SuperStar of the Month – Rick Stern

The Stern Mortgage Company
Palo Alto, California
Years Originating: 20
Customer Referrals: 40%
Returning Customers: 30%
Attorney/Financial planner: 20%
Realtor: 10%
Special niche: none
Purchase Business: 15%
Refinance: 85%
Most Effective Marketing: Community involvement, customer mailings
Applications Taken Personally: 99%
Support Team: Assistant and receptionist (shared with two other originators)
Age: 60
Annual Vacation Time: Eight weeks.

Rick Stern has been originating for more than 20 years and has initiated a number of different marketing strategies to attract customers. It has helped him generate a loyal customer base and an overflowing pipeline. Last year, he closed $100,218,000 and 332 loans.
Stern, president of Stern Mortgage Company in Palo Alto, Calif., has always done some of the mainstream marketing, including a “drip method” of staying in touch with his client base. “I have a good database of every client with whom I have closed a loan over the past 20 years,” he says. “They get at least one mailing from our firm each quarter.”

Stern, 60, notes that the mailings range from 4th of July and Memorial Day cards, to humorous greeting cards and postcards that detail how a loan product has helped a client achieve success. Some of the pieces are produced in-house, while the color postcards are outsourced. They also send HUD-1 statements at the first of the year to help customers prepare for their tax preparation. “With each mailer we remind our client base that we depend on their referrals for our business. Not only have our clients returned, they have referred their parents, children, friends, neighbors, business associates, and others to our firm. Asking for referrals helps.”

In addition, Stern runs ads in both daily and weekly newspapers. The ads typically include a photo of him in a humorous pose—putting a golf ball into a manhole cover. “It helps keep our name in front of agents and others,” he says.

He also is a guest lecturer for financial planning courses. “That has paid huge dividends,” he explains. “It’s amazing—within a week after my presentation we’ll get calls from students who want to refinance or purchase.”

Stern is adamant that originators must develop some type of ongoing marketing campaign. “If you don’t, it’s out of sight, out of mind with your customers. In today’s competitive marketplace your pipeline will dry up. They’ll forget you. I actually do more marketing now than I did when I started originating.”

However, he sets himself apart from many originators because he places a greater emphasis on “simple” networking as a way to keep his referrals flowing. “My relationships have been the cornerstone of my success,” he notes. “Part of this has been the ongoing associations with stockbrokers, attorneys, Realtors and others. I see them at events, on the street, and elsewhere and they refer me to borrowers.”

Community involvement also plays a big part in Stern’s networking approach. “These associations have been fostered by being involved in worthwhile groups. Rather than just becoming a dues-paying member of the Palo Alto Chamber of Commerce, I got involved more than 20 years ago, and served in the various board positions, eventually becoming chairman.”

In addition to the chamber, he’s been a member and past president of the Kiwanis Club, and actively involved in the YMCA. “The level of commitment in each of these organizations is what leads to the referrals,” he added. “If all you’re doing is handing out business cards to other members, it’s a shallow relationship that usually won’t pay off.”

Stern also joined networking groups, including the Peninsula Executive Association, a leads group of 70 members who meet weekly to exchange referrals. “Once again, belonging and having been a board member has been extremely beneficial,” he notes. “I’ve now done more than 30 percent of the members’ loans and they have referred me to many others.”

He emphasizes the importance of being involved for the long-term. “It’s important to understand that none of these associations paid dividends the first year or two. I have seen many people join groups and leave after six months because business never came their way. The referrals follow after the relationships have been nurtured and developed over a period of time.”

Stern has encouraged his firm’s other two originators (his daughter Julie and Todd Flesner) to expand their networking opportunities as well. “Obviously, when you’re looking for groups to get involved with you need to find the ones with which you have an affinity, whose members have similar interests,” he adds. “Of course, it also helps that they are high-profile enough and thus in a position to refer you to many people.”

Stern has watched many originators succeed and some not do as well. His advice to those seeking higher levels of production includes being more aggressive about asking for referrals. “It’s amazing that so many people stop asking for referrals. Every time you ask you’re closer to the next deal.”

He cites a high closing rate, partially based on “client control” as another goal for aspiring SuperStars. “For example, 90 percent of our refi’s fund,” he says. “Part of this involves getting a commitment from prospective customers. We don’t want shoppers and always ask customers to come to the office. That way, we know they’re serious.” Also, he readily acknowledges the support of his assistants. “We couldn’t do this volume without the invaluable support of Maria Smith, our operations manager/assistant.”

While his refinance volume was close to 85 percent last year, Stern isn’t concerned about the slowdown in the refi market. He has devoted most of his career to creating loyal relationships that generate ongoing referrals. “There will always be a significant need for home loans and related financing. The people who only pick the low-hanging fruit (easy deals) will eventually disappear; those with a strong commitment to their client base and community will remain.”

Loan Analyzer and Comparator

As a longtime user of a major loan origination system (LOS), one of the most common issues that I face in the pre-qualification phase is the issue of whether or not it makes sense to refinance in this environment. Many have refinanced into what would have been a wonderful rate historically, only to see the rates erode an additional percent. The loan pre-qualification software built into my LOS does not give me any clear way to reasonably compare the old loan scenario with one or more new loan possibilities. Loan Analyzer provides me with some needed tools to make this determination.

Loan Analyzer is a conventional Windows-based program that is available as a download (or CD request) from the company Web site ( Anyone may use the software as a demo for two weeks. Paying the licensing fee converts the software into a fully functional version. To protect the buyer’s investment, Agosoft, Inc. also includes updates and upgrades to the software for a period of 18 months. The program operates a conventional display panel with menus at the top. In addition, at the right are located a number of tabs that provide information, such as Current Loan, New Loans A through C, Reports, Summary, and several others.

I was quite impressed with the addition of a wizard, which allowed me to walk through a scenario step by step, first deciding whether my major goals included a lower payment, more rapid payoff of the loan balance, or debt consolidation. I entered my existing loan information, including the interest rate, remaining loan balance, and remaining term. In my case, I entered an existing 15-year loan only eight months old, and compared this with three other scenarios: a new 15-year loan with a one percent lower contract rate, a 30-year loan with a half-percent lower contract rate, and a T-bill adjustable with a start rate 1.5 percent lower than the existing loan.

Loan Analyzer allowed me to look at the short-term advantages to be gained by lower monthly payments, and measure this against the increased loan size resulting from financing $2,000 in new closing costs (as well as the longer time it took to pay off a new loan).

Over a dozen reports were available, which could be used in a preview mode as well as regular print mode. The reports gave me detailed information on the four different loan scenarios, and even provided one report comparing all four loans on one page. Closing cost comparisons were also available as a report. Short- and long-term gains, as well as a specified time period, were also available in the reports.

When I completed my analysis, I was able to export the desired loan as a new loan into my copy of Calyx Point, ready to start additional pre-qualification or processing of the information as a loan file. The results were a bit surprising. As predicted, a new 15-year loan and 30-year loan resulted in a lower payment. I would expect the savings to start to be significant after about five years, once the closing costs were finally paid for by the better interest rate in the new loan. But after 10 years, my principal balance was still several thousand dollars higher on the new loan. Since most customers desire rapid principal reduction through a 15-year loan, this would negate some of the advantages of the new 15-year loan.

In this environment of questionable stock market appreciation, paying off the house earlier makes a lot of sense. Loan Analyzer helped me to decide that my eight-month-old refinance was good enough, all things considered.

This is a great tool for mortgage professionals when they need to advise their clients who refinanced in the last year and are thinking of doing it again. I found the software relatively easy to use. It only took me about 30 minutes to figure out the nuances of the product.

Realize Your Goals

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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