Adapt to a changing economy and marketplace.
During the last five years, we have enjoyed the benefits of an amazing market. Record low interest rates, record high home re-sales and record new housing starts have fueled originators to produce some stratospheric numbers. Thousands have entered the business, all seeking that “get rich quick” fame and fortune opportunity. Banks, brokers and mortgage companies have made fortunes, invested in new technology and expanded into more territories. What a ride it has been.
We are back in a good, old-fashioned, competitive purchase loan market where to get business you have to go out and earn it. Some loan originators and broker/owners are worried. They have seen a significant drop-off in phone calls, loan production and office morale. They are cutting costs, cutting support staff and perhaps even cutting themselves out of their own future by not immediately adapting to a changing economy and marketplace. I speak to dozens of originators and sales managers every month, and their concerns are valid. Business has slowed in the past 12 months and more originators are out there vying for the business that’s available. If you are a mortgage originator and your business has slowed, you have basically three options at this point:
Exit the business, which many have already done. Some loan originators don’t know how to solicit purchase mortgage business and frankly others don’t want to. We are seeing a true separation of the long-term industry professionals from those who were in it for a few easy bucks. Surviving and succeeding in a competitive purchase mortgage market takes sales prowess, marketing investments and plain hard work. To be frank, if “hard work” isn’t a part of your vocabulary, exiting the business now is probably your best bet.
Remain in the mortgage business and complain about how bad things are. This involves consoling other frustrated peers at long luncheons, holding gripe sessions with your manager on pricing issues, demanding more loan products and even filling your day with non-productive activities because you have lost your focus or your motivation. This, of course, is not the desired option. It puts you on a “self-destruct” course as you worry and wait for rates to come back down and the phone to start ringing again. Many originators have so far chosen this option and it shows in terms of their attitude and their own production results. Their pipelines and their paychecks get smaller each month until they just fade away.
Recognize that the market has changed and quickly change with it. The activities you engaged in over the past few years were well-suited for a refinance market but won’t work in today’s “normalized” environment and higher rate purchase loan market. For nearly five years, many loan officers have fallen into the habit of working their refi deals. They have most likely shut off their marketing efforts—stopped making sales calls, sponsoring events, attending closings and participating in any of the other high-visibility activities that good originators engage in to generate leads, contacts and loans. Option three requires you to get back to basics and get moving again. Option three is the only real option for true career mortgage professionals who still plan to make this a good year.
So how can you make this “course correction” quickly? First, make a firm commitment that you will be successful in this market, not just survive. While many originators are singing the blues, we still see a lot of top producers across the country consistently closing $2 million to $5 million each month. How? These people refuse to acknowledge that the business is suffering. They are working their referral clients, creating opportunities, putting in a lot of hours every day and not getting caught up in all the doom-saying that’s going on around them. You know what they say—”when the going gets tough, it is the tough that get going.”
My guess is that you are one of the tough LOs who want to do well this year and are ready and willing to get to work to make your success happen. So where do you start? Here are six good ideas for the last six months of the year:
- Fire up your marketing engines. Sit down today and create your marketing game plan for the next six months. Any good loan originator in times like these should be engaged in at least five solid marketing activities on a weekly or monthly basis. Remember that the business isn’t going to just come to you any more. You must find avenues to reach it. Those avenues are directly through your referral and client sources. Consider all the available marketing activities. There are sales calls, newsletters, sponsoring open houses, and making first-time homebuyer presentations. You can run ads in magazines and newspapers, mail apartment complexes, contact your database of leads and attend trade shows just to name a few. Loan originators who are looking to grow their production now should invest as much as 50 percent of their time each week in solid marketing and outreach activities. That’s right, 50 percent. If you only have a few loans in your pipeline, what else do you have to do?
- Select new targets. Ask yourself who represents the greatest potential for business in your market. Maybe it is the Realtors. Maybe it’s the builders. But maybe it is also the CPAs, financial planners, accountants, attorneys, church groups, area employers, your database of past clients, FSBOs, community organizations, relocation companies or so many of the other new and emerging sources of business smart loan originators are tapping into. These are all potential sources of business. Pick three or four new key relationship targets now and begin to strategize your plans for approaching them…fast!
- Get out of the office. During the refi crush we all spent a lot of time in the office working up deals. We got into the habit of being in the office most of the day. It was productive then but it isn’t productive now. Make a commitment to spend at least 10 hours a week in the field making sales calls and visits, attending meetings, delivering presentations, sponsoring events, getting involved in industry activities and so on. Loan officers who are out of sight are quickly out of mind. The available opportunities can’t find you if no one knows who you are. Take your business back to the streets. Get out of your office and in front of prospects, every day.
- Know the products people want. I read that less than 35 percent of the loan business written last year was vanilla 15-year and 30-year fixed products. With rising interest rates, the market has changed. Now programs like ARMs, interest-only mortgages and other specialty programs are growing in popularity. Smart loan originators will learn these products and market them wisely and often. They will create visibility and opportunities for themselves because they have and sell what today’s customer is looking for. Start investing two to three hours each week learning and studying new products and leverage this knowledge into more loans.
- Set new goals. When the market slows, some loan originators throw their goals out the window thinking that, “Oh well, I’ll never get there now anyway!” It is okay to make goal adjustments to your business when the market changes. Set challenging but achievable goals to accomplish during the second half of the year and be committed to reaching them. Just because others have thrown in the towel doesn’t mean you should too. Goals create the passion and desire to achieve something. Make sure your goals are crystal clear and reachable, and that you are serious about bringing them to life.
- Learn from the best. As I mentioned, there are still lots of loan officers producing some great numbers, many perhaps in your own branch or company. Seek out these successful originators and learn from them. Take a superstar to lunch or call him or her up and ask for helpful ideas and advice. Find out how they do it and mirror productive habits and practices in your daily routine. Go to seminars and listen to successful speakers share their great ideas. These people are making it work with the same market that you have. Learn how they are doing it.
Staying busy in a slowing market really has to do with you—how you see yourself, your career and your chances for success. It all starts with your motivation and your true belief that you can be successful no matter what the market does. Next, it takes a goal that you want to accomplish; an income goal, a production volume goal, a company recognition goal or other important milestone you want to achieve this year. Finally, it takes work. It takes effort. It takes persistence. Staying busy in a slowing market means getting busy and creating success, not just waiting for it to happen. There are still plenty of loans out there for those who really want them.
By Douglas Smith