Superstar Secrets

There are many secrets to becoming a top producer, including a number of strategic systems and other elements that superstars use to reach the highest levels of origination. The following comments highlight the business secrets from several of the nation’s top producing originators.

“The primary reason I have been able to grow my business over the years has been the laser focus on developing, maintaining, and marketing to my database of closed loan clients. As the market has shifted from Realtors controlling 65 percent of the purchase business, to the present number of 25 percent, I have been able to maintain a high production level because of constant contact with the database. We touch our client database a minimum of 15 times a year through postcards, newsletters, annual reviews and phone calls. This system buys our clients “brain cells” so whenever they have a mortgage need, they will think of us. On average 70 percent of my production will come directly from my closed loan clients. Approximately 15 percent of my database will either personally close a loan with me in any given year, or refer me a closed loan in that year creating an annuity business. If I am marketing to 2,000 people, I should be able to close 300 loans a year by doing nothing but staying in contact with my database.”

David Jaffe
Chase Manhattan Mortgage
Westlake Village, Calif.

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“All successful LOs know how to uncover their customer’s goals before giving advice, but the super producer needs to take it a few steps further in order to maximize their referral stream. I call this step determining the customer’s center of influence. I first determine who referred the client, and that provides a context for me. From there I ask about their profession, their affiliations with civic organizations, how long they have lived in the community and other questions to determine the breadth and nature of their influence among others. This helps me identify ‘super referral’ sources. We provide extra value to these folks. It may be referrals back to them, if we are in a position to generate referrals. If not, we make sure that our super referral sources always receive special attention as VIP clients.”

Jeff Lake
American Home Mortgage
Mt. Prospect, Ill.

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“It’s hard to name one specific ‘secret’ to define success in the ever-changing mortgage industry. Over the years, the importance of recruiting and teaching individuals who are able to function as a team has become more and more important. Players on my team are all superstars in the positions they fulfill. They are positive thinkers and doers. They are loyal to me and to each individual team member.
“Each team member shares my philosophy of ‘under promising and over delivering’ and they never miss an opportunity to spread this philosophy throughout the Realtor community. I share in the pride the team members experience with the close of every loan, no matter the difficulty or ease involved in assisting our clients with their mortgage needs. I feel very fortunate to have such a group of individuals who work with and beside me.”

Jon D. Volpe
Nova Home Loans
Tucson, Ariz.

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“In building a career as a mortgage originator—or in any other career for that matter—the key is to remember the end game. As one builds their business, you have to always keep the final goal in sight. I have always operated under two basic guidelines; one that you are only as good as your last mortgage and secondly that many smaller pieces of pie will add up to more pies. This means treat each borrower as your most important one no matter how small or large the deal is, a satisfied customer is your best referral source and there is no cost to good will. Second, no matter what put your best offer on the table first, even if it means working for less than you would like to. Especially in today’s tighter market with savvy borrowers, the best first offer is generally the one that gets the deal and a slightly lesser fee is much better than no fee at all. To sum it up do what you have to get as many deals as you can and know that they will help to create a foundation that will keep the business coming in the door; good market or bad. The key is to build a base of satisfied clients who will become your ongoing source of business. Remember, our clients either move, trade up, trade down or refi. If you do a great job with them the first time, you are sure to have them as customers for life.”

Melissa Cohn
The Manhattan Mortgage Company
New York, N.Y.

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“Unlimited energy, enthusiasm, intense drive and a genuine passion for the mortgage business—these are the ingredients for a superstar loan officer. I have consistently been one of the company’s top producers and ranked among the top loan originators nationwide. So what’s the secret to being a top performer year in and year out? A few superstar tips:

  1. Maintain a Database—I learned this very early on. Start with a program like ACT and keep track of as many parties to a transaction as you can. In a purchase transaction, your contacts should include the buyer and seller as well as both the listing and selling agents. I try and add 150 names to my database each year and take out 150 names each year. If you haven’t heard from someone in the past 24 months, chances are you can delete them from your database.
  2. Direct Marketing—I market at least six times a year to people who know me from my database. My marketing materials have a consistent look and feel; the only thing that changes is the message. By having your name in front of your clients on a consistent basis, you are always kept in the client’s presence. Whether or not they have a need for mortgage services, they will have you in mind when the right time comes.
  3. Saying Thanks—I always send a thank-you gift or note at the close of every transaction. It sounds corny and takes time as well as money, but I believe it is really worth the expense. It helps you stand out from the other loan officers and clients truly appreciate it.
  4. Honesty and Responsibility—I take full responsibility for every part of the mortgage process. Being responsible also means being accessible. My clients all know they can always reach me anytime, weekdays or weekends. At the end of the day, the client remembers you and the how smooth the process was, so it’s important to assume full responsibility. If there’s a problem or an issue, be honest and upfront about it with everyone involved. No one likes surprises in this business.”

Janna Kohl
First Financial
Los Angeles, Calif.

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“Clients don’t want a mortgage, they want money. The sooner you realize that your product is money, the easier it is to transition from a salesperson to a Mortgage Planner. A Trusted Advisor, who can monitor the market, builds relationships that create wealth for their clients and take rate out of the equation. A scripted and trained mortgage planner never sells; they teach, coach and assist their clients and referral partners.

This has helped me grow my business in hot and cool markets over the past 20+ years. I am confident that I am the best qualified professional in my market to help my clients manage their mortgage as a financial tool as well as offer market advice. I think the best mortgage professionals push themselves to gain the knowledge and training that helps them feel that they are the most educated and qualified mortgage planner in their market. It isn’t a secret, but most fail to do so.”

Barry Habib
Mortgage Market Guide
Holmdel, N.J.

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“I strongly believe in the importance of turning all of your past clients into clients for life. However, many people simply mail or market to their clients for life throughout the year. This is what I call a customer retention strategy. In this market, it is critical to adopt a customer engagement strategy. One of the engaging strategies I have developed for my clients for life is a “Family Day at the Movies.” Each year during the winter holiday season my team buys out a movie theater and invites all of our clients to bring their families to see that year’s winter-themed family movie. Each year, as a team we discuss the movies available, determine a date and make arrangements with a local movie theater. We then mail out an invitation to all of our clients for life, informing them of the event and ask that they RSVP to our office. For our VIP and Raving Fan clients we make personal phone calls inviting them to join us for the movie. Of our database of nearly 1500 clients, we usually fill the event with 400 – 450 people in attendance. After the event, it is essential for everyone on my team to make outbound phone calls to their clients to further engage in that relationship. We have been hosting this event for eight years and have experienced great success in cementing relationships with our past clients. We truly believe in targeting relationships, this is just one of the many strategies we use to continue targeting and building relationships.”

Tom Bass
Targeting Relationships Inc.
Rancho Cucamonga, Calif.

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“The basics of making a personal connection with our clients are the veritable foundation for which the entire relationship will be built. These relationships are key to the longevity and fruitfulness of this customer. I truly believe that the stronger the connection I have with the client, the more referrals I am likely to see during the course of our relationship.

During the initial phase of meeting someone new (either in person or over the phone), I look for areas in which I can connect with this person without being gratuitous or over-the-top—what people do we have in common, what interests do we share, where are they from originally, and such. For example, if their Social Security number starts with a ‘0’, I know that they are probably from the East coast. If it starts with a ‘5’ I know that the Northwest is (or was at some point) their home. Every now and then a client’s accent will provide the necessary ice-breaker for me to connect with the person on a level deeper than the standard ‘what interest rate I am able to offer that particular day.’

I truly believe that the more of your personality you are able to inject into the process, the more probable this new ‘prospect’ is likely to become a long-term ‘referring client’. Often times I find ways to weave elements of my personality – for example, my love of classical music – into my conversations with the client. I try to be very intuitive as to the areas in which I feel the client and I are connecting then I exploit this connection to establish long-term rapport.

In a time in our business when we have enough software and outsourcing to never actually have to get out of bed in the morning, I find it refreshing to come back to the basics of success and the prolific impact of a handwritten thank you note.”

Matt Elerding
Chase Home Finance
Vancouver, Wash.

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“My mom was a Realtor, so I grew up among them and learned first-hand that it was poor communication from their lenders that frustrated them to no end. I learned that they chose to do business with those loan originators who did a good job of keeping them informed. So, I decided early on to make “Communication the Lubrication in my Mortgage Operation.” I designed my ACTion Marketing system as a step-by-step method to communicate with the listing agent and selling agent from the initiation of my contact with their referred client, at 12 key points during the loan process, followed by an announcement of our loan approval, culminating with a copy of their referred client’s closing survey. I announced my successes on every transaction. This aggressive system of communicating was unique when I began my mortgage practice in 1985 and remains so today. My team and I separate ourselves from our competition every month, by providing exceptional communication at every step of the loan process. As a result, our business is over 90 percent Realtor referred, purchase business. I just finished reading client and Realtor surveys on 46 recent closings. Almost every one of them had a penned notation that mentioned their appreciation for our professional communication.”

Greg Frost
Frost Mortgage Banking Group
Albuquerque, N.M.

Modeling: The Shortcut to Success

Wherever I speak and teach, there is always a burning question that arises among loan officers: “What is the one thing I can do to be successful?” Until today, my answer has always been simple: “Take action on what you already know.” While this answer may be appropriate for those who already know the basics, it may not be the best answer for all loan officers, especially for the newcomers. Many loan officers, particularly new ones, may not have adequate sales skills, so advising to “take action” is not necessarily good advice.

As many people do, I sometimes get caught up in the day-to-day duties of running my training business and lose sight of some of the basic principles that have led me to success over the years. In my search for a better answer, I realized that I already know and have lived the answer. It’s a formula that, when followed, will result in great success. Not only is it the single most powerful learning tool that has enabled me to literally transform my financial future in a very short period of time, it has also enabled me to start new business ventures and turn them profitable in little or no time, while many others have taken months or even years to accomplish the same results.

The golden answer to the questions lies within the simple, yet highly effective concept called “modeling.” Without exception, every time I have implemented this concept, I achieved positive results faster and greater than if I had tried to figure things out on my own.

The Modeling Concept

Modeling is the process of seeking out individuals who accomplished exactly what you want to accomplish, learning their success formulas, and then taking the same exact actions. We have to remember that we are not trying to reinvent the wheel. Proven sales success strategies already exist within the mortgage industry. All you need to do is find successful originators who are generating business the way you want to generate your business, then duplicate what they say, how they say it, and what they do every day.

The reason why modeling is the most powerful way to be successful is because it gives you a choice of how to become successful. Many trainers today teach sales systems that have worked for them. Nothing is wrong with this, unless the sales system they are teaching doesn’t align with your method of originating business. For example, let’s say you work for a lender that provides you leads through telemarketing and advertising, but the trainer tells you to develop Realtor relationships. What you need to realize is the method you were just taught by the trainer is not aligned with your current business model. I believe that there is no “best” business model for success, other than the model that most closely aligns with your way of wanting to do business.

Many originators are more adept at originating business one way versus another. I have often seen LOs excel in specific marketing or selling situations while struggling with others. The key to success is aligning your skill set with the sales and marketing methods that you not only have mastered, but also enjoy implementing. Remember, having passion to do something and having the skills to implement the strategy make taking action easy.

Modeling: Step-by-Step

Let me clarify this concept of “modeling” by giving you step-by-step instructions. If you follow these steps, you are guaranteed to take the fast road to success, avoiding the mistakes that most salespeople make when trying to grow their businesses.

1. Determine your preferred sales and marketing method. Do you want to be an inside salesperson or an outside salesperson? Would you prefer to work with real estate agents?

2. Identify sales professionals who are already successful in using your preferred method. Find at least three loan officers who are achieving the results that you want to achieve. Longevity in the business is not essential; what you want is someone who is already achieving the financial results you want.

3. Create a list of questions that you would like them to answer. Believe it or not, most top professionals will be happy to share their success strategies with you. Offering to buy them lunch also helps. Sample questions can include:

a. How do you set your financial goals?
b. What is your focus when meeting with clients?
c. What do clients think of you (testimonials)?
d. What activities take highest priority for you each day?
e. How many hours per week do you work?
f. How do you balance new originations versus lead follow-up and managing your pipeline?
g. What do you find to be the most effective methods to generate high quality leads?
h. How exactly do you generate referrals from your existing and past clients?
i. If you work with referral partners, such as Realtors and accountants, how exactly do you get their attention?
j. How do you handle a prospect’s objections?

4. After interviewing your selected sales professional, set aside time to consider your findings. How can you emulate some of this person’s actions? The key is to evaluate the resources at your disposal, and to figure out what resources you can tap.

5. Repeat the questionnaire with other top producers.

6. Once you’ve met with a few sales professionals, figure out a strategy that assembles best practices you would like to emulate. Create a realistic action plan and stick to it.

7. And most importantly, remember to take the same actions they take.

A Personal Example

Recently I conducted a presentation for about 300 loan officers. I had just finished the program opening with a visualization exercise when I noticed that someone got up and walked out fairly abruptly, before I had even begun to teach mortgage-specific strategies. At the break, I inquired about the sudden departure, and found that the individual had left saying the words, “I did not come here to listen to a junior Tony Robbins”.

After absorbing what this person had said, I smiled. I realized that he had just compared me to the world’s number one business and personal development coach. Just to give you some background, I have been studying excellence for many years, and Tony Robbins has been one of the key influences in my life as a professional sales professional and national speaker. Based upon this individual’s comments, my modeling of Robbins had really worked. I was just compared to the best of the best in the speaking field. The only down side to this incident was that the person that left early never got to hear the mortgage sales and marketing strategies that I am sure he could have modeled to become more successful.

You might be saying that success cannot be this simple. But the truth is, it is that simple. I have used the concept of modeling to build a successful mortgage company as well as a successful speaking and training business. And by modeling best practices examples, I have taught thousands of mortgage professionals to accomplish far more than they ever imagined. All you need are good practices to model. Once you’re armed with ideas worth modeling, there is no limit to your potential for success.

By Ron Vaimberg

The Path to Stronger Relationships

I remember hearing through magazines, conferences and seminars similar predictions, “95 percent of all mortgages will be originated through online mortgage companies.” The Internet was just becoming a phenomenal business tool and the possibilities seemed endless. As a not-so computer savvy individual, I felt intimidated by this and remember wondering what it would mean for my personal production and the direction of my company.

Well guess what? It didn’t happen. And the reason why is very simple. Mortgage financing has always been a relationship business. Even with the explosion of generation X, Y and Z buyers that are computer savvy—borrowers still want to feel connected with the individuals helping them make what may be the biggest purchase of their lives. This is where our profession comes in. Mortgage originators are the relationship center that ties homeowners to their dreams.

The foundation for any marketing strategy is developing a long-term relationship that will serve you in providing a continual stream of referrals. Take a look at every marketing effort you undertake and analyze it for its potential relationship strengths. Are you doing your best to provide exceptional service on every transaction so your reputation coincides with your marketing? Are your friends not only your referral sources (Realtors, builders, financial planners and such) but also those you have helped through the financing process?

I recently asked high-producing originators what one trait they felt contributed the most to their success. Many of the answers related to developing and maintaining relationships. One loan officer put it quite nicely when he stated his success came from, “An attitude of real interest in the client’s life, what they are doing, who they are, where they are going, what their goals in life are, how they feel about things—getting to know them as friends. When I show true interest and establish rapport then everything else is easy.” I will add here that this loan officer has an amazing long-term business based primarily on referrals.

During every aspect of your business there are opportunities to build relationships. From your prequalification contacts to borrowers, to Realtors to past clients whom you can develop relationships with that will pave the way to ask for and receive referrals. Let me give you a few simple ideas that can start you on the path to stronger relationships.

Prequals–Your goal is to turn every prospect into a closed loan. This can be difficult when you are competing with other loan officers, especially when most of our initial contacts are by phone and e-mail. You must make a positive impression that will stand out from the competition. The feeling of trust that is developed during the initial conversations is many times the deciding factor for clients.

One of the best things you can do is show empathy and concern for the individual’s needs. Use what I call the five magic words; “tell me about your situation.” Granted, you are the loan professional and probably already know what is in their best interest, but give them the opportunity to fill you in on the surrounding details of why they are in this situation of purchasing a home, refinancing or taking out a home equity loan. Take the time to listen before you start offering your services and advice.

Borrowers–Many mortgage applicants (and not just first-time homebuyers) are confused about what happens between the times they sign the application package, and when the loan actually funds. This two to four week time period seems like a big black hole, where borrowers worry that something will go wrong or continually call to ask if everything is going, as it should. This is a drain on you and your staff and can be easily resolved with a simple system.

At application, give clients a flow chart diagramming the loan process from application to funding. Let them know that you will be e-mailing or phoning them when the appraisal is received, the file goes to underwriting and once the loan is approved. If you have a system in place with your staff, this will take a grand total of about five minutes to complete these items. You are developing security and trust, essential for long-term relationships.

Realtors–The time you put into developing relationships with Realtors can have an immense rate of return. Realtors are looking for loan officers who will help their business grow rather than just continually ask for referrals. Many Realtors have had the unfortunate experience of referring a client to a loan officer and then lost the buyer to a FSBO or another Realtor. Have a system in place that guarantees five marketing touches to each potential borrower. Explain to the Realtor that you plan to reinforce them as their Realtor as you do this. Through e-mails, phone calls, faxes and snail mail you will mention the Realtor and include their phone number and business card. This simple act reinforces your dedication to their business as well as your own.

Past Clients–You have worked hard to get a borrower from the infancy stages of prequalification to the final stages of closing. First, take the time at closing to let them know you have enjoyed the opportunity to serve them and would appreciate their referrals in return. Then, let them know that you will be keeping in touch and they are welcome to contact you if they have any question in the future. Each month, your past client database should receive some type of mailing from you. This can be as simple as a postcard or can be alternated with a newsletter or other informational piece.

On the anniversary date of each closing, place a phone call to past clients to maintain a positive relationship. I’ve heard quite low statistics regarding homeowners’ memory of their loan officer’s name. If past clients have consistently received something in the mail and then a phone call from you stating “happy anniversary” and asking if there are any concerns or questions regarding their mortgage, I sincerely doubt your name will be forgotten. Rather, they will probably remember to give you their brother-in-law’s name and number who needs a mortgage on his new home.

As a mortgage trainer and coach, I want each originator I work with to succeed, but I also know that a marketing idea alone will not increase anyone’s pipeline. That is why so many individuals start out in this business and quit within a year or two. It is also why the industry historically pays on commission. Think about it. You are truly paid for what you do. Succeeding in this business takes not only marketing and innovation to find new business but the commitment and tenacity to develop and strengthen relationships as well.

By Bliss Sawyer

Creating “Affiliate Value” To Win Referrals

Yes, the market has gotten tougher. Yes, loans are still being done, and yes, top originators still have healthy pipelines. So why does it seem like you have to fight for every deal? Part of the answer may lie in where you’re looking.

While the battle for new customers rages in the streets, many originators are forgetting about value—providing tangible value to their clients. Provide more value, and you’ll win more customers. Although not a panacea guaranteed to fill your pipeline overnight, the system of delivering “Affiliate Value” will create a steady stream of referrals, bringing you a few extra deals per month. And more importantly, the system’s immune to the swing of the market!

What is Affiliate Value?
Take a close look at your target market. There are things that they want and need on a daily basis that you can help them with. Unlike the “Personal Value” that you deliver directly to your clients, “Affiliate Value” comes from other forms of resources around you – and you simply become the delivery vehicle.

First, examine the specific needs of your target market. For example, a large percentage of first-time homebuyers are looking at new cars, bridal shows, baby clothes or the local nightlife. Low credit score borrowers are researching bankruptcy laws, payday loans, credit counseling, discount stores and various forms of debt relief. But with a little thought behind it, you can get even more specific.

During the spring, people want information on landscaping, flowers and cleaning tips. At tax time, people want to know about little known deductions, loopholes and asset protection. High-end borrowers in the south want to know about pool maintenance, golf tips and vacation planning. Medical workers want to know about time management, stress relief and community events. All our prospects want to know about moving tips, insurance strategies, simple home repair tips and building equity. You can come up with thousands of variations. Affiliate Value, or AV, is simply the process of tapping into various resources to satisfy the appetite of your prospects.

Creating the Value
Start by defining your target market, and determining the value they want. What specific groups can you cater to? What types of personal experience and expertise do you have? What are your hobbies and interests? Where do you travel and spend you free time? These are all places to find your market niche.

Next, start asking questions. What are their challenges, fears or concerns? What are their interests? What do they want to know more about? Call some past clients and ask them about their profession, or read magazines and Web sites that talk about current issues. Very quickly, you will be able to identify five to seven specific items of interest, and know which direction to go.

Distributing the Value
Once you have asked the questions, the next part is pretty simple—document the answers. Locate the experts and various resources that can provide you with the “affiliate value” that your target market is looking for. These could include attorneys, CPAs, insurance agents, real estate agents, architects, medical professionals, moving companies, home improvement specialists, travel consultants or any affiliated industry resource!

Tap into these resources to create and provide the value to your market through a variety of methods. Typical choices could include free reports, CDs, downloadable recordings, streaming audio or video, podcasting, on-site demonstrations, workshops and seminars, articles or e-books, newsletters and e-zines, e-mails, audio postcards, blogs and RSS (media) feeds, radio or TV shows, press releases, community events—and that’s just a start. Use pictures, graphics, music, or gimmics to make them interesting, attractive and memorable. Make sure to credit the affiliate value source, and include your complete contact information (name, address, phone, website and e-mail).

One of the most important components of implementing this type of long-term marketing system is creating the list of recipients inside the target market. If it’s one that’s familiar to you, it makes it easy, but work to build a high quality, highly targeted, responsive list of prospects.

How It Works
Let’s take a look at a specific example of how the creation of “affiliate value” works on the streets. One of my direct target markets has been attorneys, a market which has specific challenges and very little spare time. Delivering AV to this market has been pretty easy. Through regular contact with this attorney market niche, I realized that there was a recent change in a federal law that directly impacted many of their business clients. They were scrambling for ways to help these clients adjust, and having a hard time coming up with the answers and resources they needed.

Spending a couple hours on the Internet, I soon learned of an attorney in California who was a noted “expert” on the impact of the federal law. He was an author and had written many articles on the subject. While reviewing his Web site, I located an article that directly addressed the concerns of my attorney market and those of their clients. I contacted his office through the number listed on the Web site, and spoke with his personal administrative assistant. In less than five minutes, I was given permission to reprint the article, and distribute it to my attorney market. The only conditions were that the article was left completely in tact, and that it included his name and contact information.

I sent this informative article via e-mail and direct mail to my attorney prospects. About 10 days later, I got a call directly from the attorney who had written the article. He wanted to thank me for passing it on, and excitedly exclaimed that he had landed seven new consulting clients as a result. He asked if there was anything he could do for me in return, and I quickly responded that I would like to conduct a 30-minute phone interview with him about the article.

He agreed, and after scheduling the interview and setting up a teleconference line, I invited all my attorneys to call and listen in. I recorded the interview, downloaded it onto a CD, duplicated it and made labels, then mailed them out as a bonus gift. I also took the recording and made it available online, and created a downloadable MP3 file for podcasting. Total cost: about $120. The results: priceless.

While the original intent and material had absolutely nothing to do with mortgages, by providing “affiliate value” to my target market, I established strong credibility, became a trusted resource, gained new relationships and a boatload of long-term referrals. I have since done several of these types of teleconferences and coached hundreds more on implementing variations of the same theme. You can do the same thing for your target market.

No, it’s not a quick fix for your pipeline overnight, but it will put you at a higher level than your competition, and provide for a steady stream of referrals that no market swing can touch.

By Chip Cummings, CMC

Tapping Into the Construction Market

With the changing market we are now experiencing, it is getting more competitive when dealing with potential borrowers. Since we all have the same basic products, and essentially all the loans are sold to the same investors, we can easily get caught in the “commodity trap” of dealing with only price.

One way to differentiate ourselves from the masses of other originators, is to have a niche that most either don’t understand or stay away from. By having a product that is more specialized you can move away from the issue of price, and focus on being a resource and expert to your customer.

I accomplish this differentiation and eliminate 95 percent of my competition by adding construction loans as another pillar of my business. Construction loans can be custom construction, which is usually a person building their own primary residence or vacation home, spec loans whereby a builder constructs a home with the main purpose of selling it right away for a profit, and commercial construction for industrial, office, retail, or condominiums. Here, I’m going to focus on the owner occupied SFR primary or vacation home.

Loan Types
There are generally two types of loans. There is a two-time close and a single-close. The two-time close was the traditional way most construction loans were originally completed. A borrower would go to a bank and get a short-term construction loan that was essentially a line of credit to build the home. As soon as the home was complete the owner had to do a “take-out” loan and pay off the construction lender. This is usually a more costly and paper intensive way to finance a home, because the borrower will provide financials and pay the fees and costs associated with getting the construction loan. When they do the take out a loan at project completion it is a regular refinance, meaning they will then have to provide more financials and pay all the fees again.

In a single-close loan the lender does a construction and take-out loan all in one package. The borrower provides the normal financials required for any type of loan (full doc or stated), the lender underwrites and approves the loan, the loan funds and the borrower starts construction. At the completion of the project the construction loan automatically rolls over to permanent financing at no additional cost or paperwork (except signing a new note) to the customer. It saves the client a lot of time and money.

Construction loans are typically “build and lock” or “lock and build.” Under the “build and lock,” the interest rate during construction will float with the market (prime or some other index). At completion, the borrower will then lock their final interest rate and product type at current market rates. Under “lock and build” the interest rate is locked during construction, and at the time of completion the loan rolls over to permanent financing at the same exact rate. For example, if a borrower chooses to do a “lock and build” using a 7/1 ARM, and the current rate is 6.5 percent, they will have this rate during construction, and then it will roll to the same 6.5 percent at the time of rollover for seven more years. It is essentially an eight and a half year loan, because under the product I use they have 18 months to build and then the 7/1 ARM kicks in.

Extra Effort
One point to keep in mind is that a construction loan is much more labor intensive for the originator. My estimate is that it takes as much as three times more work as a typical purchase or refinance transaction. I can justify this added time because the average loan amounts are nearly twice as much as my average loan, I have a more sophisticated borrower which I find is much easier to work with and appreciate professionalism and experience, and it is a deviation from my normal duties breaking up some of the monotony we can sometimes experience after years in the same line of work.

What are the reasons for this added work? There are three levels of approvals needed on a construction loan. Borrower approval which is the customer’s ability to qualify for the loan (just like a purchase or refinance), there is contractor approval whereby the lender approves the contractor building the home, and there is project approval. Project approval is a review of the budget, construction contract signed between owner and builder, and the appraisal. The lender wants to make sure the budget costs submitted are in line with similar projects in the same area. They want to be sure there is enough money budgeted to finish the project. The last thing a lender wants is for a borrower to run out of money midway through a project, and then have to take over the project. In addition to the two extra levels of approval (contractor and project) there is the added time of educating the borrower. Since this type of loan is completely different from what most customers have experienced from past lending transactions, you will spend much more time upfront and throughout the processing period explaining how the loan and draws work.

Marketing
One obvious way to market your ability to do construction financing is through contacting contractors and architects in your marketplace. As you drive around town, take note of homes being built and write down the names and numbers of the builder and architect on the project (they almost always have their signs up on the property). You can also promote your business by obtaining a list of people who have applied for building permits. The easiest way to do this is find a company that compiles these lists from the local governments and sells the list. Once you have this list, usually provided weekly, send a letter to the owner of the lot introducing yourself and your construction expertise.

In addition, you can get a list of recently sold vacant land from your local title company and send a letter to these people. Most will eventually be building something on their newly acquired land. You can also do some research to find out which Realtors specialize in selling land. Since so few lenders do land and construction lending, I have found most of these Realtors are very interested in talking when they find out they may have a source that can assist them in selling their lot listings. You could hold seminars on construction financing, a strategy that has worked well for several originators.

Still another way for generating business is communicating with other mortgage originators. Since most LOs don’t know how to do construction lending, get out there and network with other successful originators and let them know you can take care of those clients they can’t help. You’ll find most would rather refer their customer to someone they know rather than just telling them they can’t help. Finally, get involved with local builder organizations. In most areas there are trade groups that meet on a regular basis, and you can typically join as an affiliate member and get a lot of exposure this way.

Adding construction lending as a pillar to your business cannot only help grow your business, but also soften the impact of a shrinking market while automatically reducing your competition.

By David Jaffe

Mailing With a Purpose

Utilizing the mail to generate referrals has been a primary tool for as long as there has been marketing in our business. Unfortunately, the majority of money spent on this marketing strategy tends to give little-to-no return on investment. In talking with originators around the country, I hear over and over again that mailing for the primary goal of obtaining mortgage applications results in very few leads.

The key to direct mail is simply this: mail with a purpose. Very few people go through their mail each day hoping for a new offer from a mortgage originator. Most are looking to throw away as much junk mail as possible. In any mailing, the goal is to send a marketing piece that will be kept or passed along to someone who needs your services. Can you remember the last time you kept an advertisement for any length of time? Keep that in mind as you decide on your course of action. Here are a few ideas to get you started on a new mailing campaign.

Sports Calendar
Becoming well-known within your community is vitally important to your networking success. One originator has found an inexpensive way to help his local high school while increasing name recognition and production. Sterling Campbell with Citiline Mortgage in Colorado Springs, Colo. sent a sports schedule postcard to high school students’ parents. This was mailed at the beginning of the school year featuring the fall sports, and again in January with the winter/spring schedule.

The front of the fall postcard has Compliments of Sterling Campbell above the contact information with the football schedule listed on the left. The back of the postcard is used for the other fall sports’ schedules and again repeats the originator’s contact information and picture. The postcard for the winter/spring sports features boy’s basketball on the front with other sports listed on the back.

The school provided the mailing labels and use of their bulk-mail permit and Campbell paid for the postcard and postage. (The school secretary was especially grateful, as she is the one who usually fields the many calls before a game asking for schedule information.) The response was very positive with two applications taken immediately after the first mailing. Consider the long-term benefits of this type of mailing. Name recognition and familiarity are essential to becoming known as a trusted advisor in mortgage finance. Season after season this originator will certainly become recognized as the “Hometown Lender.”

Coupons
Sending an item of a different size, texture, and color within a mailing is another way to deliver something that will hopefully be set aside for future reference or be given to family or friends. A coupon can be like a second business card, and may be kept a bit longer than your business card if it stands out from other things received in the mail.

To get your coupon noticed, make it the size of your business envelope and print it on cardstock in a bright color (cobalt blue works great). Include your picture on the coupon; people want to feel a connection with the person who will be helping them. Your job is to make sure they have a reason to choose you, and a personal connection is one of your biggest selling points as an originator. Plus, with today’s technology, you may not see the client face-to-face until closing. Next, make it personal. Leave a place for your signature on the coupon. This gives the consumer a sense that this is more than just a mass mailing.

Be creative in distributing your coupons. Put coupons in letters to potential clients and give them out in past client mailings so they can pass them along to friends and family. You can also share coupons with Realtors for them to distribute to their buyers.

Center of Influence
Utilizing a “center of influence” mailing list will direct your mailings to people who know you, increasing the likelihood of your mailing piece being read and kept. This list should include past clients, referral sources, friends, family, business associates, and anyone else you know. It has been said that the average person knows 250-300 people. (Remember, the plumber and dog groomer will need a loan someday too.)

Once or twice a year, send something of value to this group of recipients. If your company is sponsoring an event, such as a home and garden show or Parade of Homes, you may have access to tickets. Our company had received complimentary tickets for sponsoring a local home and garden show, so I sent a letter to my center of influence group expressing my appreciation for their business along with two tickets for them to enjoy this local event. I was amazed at the positive response I received from such a mailing.

Another mailing of value to this group is a coupon for a local business. This might be a “buy one get one free” ice cream at the beginning of summer or a bowling pass for Christmas vacation. This type of mailing will also benefit the business willing to participate. Your mailing can help to increase recognition and traffic to their business. Within your center of influence mailing list, see if you have a local business owner who would appreciate your help in expanding their client base. If not, approach a local business with this idea. This win-win situation gives you the opportunity to deliver something tangible as well as increasing the partnering business’ profits. These efforts at networking will also help brand you as a trusted mortgage professional.

These are just a few ideas to help your mailing campaigns be as successful as possible. Marketing funds are precious, and your goal should be to utilize each dollar to the best of your ability. Your goal is to get as many referrals as possible from each piece. As you analyze your current marketing efforts, look for areas where you can mail with a purpose, giving the recipient a reason to open, keep, and share your information, thus helping you with your goal of having a referral-based business.

By Bliss Sawyer

Enhancing Realtor-Originator Partnerships

Do you ever wonder why some originators seem to have no resistance to getting Realtor® business and others get shut down before even getting to the door?

Doing business this year will require fresh thinking on how best to restructure ancillary relationships, using unconventional, out-of-the-box, and distinctive strategies. The predictable, standard routines we’ve used to approach agents and builders needs to be kicked up a notch with more consumer-centric, and value-added services and resources that help gain and maintain Realtor® loyalty.

It is a challenge to release what we have always done, but in order to avoid competing with the masses on price, promotion, and publicity we need to focus on ways to differentiate our offerings. The question is—what will you do differently to develop relationships with real estate agents that other originators are not doing?

Invest in Relationships
Getting in the door is not as easy as it once was, considering the number of big real estate franchises that now offer in-house mortgage services. Regardless of the myriad of available services, relationships built on trust always have an edge. For most prospects, the first point of contact is the Realtor®, which offers a direct channel to business for originators. After interviewing several successful top- producers here are a few ideas that have produced outstanding results:

Forego getting stopped at the door delivering rate sheets. Innovate by identifying a select group of up-and-coming real estate agents. Send them a letter asking if they have interest in partnering with you to expand and support their customer and client activities. A short questionnaire should be included in the letter asking questions like:

  • I am seeking a select group of high quality real estate agents to refer listing and selling leads. Would you be interested in servicing these leads?
  • Would you be interested in my support to help you get prospective listing clients to sign with you to market their home?
  • Would you be interested in our working together on client retention after the sale to help retain your clients for life?

There isn’t a Realtor® on the planet who would turn down buyer or seller referrals, let alone a good cross-servicing platform or a turnkey follow-up system after the sale. By “qualifying” the agent and asking for a commitment, getting in the door becomes irrelevant, and provides a solid structure to reciprocate and service mutually beneficial ongoing referrals.

Help with Listing Appointments
Creating a differentiation in service for real estate agents often begins with a listing appointment. A savvy originator can support the agent during the listing process with a letter or a phone call to the prospective seller introducing themselves as a member of the Realtor® team.

The originator should explain how they work with agents during the marketing process by pre-qualifying prospective buyers, and their involvement with other service offerings, like open house support and referrals, thus building the value of the team.

This strong partnership message creates a new level of value and adds support to the selection of the Realtor® partner, especially when the seller may be interviewing other agents. The originator is introduced early enough into the relationship to secure mortgage business, and the team effort may be the edge needed to win the listing that results in a successful sale.

Sending Reports in a New Way
Originators have traditionally sent daily reports to their clients and real estate agents. The dissemination of these reports has been expanded through technology applications. For example, Implementing Web marketing services that offer cross-servicing options can deliver reports or offer pre-qualification services that capture and “connect” the early Internet prospect until they are ready to advance the relationship. These “stealth” systems gently brand the agent or their originator, using automated “drip systems” via reports and e-mails that include home financing information, services for first-time buyers, builder investor services, or other reports. According to two West Coast top producers, the system is working quite well, providing a 47 percent conversion rate of prospects to clients using automated response systems.

Provide Unique Educational Offerings
One innovative originator provides an “invitation only” quarterly networking lunch for his partnering real estate agents. The luncheon offers networking opportunities with community businesspeople interested in cross-servicing opportunities, and also includes a short educational presentation on ways to grow business. Once word got around, other agents were aggressive about wanting to be included in the next golden networking event and to be part of the partnership team.

Think unique. Begin investing in new activities that pay off with impressive results.

By Terri Murphy

CPAs: A Niche Worth Working

I started in the mortgage industry in 1992, when marketing to and working with CPAs wasn’t a mainstream concept. I fell into that niche because most of my business acquaintances were accountants from my past career as a CPA. Little did I know it would lead to a very successful mortgage practice that has been growing and thriving for so many years.

Today, my business is 100 percent referral based. The only marketing we do is to our database of clients and other referral sources. We have three main pillars of business. Our strongest pillars of referral sources are the financial services, accountants, and CPAs. This accounts for about 40 percent of our annual revenue. Our client database is the second most valuable pillar. We are fortunate to have kept a complete contact management system since 1995. Our past clients, who we like to consider our current clients, are very important to us. In fact, they represent about 35% of our annual revenues. Our last pillar consists of a small stable of great Realtor relationships. Our Realtor referrals represent about 15 percent of our annual revenue. The remaining 10 percent is generated from various sources such as associates, family and friends, and out of area referrals.

Why Work With CPAs?
There are many benefits from working with the financial community. I consider the financial community to include: accountants, CPAs, enrolled IRS agents, money managers, financial planners, life insurance specialists, and so on. These are all foremost businesspeople. They generally maintain normal business hours, with no Friday night or Sunday calls. Financial people enjoy working with other competent professionals. If an issue or problem comes up, and you’ve communicated the issue clearly, providing alternatives and other solutions, they will be loyal and continue to work with you. That’s not always the case generate from those who are not of the same professional caliber.

Working with accountants and other financial service providers has other great benefits. Even in a high interest rate environment, they have great potential to refer loans. This is attributed to the “type” of clients most accountants service. They work with many small business owners, self-employed individuals and entrepreneurs, who always have a need for money in any market. The interest rate is important, but not as important as service and providing solutions to problems. In addition, these professionals are loyal. Once they receive good service and become familiar with your character and competence, you become an integral part of the accountant’s financial team.

As loan originators, getting a referral from a trusted advisor gives us, the advantage to potentially refer them to some of our other business associates, such as Realtors. I have consistently been able to refer clients to my core Realtors for the past several years. Having and giving good referrals to professional Realtors is a great way to secure and build relationships regardless of an “in house lender” or other existing relationships.

What Volume of Loans Can You Expect?
In a normal interest rate market, the type of leads that are generated from the financial service community and generally purpose refinances or purchase money. I feel getting at least one loan a quarter from a business referral source is good. A few loans a month would be like hitting the jackpot. Remember these are quality leads. These referral sources are generally very low maintenance, once they know you and make you a part of their team. To maintain these relationships takes minimal effort, and in addition, they do not waste your time. I have relationships that can refer one or two closed loans a year, and some that refer three closed loans a month. The average loan amount for these types of clients is generally larger. I realized a long time ago, if I wanted a raise I needed to do more loans or increase my average loan dollar amount. This is a great way to get the larger loans. In a refinance market these relationships can refer you a large quantity of loans. My business has grown each year, largely to the fact I keep expanding my relationships in down years. When interest rates begin to go down, the lead volume I get from each of these relationships goes up four fold.

Getting Started
I believe the best way to start working with financial services providers is to look at your own sphere of influence. Who is your CPA? Who helps you with your investments and insurance needs? If you have been in business for a while, ask your best clients for their help in building your business. You might say “I am always looking to work with other top professionals. Is your CPA or financial planner someone you think I should meet?” Trust me, your best clients and friends would love to help.

The key to getting started is a face-to-face meeting. It is important to be prepared, as you need to convey both your competence and character in that meeting. In addition, you should have a list of questions to ask the CPA about their firm. Some questions might be: “What type of clients do you have? How many tax returns, both business and personal, do you prepare? How many employees do you have? Do you have an assistant? Do you have a marketing plan?” The more information you have, the more help you can offer. Remember, most accountants are not very good marketers. As part of my own initial research, I developed a two-hour workshop to help accountants and financial service providers market their own practice. Then I used feedback they provided and my previous CPA and marketing experience to give them some additional ideas for promoting their business.

Of course, one of the best ways to start or strengthen a financial relationship is to refer some clients back to them. I will always do anything and everything I can to help them and their business.
After the meetings I stay in touch with my referrals sources with a weekly e-mail that highlights market conditions and information, as well as a monthly mailer. This further helps to convey my competence and character, as well as solidifies our consistency. We are trying to be first in their mind when an opportunity to refer a loan comes along.

Commission Sharing
Today, CPAs and professionals in most states are able to earn commission and share in revenue of value-added service, such as, mortgages, life insurance, and asset management. This was not allowed when I first started and is a relatively new concept. But, today most of the states now allow accountants to share in the revenue, so this is a possibility for you to consider. However, each state has different laws, guidelines, and rules. It is important to be aware as the playing field and rules are always changing. If you are looking to go the commission-sharing route, I suggest contacting your state’s board of accountancy and the appropriate legal counsel who understand not only the accountants’ laws but also RESPA and federal laws. These types of programs must be set up in compliance with all the agencies.

CPAs and other financial service providers are a great niche to work with. Coupled with a solid database contact management system, you can build a strong, consistent practice that is loan recession proof and can be relied on for years to come.

By Mark Klein

Marketing Portfolio

Al Hensling, president of United American Mortgage, Irvine, Calif., likes to “drill” his name into his customer’s memory. While searching for the perfect post-closing gift during the holiday season—”something the borrower would keep for a long time and find both useful and valuable”—Hensling found a complete cordless drill/screwdriver set at a home improvement store and purchased every one in stock. He then printed up some professional labels with his name and contact information and affixed them to the reusable case. “Of all the promotions I have utilized, I can not remember a better received gift that resulted in additional referrals from satisfied customers,” Hensling says. “The response was incredible.” He sends about 300 per year to purchase customers, at a “very attractive price for a quality product” (approximately $40 each, including shipping). Hensling calls it a “unique and lasting” gift that leaves a great impression on borrowers who are never expecting a gift of such “significant value.” Look for specials on this or similar items at home improvement stores, especially during the December holiday season.

See your name in lights—or very close to them. Betsy Lamond, an originator with Charter One Mortgage, Rockville, Md., wanted the members in her community to be able to “put a face with a name,” so she gave herself an audience of likely prospects. Lamond began running playbill ads 10 years ago at the successful Olney Theatre in Maryland’s Montgomery County. They are featured in both the winter and summer show seasons, with five or six plays per season. The ad highlights a fictional show—”Loan Approved”—and features Lamond herself as the star. “I get recognized by being a part of the community and it gives people a sense of familiarity,” she says. “People have commented on the picture and how nice it is to be able to put a face with the person on the other end of the line.” The idea stems from a desire for visibility in an upscale-buyer market, and the theatre was a natural place to start—her father sits on the Board of Directors. Lamond was able to create the ad in conjunction with a design team to get just the look she wanted, and is very pleased with the results. Not only does it generate substantial business, but also the cost is relatively low ($1,600 per year), making it very profitable. Check with theatres in your area for advertising rates and show schedules.

Hold the phone! Shawn Portmann’s unique “Cellmate” will really give the competition a hang-up. The Cellmate is a thin grip pad that “magically” holds a cell phone in place on a car dashboard. “My clients love it,” Portmann says. “They always want more.” Portmann’s name, company, and phone number are conspicuously, yet unobtrusively printed along the bottom. “It keeps my name in front of them at all times. Repetition and consistency is the name of the game.” The idea of placing your name on an everyday item isn’t new, but unlike pens or key chains, this marketing piece grabs the client’s attention because it’s something out of the ordinary—something they probably don’t already own. In the past, Portmann, a loan officer with CityBank Mortgage, Puyallup, Wash., has also sent out such novel marketing items as water bottles, lunch boxes, and Frisbees. He distributes about 1,000 Cellmates per year to customers and 200 to Realtors as part of a larger thank-you package after closing a deal. The Cellmates cost approximately $0.30 a piece.
Lawrence Montani of First Interstate Financial Corp. in Shrewsbury, N.J. knows that the mortgage business is a numbers game, and often a confusing one. That’s why he gives out an easy-to-read slide mortgage calculator at bridal fairs, seminars, and Realtor presentations. “It’s a good giveaway that people will hold on to,” Montani says. He originally saw the calculator being used by a competitor, and liked the idea so much that he started ordering them himself. He estimates that he gives 1,500 per year, and gets a great response. “People love picking them up at seminars so they have something to play with,” he laughs. “It’s successful because I can show prospects how to use it, which gives me an excuse to talk to them, and it’s functional so it fills a specific need.” The front of the calculator has Montani’s company logo along with his name and phone number. The back has a clear envelope that holds his business card, which displays his contact information on one side and his photo and tagline, “Because Every Mortgage Matters,” on the other. Montani spends $1.50 per piece; it’s an extra 50 cents for color, which Montani gladly pays because “it looks sharper.” Montani says, “This is a staple—it’s one of the things I use on a consistent basis because I’ve had such good luck with it.”