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

Managing in a Tightening Market

Here we go again, another tightening of the market. The rapid deterioration of the market has caught not only homeowners and builders off guard, but the banker/broker management teams responsible for maintaining and building market share. Volume projections are down. Resale inventories nationwide are up significantly. New home sales and new home starts are projected downward and to add salt to the wound, the nation’s cost cutters are now scrutinizing every nickel spent. You now stand within this fishbowl of greater management visibility.

Some managers will rise to the occasion, recognizing that a tightening market has far reaching implications, the least of which is how a slowing market impacts their management skills. Others will say, “I have been through this before and this too shall pass,” leaving modifying management skills to others. Another potential reaction is the “I don’t think I can take any more of this” and allowing yourself to become a victim of current market conditions. The “woe is me victim” does not inspire those around him or her and therefore, cannot possibly be an effective leader. The “this too shall pass” manager hardly encourages individual initiative.

Managers who seriously analyze how market conditions impact their leadership will be the ones to win. The following steps are designed as a management self-assessment. As you review each, answer this question: “Is this an area I can brush up or do I have it nailed down?” Only you are answering these questions, so you can play all the games you want, but remember, as Zig Ziglar said: “In the subconscious, there is only witness for the defense”

KEY POINTS:

1. Avoid the knee jerk reaction. Drastic layoffs are not necessarily the answer. A knee-jerk reaction that involves a reduction in staff to save overhead is an easy trap into which many managers fall. The long-term ramifications of this move must be considered. Too often this move is perceived as a short-term gain, only to ultimately become a long-term loss. It is true that a significant decrease in volume may not warrant continued staffing levels, but an across-the-board cut without serious study of the potential fallout is a mistake.

2. Be careful with comp plan changes. If you believe your compensation plan does not accurately reward the behavior you expect of your personnel, then a change is in order. Sometimes it takes a downturn to reveal “this comp plan does not encourage nor measure what it should.” However, the downside risk of making changes to your comp plan, no matter how minimal, can be significant. Be careful that your changes are not perceived as a “takeaway.” It is therefore incumbent upon managers to give serious thought to phasing in comp plan changes over time. Or announcing the change in September to become effective January 1, 2007.

Changes to your comp plan may be appropriate and warranted. Announcing a wholesale change to be effective immediately runs the risk of creating disenchantment levels that will serve only to increase turnover. Why run the risk of losing good employees because you tried to squeeze too much too fast? While introducing the new comp plan, discuss the business reasons behind the plan and help the team find the wins in the new plan.

3. Don’t pretend the skills you need in an “up market” are what you need today. When markets tighten, frustration levels rise. This reality can become a heavy burden upon all team members. It is easier to find fault when there is more time to focus on how much the market has changed. Increased market volatility is often followed by internal warfare where office politics trump working as a team. Your management skills will be severely tested in not only building the communication bridges required, but in expecting your team to travel them. The skills you applied in a “rock ‘n roll” market must therefore be amended for effective application today.

4. Determine if you are a mother hen or captain of the ship. It does not matter if you are in the “hard landing” or “soft landing” camp. What does matter is that you do not minimize the challenges your team faces. More importantly, it is imperative that you involve them in the decisions on how best to weather the storm. Managers who try to insulate their personnel from market realities are not doing themselves a favor. Employing a “mother hen” attitude to protect your “flock” from harm actually does more harm than honestly calling the game. If you minimize the issue, you undermine your personnel’s propensity to take remedial and immediate action. This is a classic management blunder.

5. Don’t think you are “above the fray.” If a manager’s sleeves were ever to be rolled up, now is the time. If all you do is stand at your white board and “pontificate from the pulpit,” you should rethink your time and energy allocation. Sure global visions and long-range thinking are required, but if you are in meetings all day, how do you really know what is going on? In times like this, it is imperative that all managers forget both ego and title and get into the trenches for an intimate look at the trials and tribulations facing their teams. The ivory tower is a splendid destination resort when markets are flush. It can be a debilitating prison when markets are not. Get over your “holier than thou” attitude and get a grip on what is happening.

6. Help your team to anticipate. What changes in product knowledge will be required to meet a changing market? When markets are hot we normally do not prepare for changes in products and guidelines. When things get tight, it is important to understand what product features may once again be in vogue and how their use will generate more business. Case-in-point: 3-2-1 Buydowns. This once popular feature has minimal value in a low rate environment. Today it will begin to gain ground. Are your personnel prepared and knowledgeable on how to position and use this feature correctly? Seller-concessions are another example. This feature is not real popular when markets are rolling. It will gain popularity as the market continues to tighten. Is your team prepared to anticipate these and other changes in product features?

7. Provide a vision for the future. Your team will actually “go to the moon” for you if they knew where the moon is. “Here is where we are.” “Here is what we are going to do. For example, we will cross train staff/departments for the next wave.” “Here is how we are going to do it.” These are all issues successful managers address. When loan volume takes a hit, so do individual confidence levels. Successful managers today realize that they must, by word and deed, present a definitive direction and vision for the company. Anything less will cause your team to question the wisdom in hitching their wagon to yours.

A successful manager is a lot like a marionette master. Pull the right strings and the show is a success. Pull the wrong strings and you are in trouble. In pre-edition testing, most managers have identified more than one of the seven issues above as worthy of greater individual attention. If you fall into that category, pick one issue and work on it until you have it covered. Then, move on to another, keeping only one on the burner at a time.

By Bill Evans

Superstar of the Month – Gary Welch

M.O.M.— How did you get started in the lending business?

Welch— I was right out of college (Furman College, Greenville, S.C.) and went to work for a small brokerage. I had no mortgage background or business experience, so it was “sink or swim.” However,  D.C. Aiken (top producer) who hired me was encouraging and told me to “go for it.”
I liked the idea that you could “bet on yourself,” meaning that what you put in to the profession you would get out of it. Even at the young age of 21 I wasn’t afraid because I felt that by working hard good things would happen. After 2-½ years, I went to work for HomeBanc Mortgage, which I thought was the ideal place to build a career, where I would have the tools and infrastructure to be successful.

M.O.M.—What was your first marketing activity?

Welch—At that time, it wasn’t as difficult to gain access to Realtor offices as it is today. I would spend every day visiting agents at their office and asking for an opportunity to handle their customers’ loans. I’d also ask them to teach me about the business, and to recall what it was like when they first started out. The key advice I received was to remember that it’s ok to say you don’t know the answer to something, but that it’s critical to respond quickly with the correct information.  I also spent time observing agents with their customers, to see how they interacted. It wasn’t long before they gave me some of the first customers, primarily first-time buyers.

From that point, I continued developing my database, realizing the importance of marketing to past customers. I sent out hundreds of thank-you notes. HomeBanc’s marketing department assisted with the development of various marketing pieces.

M.O.M.—Was your age an issue?

Welch—In the beginning, agents and others were willing to give me a try even though I was young, especially because they were giving me easier deals. However, later I realized the importance of showing that I wasn’t the same new college grad without experience, but now had a track record as an originator and was married with a family. That was important to do so that I could develop the relocation and luxury/move-up buyer business as well.

M.O.M.—What steps have you taken to generate Realtor business?

Welch—Much of my Realtor activity has focused on establishing relationships with agents, by hosting Christmas parties, “happy hours” and other social gatherings. We have also developed educational programs, whereby agents can earn continuing education credits by attending a daylong program taught by a certified instructor. We hold monthly Lunch-N-Learns at our Realtor Marketing Alliance. We cover a wide array of topics, from “Fraud in the Marketplace” to Fung Shei. We provide lunch for the office and discuss how these topics can help grow their business.

Another thing we did was send the “Love is the Killer App” book to Realtors (and anyone else who requested a copy). I included a personal note of encouragement, noting that I felt it was applicable to our business and how it might be for theirs as well.

We also send agents e-mails and make calls for status updates, market reports and other areas. In addition, earlier this year we held a referral campaign, encouraging agents to provide us with referrals. We kept a running tally that resembled a football field of referrals that we received over a four-month period. Agents liked the idea of having a weekly update.

We try to frame most of our Realtor and other marketing activity around a formal campaign. We usually evaluate a specific need that a builder or Realtor has (and how one of our loan programs can be the solution) and develop a program that includes several different pieces, rather than a single element. This could include a meeting/seminar, fliers, a breakfast, or attending an Atlanta Braves baseball game as a group. This helps grow momentum to reach specific goals.

M.O.M.—What about builders?

Welch—We are primarily promoting our construction to perm program at builder gatherings and more importantly, in one-on-one meetings with builder reps.  

M.O.M—How do you stay in contact with past customers?

Welch—We have a customer-for-life program that features a range of actions, including:

  • Regular mailings of “value pieces,” including newsletter and other items.
  • Monthly thank-you notes with calendar business cards sent to past customers. We also ask that they keep us in mind if they are ever in need of our services.
  • A special spring mailer postcard to past customers. It lets them know that we are here to help them with any home financing needs.
  • Another popular mailer to agents was the collection of motivational CDs by Dr. Ike Reighard, HomeBanc’s Chief People Officer and a nationally known speaker.  We had a great response from that.
  • Donations to CHRIS (Children have Rights in Society) homes, in lieu of holiday gifts. We send customers and agents a letter letting them know that a donation was made in their name. In turn, the organization sends a letter stating that a donation has been received in the customer’s honor. We get lots of feedback from customers and agents. Of course, the real return is knowing that we helped kids.
  • Inviting past customers to a playhouse, for refreshments and a performance.

M.O.M.—Do you have a specific niche market?

Welch— One informal niche is the corporate relocation market, specifically one Fortune 500 company in the Atlanta area. I’ve done close to 300 loans for this company during the last seven. While much of it is now word-of-mouth, I have also provided onsite luncheon presentations, held workshops and sent e-mail blasts about our service.

In addition, we’ve done some work with teachers. For example, we sent an e-mail to our teacher database. We sent fliers that highlighted special loan programs (reduced or no down payments) for teachers, as well as firemen and policemen.

M.O.M. –How do you use your Web site?

Welch— Our Web site offers several key benefits. First, it enables prospects to go online and complete an application. We also provide a mortgage calculator and other tools. Finally, the site includes information on my background, interests and related areas, which allows prospects to get to know me before applying.

M.O.M.—Do you develop an annual marketing plan?

Welch— We usually start our planning process in October and are finished in January. My marketing assistant and I review previous activities and discuss plans for our different spheres of influence (builders, Realtors, past customers and business to business). We then present the plan to my other team originators who rely on me for basic recommendations. 

M.O.M.—Explain your team originator concept.

Welch— When D.C. Aiken (a top producer atHomeBanc) decided to cut back on his own originating, myself and two other originators decided a good approach would be to work as a team to ensure we didn’t overlook any of D.C.’s extensive customer base, and were still able to work a reasonable schedule so that we could enjoy our personal lives… The other originators are Rick Stevens and Richard Young; each of us has about 15 years experience. Erin Kikly is our great administrative partner.

We all have our own customer bases and do our own originating. However, we share ideas, help cover for each other when on vacation, and combine our total volume from which we split the commission.

M.O.M.—Tips for making the team concept work?

Welch—You don’t take on this kind of a team approach just for the extra money; you can’t be overly concerned with generating more business and greater commissions.  It has to be a true partnership; each member brings certain talents to the team. There has to be a trust that everyone is an equal partner.

M.O.M.—Who is on your own support team?

Welch— I certainly couldn’t do this volume without the help of Cindy Sandoval, processor/underwriter; Allison Hamil, my assistant; and Wynita Cannon, our marketing assistant. They do a great job. Having this team enables me to focus on the areas that I do best: talking to clients and developing the mortgage package, building and enhancing relationships, and working on marketing. We strive to find out what everyone does especially well and then let them concentrate on that.

M.O.M.—What system/process do you have to handle the volume?

Welch— One beneficial step is that the same person who processes the loan, also underwrites and delivers the file. This helps ensure faster closings. Also, we have proprietary software that allows myself and our processor to view the loan status at the same time. I can check loan status from my desk, without having to call or meet with staff.

M.O.M.—Is there anything else you do to make a difference for your customers?

Welch—Once a week I call customers who recently closed with us to make sure that we have addressed the questions they raised. For example, they might have called regarding insurance or future servicing issues. This demonstrates that I’m just as interested in their welfare after the loan closes, as I was prior.

M.O.M.—What do you consider key characteristics of superstar originators?

Welch— First, I think top producers have a thirst to excel, they want to achieve at a high level, rather than being satisfactory at their job.  As part of this, they have an attitude that they will succeed; believing that every day will be productive and successful.

I also think that they enjoy a faster pace than other originators. They’re more comfortable, similar to great athletes who like challenges and the thrill of the game. Of course, as mentioned earlier, you need a team of some kind to succeed at the superstar level.

I also believe that working for a supportive, successful company is critical. For example, Fortune Magazine has recognized HomeBanc as one of the top 100 (number 14 in 2005) Best Companies to work for, based on benefits, working environment and other factors.

M.O.M.—How do you balance work with your personal life?

Welch— Providing for our family life is a critical objective and I always place family related activities on the calendar first, and then work other events around those. I coach my children’s football and basketball teams and we take time out for other activities as well. I rarely work on the weekends and we spend approximately five weeks a year on vacations. Having this time is one of the major benefits of our originator team partnership.

M.O.M.—What about the future?

Welch— Our main goal will be to grow the business in this different market environment and continue to refine the team concept. And, of course, to enjoy time with our families and friends.

Can a Blog Help Your Production?

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

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

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

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

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

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

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

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

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

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

By Bliss Sawyer

Rookie Superstar – Lydia Gajeski

Advice to New Originators
“Gain as much knowledge as you can—other people will perceive that and you can build trust upon it.”

In 2000, at age 19, Lydia Gajeski returned home to Green Bay, Wisc. Homesick after pursuing pre-med studies and trying to make ends meet as a single mom in Las Vegas, Nev., she was ready to take on any promising opportunity that came her way. So when a friend of her mother’s needed a part-time loan processor, Gajeski hoped it could potentially be just the break she was looking for. “I love math, so that seemed a good fit,” she said, “and it was a small mortgage company and a great place to get my feet wet.”

Gajeski, one other processor and an originator handled all the business for Oasis Mortgage, a local manufactured housing company’s finance arm. “We only did 50 to 75 loans a year, but it was an introduction to the business, and eventually landed me a job as a loan officer assistant at another company,” she said, “which is where I received most of my training.” Gajeski began as an assistant during the refi boom in 2002 and quickly started taking applications, running credit and calling clients, and eventually “basically doing the LO’s job, who was always out hunting and fishing. I didn’t know much at the time about the different jobs, I just did it all,” said Gajeski, 25. “I was a single mom raising two daughters and all I knew was no matter what, you got the job done—just like coming up with money for your own mortgage payment.”

The hard work and trial-by-fire introduction to originating paid off a couple years later when a local originator approached Gajeski about joining his start-up company, Patriot Mortgage Services, and becoming an originator on her own. “I was hesitant to switch to a commission-only salary, but I knew then where the money was being made,” she said, “and I knew it was time to make more money for me and my family.”

Many of the clients from her previous company followed. “The company was actually on its way out of business, so the timing worked out well for me,” said Gajeski. “People came looking for me because I was the one they had developed a relationship with. Starting out with clients was helpful—I had no idea how to go out and get new ones.”

Additionally, it helped that Patriot Mortgage made a big entrance when they joined the Green Bay marketplace. “We advertised all over the place—newspaper, TV, radio ads, and real estate guides,” said Gajeski. “We also sponsored the Brett Favre Annual Softball event here and got involved with the local Chamber of Commerce.” Gajeski placed her own ads in the phone book and on shopping carts at area grocery stores—but she focused mainly on developing business in the niche she knew—manufactured housing.

“Manufactured homes require different types of loan products,” said Gajeski. “The key part is being able to get construction lenders to trust that you know what you are doing, and that you are going to be on board with the right builders—they are sometimes hesitant because there can be a lot of problem areas.” Having established relationships with several lenders, Gajeski was able to create four or five accounts with manufactured housing producers in the Green Bay area.

Between these business partnerships and the four real estate agents she works with, Gajeski keeps busy working nearly 60 hours a week. “I usually work at least one weekend day a week, which I spend visiting the offices of my manufactured homes’ accounts,” she said. Her husband (Gajeski was married in 2004) stays home with the children so that she can maintain her thriving career. “We make compromises,” she said, “and he’s incredibly supportive of me.”

Gajeski also relies on a little help from her Mom, although there’s a paycheck involved. “I have one processor, who is amazing, and my mother works as my assistant,” said Gajeski. “It is great—I am a very ‘get to the point’ kind of person, and my mom relates well to people on a personal level—we make the perfect team.”

In 2005, Gajeski closed over $18 million on 128 loans, and she credits her first-year success with her knowledge of the entire loan process. “It has been extremely helpful for me to know the business from the processor’s perspective,” she said. “I don’t have to wait around if someone isn’t available—I can step in and order title or appraisal or call the underwriter—there’s no waiting around for someone on my team to come back.”

With an ambitious goal to more than double her 2005 volume this year, Gajeski is making an effort to be ever-present in the field and keeping in touch with customers in her database. “I am making a lot of phone calls to make sure people remember me,” she said. “I’m also hosting events for many of my business partners and focusing on keeping those relationships strong.”

Having a specialized niche in manufactured housing may prove the most fortunate move yet for Gajeski. “I am seeing a lot of Realtors and originators drop out of the profession these days,” she said. “I am lucky to be able to rely on the trust my business partners have in my knowledge of the products and players involved. I have also learned to be very versatile with any kind of credit that comes in the door.”

Although Gajeski vows to return to pre-med after she retires from originating, right now she is exactly where she wants to be. “I am 100 percent satisfied with my career. I couldn’t have imagined that I would be doing this well,” she said. “I remember growing up and my mom struggling a lot and I never wanted to feel that way with my children. I am so fortunate to be where I am now.”

–Gretchen Lees

Net Branching Strategies: Is There Safety In Numbers?

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

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

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

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

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

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

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

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

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

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

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

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

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

Jacobs adds several to the list:

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

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

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

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

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

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

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

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

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

Products

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

Technology

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

Administrative

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

Advertising

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

Secondary Marketing

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

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

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

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

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

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

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

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

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

John Wayne would have liked that.

*****

Due Diligence Review

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

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

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

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

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

Saying Goodbye to a Business Partner

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

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

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

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

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

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

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

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

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

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

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

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

By Douglas Smith

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

Sales Management Starts With Selection Process

Most of us have read hundreds of articles on sales management and attended a seminar or two focused on this critical topic. I’d also imagine most of them were very worthwhile. However, it never ceases to amaze me how many mortgage sales managers will only attend a seminar if their company suggests it or pays their way to attend. If you have not personally invested in your career and attended a mortgage sales management seminar, now is certainly the right time. Mortgage sales managers truly earn their compensation in declining markets, and those who can’t adapt will be “outed” by a slow decent on their company’s ranking reports. These articles and seminars will typically focus on how you will hold your originators accountable through goal setting, inspecting what you expect and various other well-recognized sales management practices. However, I suggest that unless the average mortgage sales manager changes his or her approach to hiring, we will continue to be plagued with these challenges and high turnover in our industry.

“Recruiting” and “Retention” are two of the most frequently spoken words in the mortgage industry today. Often, our retention issues are primarily two-fold. Good originators leave to go to the competition and weak originators do the same or get out of the business. So rather than focusing on managing our originators once they start dropping down the production reports, I would like to concentrate on avoiding our future challenges, thus increasing our retention rates. And yes, it has a lot to do with recruiting.

Doug Smith, my friend and fellow M.O.M contributor, recently conducted a sales management and recruiting session for the sales leaders of our company. One of the messages we came away with was the term “recruiting inference.” Doug described it as tailoring your interviewing questions to get the answers you want to hear from the candidates you immediately like. How many of you have done the same thing? Sharp candidate, great suit, very professional, strong vocabulary and simply very impressive—all things you have formed an opinion on prior to asking the first in-depth question. We see it with reports every day. A big celebrity is in the chair and what do they ask them, controversial questions or fluffy ones? A fluff question: “Don’t you think it is important to invest in your business through marketing and database management?” Do you think you would get better information if you worded it like this: “Can you give me a few examples of how you have invested in your business over the last 12 months. What did you do and what were the results?” Everyone reading this will agree the latter question will result in better vetting of the candidate. But in an interview setting with the picture-perfect candidate, most of us forget to take charge and conduct a thorough, probing interview. The following are some questions that are designed to elicit more information from candidates, thus helping you make a more informed hiring decision.

Application and Closing Volume
You want to understand the candidate’s production numbers and which products they use the most so you can ensure a fit and also avoid a slower ramp-up period. Questions:

  • Let’s talk about your current and most recent production numbers. How many loans have you closed YTD and what is the dollar volume?
  • What was the lowest closing month you had recently and what did you close? How did you react?
  • What are the top five products you sell on a consistent basis and why do you personally sell them?

Referral Sources
You want to know if they know where their business comes from and if they have developed relationships that will carry over to your company if they are hired. If you can’t get comfortable with understanding how the candidate develops relationships, I suggest you pass unless you are hiring for an inside or captured position. Questions:

  • Give me a rough percentage breakdown for your sources of business, such as Realtors and builders.
  • Let’s discuss your closings for last month. How many units and what was the volume? Tell me the source for each loan. If it was a referral, why did they send it to you?
  • What was the biggest mistake you have made on a loan that was referred to you by one of your better sources? How did you handle it, what was the outcome and do you still work with the source?
  • What segment of your business (Realtor, builder, captured, affinity, past clients, etc.) would you like to see have the largest percentage increase? Why and how are you going to achieve it?
  • What Realtors are currently working with you and how did you start? What type of business and amount of closings does each have?
  • Let’s role-play a minute. I am a Realtor, you are the originator. You just convinced me to go to lunch with you and we are at the table. Tell me how you would handle going forward.

Work History
You want to go company by company and find out why the person joined and then left each one. Look for patterns. If the candidate complains about their underwriting or processing, be sure to ask for specifics. Questions:

  • I see on your resume you were at ______ company. Why did you decide to go to that company and why did you leave?
  • What are you personally most proud of in your career?
  • Who was your favorite manager and why did you like working for him/her?
  • What was the best coaching a manager gave you and what was the result?
  • What was the most difficult obstacle you encountered in your job and how did you handle it and what was the result?

Getting To Know Candidates
Your goal is to understand the work ethic, the drive and motivation, the ethics, and the type of employee you will have once they start working for you. Questions:

  • What are you most proud of outside of work?
  • In high school or college (depending on the candidate) what organizations or clubs did you belong to? Which one did you enjoy the most and why?
  • What organizations do you belong to today and how do you participate?
  • Describe a time when someone in your office did something unethical. What happened and how did you react?

The average mortgage sales manager spends far too much time trying to grow $8 million producers to $12 million originators. The most effective and productive use of your time is growing $20 million producers to $40 million originators. Not all candidates can achieve this level, even with the best training, coaching, products and price. It is up to you to determine if the candidate has the traits and characteristics to achieve these levels. Being relentless with probing questions during the interview will make your role as a sales manager easier and more enjoyable, and increase production and decrease turnover.

By A. Blair Glenn