprime isn’t appropriate,” said Wayne Panniello, president of WFP Mortgage, North Reading, Mass. “There are always situations that people face that make them unqualified for a conventional loan.”

“With purchase business declining and refinances diminishing, you need to replace it with other opportunities and subprime is perfect for that,” agreed Jerry Kaplan, vice president at Cherry Creek Mortgage, Denver, Colo.

Most subprime prospects are aware of their credit issues and are receptive to a higher priced loan. Loan originators have an opportunity to assist them through a difficult time and subsequently convert them to a conventional loan product, thereby ensuring long-term customer loyalty.

Some originators may be wary of taking on subprime business because of its association with predatory lending. Of course, while consumer advocacy groups and other critics have argued that subprime and predatory lending are synonymous, there is a clear distinction to be made, one that originators should understand in order to explain to prospects. Panniello and Kaplan stressed that they haven’t witnessed extensive customer resistance. “It hasn’t been a major factor,” said Panniello. “I haven’t seen anyone (customers) that concerned.”

Panniello emphasized that most of his subprime business is generated through referrals; Realtors, builders, and past customers advise others that he is a subprime specialist. “I inform people (about his specialty) in meetings and conversations,” he said. “I’m trying to educate them that these loans can be done. I don’t want agents and others thinking that a customer can’t be helped because of their past (credit) situation.”

Kaplan noted that a key to success in subprime originating is developing strong relationships with a few “quality” subprime wholesale lenders that will help streamline the approval process. He also stressed that most originators should be able to maintain a combined prime and subprime business. “A lot of subprime business is Alt-A business, and overall it’s not that much different,” he noted. “The main difference is the credit issues.” He added that subprime newcomers might benefit from a support team of experienced processors/underwriters to help them through the transition.

Jumbo Lending
For some originators, tackling the jumbo market may be a question of simple math. If you’re in the right market—with higher priced properties—why not do fewer loans for the same or greater income potential? Current loan limits for jumbos range from $359,651 ($1 over the current conforming limits) to $650,000. The super jumbo category ranges from $650,001 and above (although banks and investment banks often get involved at the higher limits.) Jumbo originators are typically based in or near higher-priced property markets and/or have a niche of resort/second home business. Their customers are a mix of bankers and Fortune 1000 senior level executives, doctors, and attorneys, as well as celebrities and athletes. “This is a viable market for originators, regardless of the economic conditions,” said Kevin Gentry, president of Gentry Capital Services, Stamford, Conn.

Gentry markets to the jumbo borrower segment in a number of ways. For example, he has established relationships with private banking department reps at large financial institutions that aren’t able to handle large residential loans. He also hosted luncheons and other meetings for attorneys and Realtors to educate them about the jumbo market. In addition, he tapped the jumbo relocation market. “From my experience, jumbo borrowers may push a bit more on pricing, but no more than conforming borrowers,” he stated.

A major portion of Marcus Zavattaro’s business is jumbo-based, developed via referrals, mailings, and networking with prospects at community events. Zavattaro, president of Pinnacle Financial, Greenwich, Conn., disputes the notion that jumbo borrowers are easier to work with than other customers. For example, he explains that they are often very aggressive in seeking competitive rates and fees. “The difference for me getting a deal might be whether I’ll pay the appraisal or application fee,” he said. “In the jumbo and super jumbo transactions there are typically lower margins. Jumbo borrowers will drive you harder on getting lower rates.”

He also noted that many jumbo borrowers require additional handholding. “The maintenance level is much higher; they demand more of your time.” Still, Zavattaro pointed out that this has been a profitable part of his overall business, which also includes a healthy share of conforming loans. “I think you have to have a mix of both to be successful,” he said.

Home Equity Lines of Credit
According to a recent Mortgage Bankers Association survey, there has been a major increase in the number of home equity line of credit (HELOCs) applications—a substantial 77 percent in the first half of last year. The size of the average HELOC loan amount has also increased to $83,630 during the same period.

One of the reasons that the HELOC has become so attractive is the recent drop in rates and fees, along with an overall streamlined process. Many banks offer the credit line at or below prime commercial rates, which makes it difficult for mortgage brokers to compete effectively.

Demas Lamas, branch manager of Olympia Funding’s Frisco, Texas office, has been successful with HELOCs because he’s willing to make a little less on the commissions and because he’s found a way to compete with the banks. Lamas handles HELOCs so that he doesn’t lose the business to another originator or lender. He noted that a high percentage of his HELOC borrowers also refer him to others who need a similar loan.

“I think that if you don’t have this as a part of your product arsenal, you’ll be leaving loans on the table,” he said.

Lamas has used fliers to reach potential borrowers. He also suggests postcards and meetings with Realtors to explain how HELOCs can benefit their customers. To supplement the premium he receives from the lender, Lamas usually adds another fee of approximately $600 for his services, including shopping for the best deal. “I rarely have a customer question this,” he said. “They see the value in my trusted advisor role that they may not get elsewhere. I’m helping them understand the value of HELOCs and how they can use one.”

Lamas noted that other originators should be less concerned about a minimal commission, and more interested in the resulting referral business and more important, the long-term impact HELOCs can have on their customer relationships. “If we always tell customers to ‘call us whenever we can help you,’ and then say we can’t do a HELOC for them, eventually they may go to another originator who is better able to meet all of their needs.”

Reverse Mortgages
The popularity of reverse mortgages has increased dramatically during the last few years. Reverse mortgages may not be a staple on more product menus because originators aren’t aware of the basic ingredients, which include:

  • Reverse mortgage borrowers receive cash payments and owe nothing on the home as long as they live there.
  • There are three main types of reverse mortgages: FHA Home Equity Conversion Mortgage, Fannie Mae Home Keeper, and Financial Freedom Cash Account
  • Borrowers must be at least 62 years of age and own their own home. (Some borrowers can use the new mortgage to pay off their home).
  • The loan amount is based on several factors, including the borrower’s age, home value, interest rates, and type of reverse mortgage. Generally speaking, the older the borrower and the more valuable the home, the greater the loan amount.
  • In most situations, borrowers can receive payments in one lump sum, fixed monthly payments, a line of credit, or a combination.

Those originators who have entered the reverse mortgage market agree that it’s worthwhile but challenging. For example, John Lucas, vice president and reverse mortgage specialist at Pacific Republic Mortgage Corporation in Van Nuys, Calif. noted that seniors are harder to close than other customers. “A key challenge is the nature of the senior market in general,” he said. “This is especially true with older widows who aren’t confident about their financial situations and are handling major finances for the first time. Some of them are understandably skeptical.”

Lucas has used direct mail to market his reverse mortgage niche, but said that advertising in senior publications has been most effective. In addition, he has an extensive network of financial planners, CPAs, attorneys, and senior center directors. “They know that I’m a specialist and will call when they meet clients who have a need, including their own family members,” he said.

Julie Okragly, vice president and mortgage consultant at Intermountain Mortgage Company in Billings, Mont., advertises her reverse mortgage specialty with radio, bus bench, and magazine (senior publications) advertising. She’s also been featured in a series of newspaper articles on reverse mortgages, and highlighted in a bank’s monthly customer statements. “Realtors also have been a major source of referrals,” she said. “A good place to start is with your sphere of influence: attorneys, Realtors, CPAs, and financial advisors.”

Both Lucas and Okragly stressed that not all originators are suited for the reverse mortgage market. “The lender/originator must be committed to spending extra time with the senior community to show how the program works,” said Lucas. “Many originators don’t have the desire, because they want to close as many transactions as possible. However, if you enjoy the satisfaction of doing a job that can change a person’s life, reverse mortgages may be good for you.”

Okragly noted that it’s possible, but somewhat difficult to do both traditional originating and reverse mortgages. “It’s (reverse) a slower-paced production level. I’ve found that if you want to go with this program, it can’t be about the money.”

She suggested an option for originators interested in being involved on a more limited basis: align themselves with a lender that handles reverse mortgages. The originator can meet with prospects, educate them about the reverse options, and then send the borrower to the lender for the application process. In exchange, the lender will pay the originator an applicant assistant fee (as long as the borrower agrees). “It’s a way to educate more people about the possibilities,” she said.

Getting Started
Whether or not a loan originator should enter a new market depends on several considerations, including their experience, resources, and overall business plan. Panniello underscored the necessity of establishing the proper foundation. “For example, you don’t want to do subprime unless you’re really prepared. Talk to people who have done it, gain the product and other knowledge that you’ll need. Understand the potential problem areas so that you can head them off. Otherwise, you can get frustrated when it doesn’t work out the way you expected.”

Lucas added that the customer knowledge is essential. “You have to know the products backwards and forwards but also understand what motivates customers and needs of clients are that you’re going to fulfill.”

Okragly said that originators need to make sure their past customers are properly serviced when they enter a new field. “You may want to work with a colleague who can take over for some of the other business while you’re developing the new market,” she said. “You don’t want to drop the ball with your past customers.”

Originators should concentrate on one new area rather than spreading themselves too thin, according to Zavattaro. “Become the expert,” he said. “Know everything about it. Customers appreciate this.”

In addition, Kaplan advised originators not to be intimidated about entering a new product arena. “Don’t be afraid,” he said. “If necessary partner up with someone who has done it before. Find a mentor.”

There are a number of factors to evaluate before embarking on a major new niche or market direction. The aforementioned originators have suggested a few of the basic directions. The key is to conduct your own research and determine if these or other niches are right for you and then take the appropriate steps so that you can have another source of business during a competitive lending environment.

Realize Your Goals

Overcoming the obstacles that can get in the way of success.

This time of year may seem like an odd time to be discussing goals. Most folks in this business talk about goals in January. But we all know that a lot of loan originators have yet to take action on the goals they set for themselves nearly four months ago. For example:

  • Jack set a goal to join his real estate association as an affiliate member and attend the functions to meet new Realtors. He has yet to make the phone call to get the sign-up forms.
  • Valerie set a goal to form a new strategic partnership with a CPA. It’s May, and she hasn’t set up her first appointment.
  • Kevin told his boss his 2004 goal was to get himself organized and create a better loan file flow system. Sixteen weeks into the year, he has still not done so.

Like Jack, Valerie, and Kevin, the same thing happens to the goals and New Year’s resolutions we set. We start out the year planning to lose weight, get in shape, spend more quality time with our families, and so on. Goals are easy to set, but take effort to achieve. Because of this effort, many never take action of any kind. Research has proven that the average number of times people take action on most of their goals is less than one. They simply never get started. Here are the three biggest reasons why:

The Fear of Commitment
I read a magazine story the other day about a 60-year old man who hiked the entire length of the Appalachian Trail, a 2,100-mile path from Georgia to Maine that takes about five to seven months to hike. Although many people have accomplished the trek, most of those who start out never finish. The magazine reporter asked the 60-year old man: “What was the hardest part of your 2,100 mile journey?” The hiker answered: “Taking the first step.”

The same is true with our goals. The first hurdle we have to overcome is our fear of commitment. That hiker knew that as soon as he took his first step on the trail he was committed to a goal and had to accomplish it. Let’s apply this to one of our loan originators mentioned earlier.

Our friend Jack set a goal to join his real estate association this year. Jack knows that if he signs up and pays dues to join the association, he must be committed to attending breakfasts, luncheons, and meetings. Jack worries about the time that will require, that he will have to actually have to go to these functions, try to meet new agents and talk with them. It means he will need to follow up on those meetings and schedule sales calls. He thinks about all of this and fears he won’t do it. Jack is afraid of commitment, and so, he hasn’t taken his first step.

The same fear of commitment can be seen when people don’t start their diet plans, don’t begin their new exercise routine, or don’t promise their families they will spend more time at home. They are afraid of committing themselves to action. So, the first step to get going on your goals is overcoming your own fear of commitment. No one can do this for you. You cannot read a book or listen to a tape that will change your mind. You must make the decision to put your fears aside and get committed to your goal. Only then will you take your first step.

The Absence of a Plan
The second thing that stops us from taking action on our goals is the absence of a written plan or road map. Valerie wants to form a new strategic partnership with a CPA, but she hasn’t acted because she doesn’t know where to start. The solution? Valerie needs to sit down today with a blank piece of paper. On the bottom of the paper she should write: Secure new relationship with at least one new CPA by June 1. Then, working from the top of the paper down, Valerie needs to list the steps of how to do that. For example:

  1. Make a list of possible CPA client prospects.
  2. Do basic research on each using the Internet and their Web sites.
  3. Draft and send an introductory letter to each CPA prospect.
  4. Follow up in four days with a phone call asking for an appointment.
  5. Hold discovery-meeting appointments with those CPAs who wish to meet.
  6. Prepare follow up meeting presentations on what I can offer them.
  7. Schedule and hold follow up presentation meetings with CPA prospects.
  8. Assess interest in working as referral partners.
  9. Initiate contact follow up campaign to cement the relationship.

Now Valerie can clearly see what it will take to reach her goal. Like any goal, it is achieved by executing a series of single action steps. All she needs to do now is take the first step, then the next, and the next. In a short time, Valerie will realize her goal of working with a CPA. Why? Because now she can see how to get there.

The Hesitancy to Change
The third thing that stops us from starting our goals is our own hesitancy to change. Most people don’t like change of any kind. Whether it’s a new funding procedure, a change to a different computer system, rearranging the office, it doesn’t matter. They see change as a negative thing. (Sometimes in my all-day training seminars I ask participants to change seats for the afternoon, just to give them a fresh view of things for the next few hours. You’d be amazed to see how many absolutely refuse to move! Even changing chairs frightens them!)

Setting new goals often means you are going to have to make some changes in how you run your business. From our earlier example, Kevin set a goal to get organized this year by creating a new loan-file flow system. The reason why Kevin hasn’t started out on his goal yet is his own hesitancy to change. His system may be ineffective and cumbersome, but it’s “the devil he knows” and is comfortable with. Although developing and installing a new and better loan file flow could mean time savings, a faster closing and a more organized process, Kevin will continue doing it the way he has always done it, and make up some excuse for his non-action.

If you find yourself not acting on your goals because of hesitancy to change, ask yourself why you feel this way. What are you afraid of? What’s the worst that could happen? Most importantly, what are the consequences of staying where you are?

Here’s a wonderful five-minute exercise for Kevin to help him move to action. Kevin should use a piece of paper or a whiteboard and draw a line down the center. On one side he should write “Current Process” and on the other “New Process.” Under “Current Process” Kevin should list how it is working. For example:

  • Too much repetition
  • Lost files
  • No order of process
  • Confusion with loan processor
  • Some missed closing dates
  • A few upset borrowers

Next, under “New Process” Kevin should list what an updated, more organized loan file flow system would mean. This might read something like:

  • Less stress for me
  • Things easy to find for status reports
  • Faster approval process
  • Better communication with loan processor
  • Fewer emergencies and problems
  • Happy customers

It won’t take Kevin long to see that action isn’t an option; it’s the only option. He may feel that changing to a new process is painful, but going through a little bit of discomfort now will be well worth it in the long run. He now stops looking at the negative points of change, but rather focuses on the positive results. If a hesitancy of changing to something new has kept you from starting out on one of your goals, this exercise will work for you too.

The only way we get anywhere in our careers and our lives is through the process of setting and achieving goals. The key is to get started. Perhaps you have some goals you set out to achieve this year that you have yet to begin. It’s never too late. They say the best time to plant a tree is 20 years ago. The second best time is today.