Origination Superstars: The New Breed

Mortgage originators who aspire to Superstardom have learned … to keep pace with the changing environment in which they make their loans, using available technologies and — most importantly — staying open to new concepts and ideas as they go about their business.”

“Seeing much, suffering much, and studying much, are the three pillars of learning.” – Benjamin Disraeli

How do we mark the eras in mortgage lending? They certainly exist, though often less measurable by time than by other metrics. Interest rates are certainly an example, as low-rate markets have historically given rise to refinance booms, eras unto themselves. As one era ends and another begins, another indicator tends to become evident: a change in the characteristics of high achievers, the superstars. Certainly some characteristics are pretty much evergreen, but there are others that are caused by the times, the prevailing technologies, or by attitudes. Superstars of any era, in any activity, tend to reflect the better ideas of the day.

Among the evergreen characteristics are perseverance, long hours, hard work, and the willingness to pay the price of success. But in several ways, the new generation has put a modern spin on things that were less evident during the last era, the refinance boom that ran through 1998. At that time, the name of the game was customer acquisition: everyone needed to refinance at some point, and the hard part was being in the right place at the right time with the capacity to give immediate service. The big banks’ refinance efforts were largely a joke – they were lumbering behemoths that were unable to make decisions, much less implement change. And as the commercial says, it’s tougher to run with the squirrels, with all their speed and nimbleness, than it is to compete with lumbering, beast-like opponents.

Today’s refinance customer is more sophisticated and has more options, thanks to the Internet. Likewise, the big lenders are not as slow and sluggish as they used to be, having learned many lessons through last time’s portfolio runoff. You can’t simply target borrowers who have loans with big banks anymore; today they are more able to compete for service with the independents. The name of the game today is customer retention and customized small-scale customer relationship management (CRM). Superstars are using systems and low-cost technology to keep the borrowers they won in the last boom, many before they were superstars. And using word-of-mouth technology (yes, there is such a thing) to help build business, along with untraditional marketing concepts.

Superstars commit the time to learn. If you refuse to a) recognize you don’t know it all, and b) find collections of people who do, you will not become a Superstar. Finito.

Before you can learn from the masters, you have to find them. Fortunately, that has never been easier to do, thanks to the power of tools like the Internet and other resources (like Mortgage Originators Magazine, for example.) Because of the parochial nature of loan origination, many Superstars will share their ideas and secrets, generally at very modest cost. They are more than reasonably confident their own methods will not be deployed against them with any degree of success, since 99 percent of the aspiring originators they are teaching don’t operate in their back yard. With seminars, tapes, books, and kits more available now than ever before, there is no excuse for being uninformed regarding techniques that have worked for others. So much for item b), above. If you suffer from item a), that’s a different story.

Odd that the trait of being unwilling to seek wisdom or learn anything new is most often associated with the elderly, and with teenagers. The sophomoric attitude of believing you can’t learn anything new about a given subject is like a death sentence for careers in the sales of just about anything, including mortgage products.

Superstars use systems. The last refinance boom presented most originators with a simple math problem: taking care of the refinance calls while trying not to ignore their core business of Realtor-referred purchase business. Most could not do both, much as they desperately wanted to. Enter the modern database marketing program.

Systems are available today that allow originators to communicate regularly with their existing borrower base, answering frequently asked questions and repeatedly asking for their business – without ever picking up the phone or making a personal visit. They involve letters and faxes and broadcast voice mail systems that have become astonishingly good at relatively low cost. These systems allow Superstars to stay close to core clients and treat new borrowers with the care they deserve, turning them into long-term customers who are like money in the bank when another refinance trend begins. Superstars use systems, and use them well, particularly if they operate in a market of any size. Without systems, originators are faced with that same math problem with no solution in sight.

Readers may be familiar with written communication systems, but less so with broadcast voice mail offerings. The amazing power of the spoken word is at work here, providing a technology for word-of-mouth. Broadcast voice allows you to record a message one time, which is then automatically called to the phone numbers you specify, usually your existing client base, at times of day when people are most often away from home. If the software detects a live voice on the line, it hangs up. But if the call is answered by a machine, it leaves your message: “Hi, this is Jim Hennessy. You probably heard about the Fed’s lowering rates by a half point recently, and it occurred to me that you may want to know how that’s going to affect the interest rate on the home loan we put together for you not long ago. If you’d like to know whether it’s time to refinance to lower your rate and your payment, just give me a call at this number . . .”

There are several services offering this capability, and the messages can be powerful in the extreme. Users of Epocall, for example, report very high success rates.

Superstars are organized. Many of the database marketing systems include organization assistance as well. For example, phone and address books in the system are the source for the data used in targeted mailings, and they generally include scheduling capabilities. With additional business, of course, comes additional pesky details, like the processes required to take loans through to funding. Depending on the company you work for, you may be responsible for paying for assistance, and are therefore reluctant to bite the bullet – even when volume justifies it. Consider another Superstar tactic of justifying an assistant as a shared resource with one or more of your contemporaries. If your company has several loan officers who are spending too much time in the office handling details that could be better performed by someone else, the situation may be ripe for proposing you go in together to pay for administrative assistance.

This does not mean you are passing off tasks you may not like but are better off doing yourself, and it does not mean that you should go out of pocket now, betting on production later. These are pitfalls that will run your cost basis up before your production levels can justify them. Superstars use their available funds wisely, but they do use them.

Superstars establish a “Brand of One.” You may have noticed a company in the United Kingdom that seems to be getting into virtually every aspect of life over there, and more of them here. Sir Richard Branson’s Virgin brand is by no means merely music. His company is into air travel, train travel, soft drinks, wireless communications, banking; even gas and electricity. And all of them have been entered into on the strength of his name: Virgin is essentially the brand of one man whom consumers believe will give them good value for their money. Branson takes established industries and puts his own special mark on them, generally prompting innovation and response from those industries’ “establishments.” In banking, Virgin was an early provider of the Current Account Mortgage, a consumer-friendly financing instrument that may never fly over here. Before long, many of the UK lenders were providing it, sensitive to the public’s reception to Branson’s name value. In fact, among consumers, this mortgage is better known as the “Virgin One Loan.”

Superstars establish themselves as a “brand of one” in much the same way: their borrowers and Realtor clients do business with them because of the impression of value they have been able to impart. In Albuquerque, New Mexico, for example, ask any Realtor what name is most associated with mortgage lending, and they will probably mention Greg Frost. Through effective use of systems, organization, creativity and dues-paying, Frost has established himself as a brand of one. Future Superstars can do much the same thing, even if in a much smaller area.

Superstars get the word out. Depending on their target market area, they use the appropriate media to get the word out about their services. That media may well be word-of-mouth, involving clever incentives to make it happen. One example is a loan officer who provides a discount card with merchants in her area. Her logo and name are the central part of the card, with participating merchants listed on the back. The cards are good for a year or so, and she constantly receives calls for new ones when they expire. The cost? Only the cost of printing, and the time involved with enlisting the merchants.

There are as many ways to get the word out as there are people to dream them up. Each one, of course, does not have to be a reinvention. There are techniques used successfully by Superstars from various parts of the country to get the word out that are readily available by doing some homework. See “Superstars commit the time to learn,” above.

Superstars work smarter, not harder. The corollary to this one is, “Superstars have lives, too.” In the old days, Superstars were often workaholics who sacrificed everything for the numbers, money, and accolades that came with Superstardom. And most of them burned out, marriages and health sacrificed in the process. Today’s new generation of Superstars are learning to work smarter, not harder, and to take the time they save and invest it in caring for themselves and their families. Studies reliably demonstrate that well-rounded people who live balanced lives are more likely to be productive and happier over the long-term. “Balance” refers to the essential spokes on life’s wheel, such as self, family, work, health, learning, and love. If any of them get out of balance, the wheel starts to shimmy, then wobble, and ultimately may shake apart. Superstars take time to smell the roses, as well as exercise or find other ways to stay in good physical shape. They develop and maintain a good support network of people who care about them, living the concept that “the love you take is equal to the love you make.”

All that balance requires an investment of time that comes at the expense of time available for chasing loans. So how do the Superstars do it? The answer lies above: systems, organization and resources. In the Mortgage Originator Superstars Seminar Series last summer, many of the Superstars were asked how many hours a week they worked. Almost invariably, they replied that when starting out, they regularly worked 80 or more hours per week. As they began to use systems and automation to do much of the work for them, they were down to an average of 40 or fewer hours a week. Having a life is important to having success in the business – any business – for an extended period of time.

As Disraeli said, seeing much, suffering much and studying much are the best ways to learn things. We learn as young children that suffering through the learning process, bloodying a knee learning to skate, for example, is overwhelmed by joy as the learning process blossoms into empowerment. The skater performing perfect pirouettes probably dwells little on the bloody knees earned along the way.

Mortgage originators who aspire to Superstardom have learned much along the way, too. They have learned to keep pace with the changing environment in which they make their loans, using available technologies and — most importantly — staying open to new concepts and ideas as they go about their business.

by James Hennessy

Serving Your Customers

How one successful originator is developing “raving fans.”

Ten years ago when I started in the mortgage industry, $100 million Mortgage Originators seemed to be more an “urban legend” than a reality to me.  Just like when Roger Banister broke the four-minute, the initial $100 Million Originators have raised the bar for the entire industry. It took the combined first six years of my career to originate a total of $100 million.  In 1992,Todd Duncan Seminars introduced me to the concept of the super originator. Todd Duncan helped me to dream big. Thanks to Todd, I finally joined the “$100 Million Originator Club” in 1998.  And this year, I have already closed $100 Million personally in the first six months.
Building a referral by design business was the key for me becoming a top originator.  One “raving fan client” at a time, I have grown my business 99.9% by referral. As I network with other top originators around the country, the common “secret of success” is building a referral business, largely based on outstanding customer service.

Referral Service
Referral Service is a personal commitment to wowing your customers by providing the best service imaginable. Disney, Ritz-Carlton and Nordstrom are examples of companies that are truly passionate about exceeding client expectations. Far too many mortgage originators think like traditional salespeople, rather than entrepreneurial business owners. Create a big hairy audacious goal for your business. Defy the odds, set a new standard and step-up to outstanding service.
In today’s competitive mortgage environment, satisfied clients are not good enough. In fact, having your clients just satisfied will bankrupt your business when rates go back up and the refinance boom ends. You can’t afford to have clients just satisfied, because there are too many originators competing for the same client in a purchase market. Your goal is to create raving fan clients. You want clients so thrilled with you that they are literally running up and down the halls of their office singing your praises and referring you to everyone they know.
An inspiring three-year vision for all of us is to double our net income and double our time off by implementing a world-class, turnkey mortgage system that predictably creates clients for life and generates referrals by design. My personal mission is to set the standard of service excellence and to care more for my clients than anyone.
The goal with referral service is to wow and delight your clients and compel them to become raving fans for you. Commit to delivering world class service. For us, world class service means spending time with customers to answer their questions, taking an educational/financial consulting approach, keeping them constantly updated on loan status, and of course, fast turnaround time. We do much of our business via mail, so meeting and greeting in our office isn’t a big issue. However, for many originators, welcome signs, coffee and rolls, and soothing music are part of the application time customer service environment.
Develop predictable systems that guarantee excellent service. Consistently let your clients know that you value their business. Systemically let your clients know that you appreciate their referrals. Build your system so that you are communicating your vision and a heartfelt message to your clients on a regular basis.
Once you have a compelling vision and a clear mission, you’ll be in a position to grow your referral business.

The Point of Sale
Referral Selling is going beyond value-added selling to “wow selling.” According to Dave Savage, the CEO & founder of Mortgage Coach Software, the first step to building a referral business is to wow your customers at the point of sale My team goes out of their way to make clients feel special when they arrive at our office or when they talk to me. My team members use the following script: “Hello, you have reached Steven Marshall’s office, this is Patti, can I help?” When I am unavailable, Patti will respond to the client, “Steven is with clients, I am his senior processor, is there something I can help you with?” The key is that my team never says that I am on the phone, or unavailable, or in a meeting. They always say that I am with clients. When I am actually talking to the client, I go out of my way to make the customer feel appreciated and valued. I devote all of my attention to the client. I know of several other $100 million loan officers that are working two phone lines and one cell phone at the same time. I believe that this sends the wrong message to the client. I don’t want my clients feeling like I am too busy for them. I want to send the message to the client that they are my number one priority. I want them to feel valued and appreciated. And most importantly, I want them to know that I want my referrals. Too often mortgage originators consciously or unconsciously sent the message that they are super busy and don’t need the client’s business or the client’s referrals.
Top originators (and good friends of mine) Jim McMahan and Tim Broadhurst have mastered the art of scripting their team’s and themselves during the initial conversations with clients. There is much to learn from professionals like Jim and Tim on the power of wowing customers at the point of contact. For example, clients will bring up the “interest rate question” in the first two minutes of a conversation. Why not create and memorize an eloquent script that effectively handles the questions. Here is just one of the many scripts that Tim and Jim have taught me: “There are really two ways to look at rates—quoted and real. Many lenders today will give you a quoted rate. It is not always a real rate. My goal is to help you make smart choices when selecting the right loan and the right rate and through integrating the loan and the rate into your overall lowest cost of borrowing. Based on that commitment, do you feel comfortable moving forward?” The key to professional selling is to prepare in advance for the objections that we experience on a daily basis.

The best way to wow your customers is to position yourself as a mortgage planner. When I meet with my clients, I also help them understand that I see my role differently than a traditional loan officer. As a mortgage planner, my role is to help them integrate the home loan that they select into their overall, long and short-term financial and investment goals to help minimize taxes, improve cash-flow and minimize interest expenses. I find out what is really important about a home loan to the client. I position myself as a “highest value needs” consultant, which again, is a key part of our customer service philosophy.

When I meet with clients, I also help them understand that my goal is to create an outstanding loan experience. I want them so thrilled with the level of my service that they refer their friends and family to me. I let my clients know that the greatest compliment I ever receive is a personal referral.

I consistently tell my clients that I appreciate them, and value their referrals. I want my happy clients to understand that they are my greatest assets. Too many of us get busy closing loans and send out the unconscious message that we don’t need or want any more loans. Instead, let your clients know that if any of their friends are thinking of buying or refinancing, that you’d love to be of service to them.

Service Systems
Recently, I was talking with my business coach, Daniel Harkavy, the CEO of Building Champions. Daniel made a very important point. If you don’t close your loans on time and manage and exceed people’s expectations, you’ll never build a referral-based business. Often, we get so focused on originating loans, that we forget the most critical part, making sure that your clients are happy with the way the loan was processed and closed.
With the huge volume of loans clogging up the back-end underwriting and funding systems today, it is a challenge to wow your clients with the loan process. In today’s market, securing a home loan is like going to the dentist and getting teeth drilled. All we do is shot our clients full of Novocain and try to ease the pain.
My company’s goal is to anticipate problems in advance and to consistently manage and exceed expectations. I have spent five years trying to build a turnkey, bulletproof system that serves my clients at the highest level with or without my presence. The goal is to McDonaldize your business. Consistency of service is often more important than wow service. For example, if you do a loan 98% right, but the loan closes one day late, you will be in trouble. Your homeless client will not be a raving fan of your company. Raving fans are the result of consistently exceeding expectations.
Today’s technology makes it much easier to wow customers. LP & DU underwriting create a sense of certainty up-front for the client. The automated approvals help prevent last minute surprises. Two-minute loan approvals help you deliver outstanding service. It is also important to work with a lender that is integrating technology to help improve back-end processes and systems. After talking with top originators around the country, I have found that Interfirst Wholesale is the best for streamlining closings. I have already personally closed 100 loans in the last year using the “Interfirst Fly” program, which makes 15-day refinance closings easy.
Technology can be used to automate many of the processes and reports involved with loan flow management. Most sales automation systems can print out dozens of status reports within a few minutes. I use technology to proactively manage my loans. We contact clients with loan updates before they ask for status. We use reports to track every aspect of the loan process to make sure that there aren’t any surprises. The days of running a successful mortgage company without a customer relationship management system are over. No longer is it acceptable service to keep all of the files in a processor’s file cabinet and rely on the processor’s memory or weekly pipeline meetings to keep on top of your files. Your loan flow system should allow for instant, real-time updates on any of your loan files in process.
Even more important than the technology itself is creating an operations procedure that makes your processing team accountable to the technology system. I can vividly remember three years ago when I first decided to send e-mail updates to my clients during the loan process and to also generate a special daily report for all loans in our system that were less than 10 days before closing, but still didn’t have documents prepared. I knew that these two systems would substantially improve customer service and allow my team to more proactively manage loans. My processing team fought me on implementation and gave me every possible excuse why the system couldn’t be developed. I had a very good processing team, but they were not committed to keeping up with the new technology. Rather than giving up on the new systems, I replaced my processing team. Far too many mortgage originators are held hostage by loan processors. Today, I have one of the best processing teams in the world. My processing team closed $20 million a month for three months in a row. Our e-mail systems and special pipeline report paid off big time by creating tremendous efficiencies during this refinance boom.
Exceeding your clients’ expectations should not be something that happens from time to time, or by accident. Exceeding expectations should be by design. Build your loan processing system so that it consistently and proactively delivers beyond anticipation and expectation. Clients shouldn’t have to call you during the loan process if you’re doing your job right. You should be anticipating their needs for information in advance. That’s great service. Most of your clients should just call twice; once to start the loan process and again when they thank you for a great loan experience and give you your first referral.

Ongoing Contact
The previous steps lay the foundation for a referral business, but it is the follow-up that will allow your referrals to grow exponentially. Once you have a vision of outstanding service and wow your customer with expert advice and then deliver excellent loan processing, you are now in a position to have your cake and eat it too. Unfortunately, way too many loan officers stop after the first three steps and never execute an ongoing plan. It can actually be frustrating for many originators. I often hear originators say that they give great service, but just don’t have a substantial referral business. Most originators don’t go the extra mile. All of the money and glory is in going the extra mile and creating raving fan clients.
A fundamental part of customer service is staying in touch with customers. From loan application until 30 days after closing, my referral marketing plan delivers 16 personal touches to my clients. These 16 personal touches consist of e-mails, letters, cards, gifts and special mailings. Although each referral marketing piece serves a different purpose, the theme remains the same. Here are some examples of phrases that I have pulled from the letters and e-mails that I send: “It’s my goal to make the loan process simple for you and the closing as stress-free as possible.” “Is there anything I can do to make the home closing easier for you?” “I look forward to both a smooth closing and a lasting relationship with you in all of your real estate needs.” “I appreciate you and value your referrals.” “Your closing is my top priority.” “Thanks for being one of my favorite clients.”
There are several strategies that I recommend implementing. First, try to make your notes as personalized as possible; handwritten notes are my favorite idea. However, it is a little difficult to send thousands of handwritten notes a year. I have created my own computerized handwritten font with Signature software. This creates a very individualized letter.
Design unique and personalized stationary with your photograph. For my referral marketing, I have created special letterhead that is only six by nine inches. At the top of the note, it reads, “A personal note from Steven Marshall, your personal mortgage planner.”
Develop thoughtful, wow gifts to send to your clients during the loan process. Within a day of receiving a signed purchase and sale agreement, my team mails our clients thank you cards to remind them that they are our most important priority and that we will take care of all the details. As soon as we receive final written approval, my team mails our clients a congratulations card to let them know that they are approved and that we look forward to a smooth closing. Included with the congratulations card are free Starbuck’s certificates and a Bellevue Mutual mug. About a week before closing, I send my clients a hand-written note letting them know that I want to make sure the last seven days of the loan process are smooth and hassle free. I include a Bellevue Mutual key-chain, a flyer that outlines the five steps to a successful escrow closing and a U. S. Postal Service change of address packet.
At closing, my team delivers a gourmet gift basket to our clients with a thank you note to let them know we appreciate their business, and hope to be of continued service to them, their friends, and family. About a month after closing, my team mails a live friendship tree for our clients to plant in their new yard. The card thanks our clients for being one of our most valued customers, and that we look forward to a long and lasting business relationship with them in all of their real estate financing needs. After closing, we launch an intensive client for life marketing plan that consists of dozens of wow services and mailings.
My most effective, high-impact, low cost strategy is my proactive, systemized e-mail campaign. As I mentioned earlier, I had to struggle to make this system a reality. Now that it works, I am able to deliver excellent service and not even be in the office. I developed e-mails for all of the high-impact points of contact; Introduction E-mail; Approval E-mail; Loan Docs Ordered E-mail, HUD-1 Reviewed E-mail and Closing E-mail. The e-mails look and feel like a personal contact to my clients. I integrate some of the phrases outlined above. And I also try to answer questions in advance of clients asking them. After personally closing 2,500 home loans, I started to realize that there is a pattern to the questions and concerns that clients have during the loan.
Last year, I enjoyed the opportunity to really experience the difference between a satisfied client and a raving fan client. In February, I helped a client purchase a $950K home with 20% down. I went the extra mile to make sure that they received special and thoughtful gifts during the loan process, in addition to making sure the loan went perfectly. Within 90 days of closing, this client referred me to new clients buying a $1.5 million home, $1.3 million home, $800K home, and $500K home. And this year, I have already refinanced several of these loans. I successfully closed over $6 million of loans in one year directly from one client. I am a successful originator because I build my business 99.9 percent by referrals from raving fan clients.
Developing an “extra mile” referral marketing plan, seems to be the barrier that keeps many good originators from becoming outstanding originators. The good originators work hard, treat their clients well, close on time, add value, but don’t always get the jackpot referrals. Build a service system for your business, one that consistently “wows” your customers.

By Steven Marshall

Navigating the Technology Maze

“Technology is changing so rapidly it is difficult to keep up.”

Until about 100 years ago, the primary method of interpersonal communication was talking face to face. Printing is just 400 years old. Just over 30 years ago, man last walked on the moon, using state of the art computers, not as powerful as your current Palm Pilot.

Technology is changing so rapidly it is difficult to keep up. A little over nine years ago 25 Mhz Intel 286 computer chips were acceptable. Today’s Gigahertz chips are nearly 4000 times faster.

In 1946, the ENIAC computer was built. It was the first “electronic brain.” To match the computing power of the human brain, you would have had to cover the entire United States landmass with ENIAC’s. Now, 54 years later, you’d only need 800 square feet of the current best available computers to match the human brain processing capacity. According to a recent Milken Institute report, sometime in September 2021 someone will announce a computer that matches the computing power of the human brain.

Fortunately, you don’t need to be on the leading edge to be successful in what you do. Select those tools that help make you more efficient, speed your process, and conform to your work style. Experiment a little if you have the time, but don’t become too enamored with the bells and whistles.

Every day you see or hear about yet another technology marvel. It’s another gadget, tool, or gizmo you just have to get. More are coming, too. Things such as totally wireless Internet connections with speeds matching or exceeding T-1 and Cable, available all the time, nearly anywhere. More feature integration is on the way too, with small portable tools that extend your abilities and enhance your workflow.

But how do you evaluate these products, ideas, and concepts to determine which, if any, are right for you and your business? It’s a good question. Here are my latest guidelines to help you make some practical sense of the technology maze.

Focus on Your Goal
Don’t necessarily think about what you should buy. Consider, instead, what it is you want to accomplish. Only select tools that will do the work you need done. Leave the bleeding edge screaming machines to the gamers and moviemakers. You’re in the mortgage business, not a technology beta tester.

The good news in all this is that mid-scale equipment is also much less expensive. You’ll likely replace hardware every two or three years, anyway. That’s about the time it takes for the relative speed of your equipment to get slow enough that you can feel the need to upgrade. The outlet shops of makers such as Gateway, Dell, Micron, Compaq, and IBM have excellent buys on slightly used and refurbished equipment with like-new warranties. Check at their respectively named websites.

Enhance Your LOS
Make sure you get a loan origination software (LOS) program you can use to manage your production. If you also need funding and servicing options, then explore that level of software. After many years of development, all the major vendors can handle the job. It is now more a question of ease of use and training. The recent spate of mergers and acquisitions in this area bears watching. It’s too soon to tell what will result from all this, but expect significant changes in the way this kind of software is marketed and maintained. More and more, your business is moving to the Internet. Not just applications from potential borrowers, but access and delivery of loan components among your preferred providers.

Several credit-reporting companies now offer access and delivery on the web. You can order, generate, and deliver loan documents on the web in minutes from any of several vendors.

Brokers can (and do) order, receive, and print flood certificates and mortgage insurance documents in seconds on the web instead of waiting days for the same result through the wholesale lender. Smart brokers do this and include both items in the loan package when offered for initial underwriting.

LP and DO/DU on the Internet make far shorter work of using these automated systems at point of sale, which is where they should be used. Twenty dollars spent during the origination process for a credit report and automated underwriting could potentially save hundreds of dollars of wasted time and effort on loans not likely to close. It also saves client time and frustration by sharply reducing the seemingly endless list of documents needed to secure the loan.

A good LOS system has built-in connections to all such providers, reducing the work to a few mouse clicks and eliminating nearly all duplicate data entry.

Select Proper Office Software
Do you really need to upgrade to Microsoft Office 2000? We do not live in an exclusive Microsoft world. For example, there are very adequate products from Corel and Sun that compete with Microsoft, offering excellent features at dramatically lower costs. They all read and write to each other’s formats anyway. Not that you shouldn’t use MS Office if you wish, just know that it isn’t the only option.

Once you make a selection, train your staff how to effectively use your choice. You won’t outgrow this program for years. Learn how to get data from your LOS into your office suite for better letters, reports, forms, and data management. Otherwise there is very little other than ego driving this software category for at least 85 percent of office suite users. Most of us only use our word processor to write short memos, brief letters, and complete some simple forms. You could accomplish nearly all of that with the free WordPad program included with the Windows operating system.

Obtain Online Banking Services
Pick an online banking service that integrates with your accounting software. Online banking offers convenience and accessibility. Get the electronic bill-paying feature. Once you get started with this service, you’ll wonder why it took you so long to reach this level of simplicity. There will be no more checks to buy, and no folding, stamping, inserting, or mailing. You can even set up automatic payments for stable items such as rent, equipment leases, insurance premiums, and more. Unless your company is big enough to have an in-house accounting department to take care of such chores, lose the paper, and save the resulting time and money.

Get the Fastest Internet Connection
You want the speediest connection you can afford for your office, based on your number of concurrent users. If your staff works from home offices, then DSL or cable is minimum. Over the next few months, not having an always-on Internet connection will cost you money. In a year, you’ll be hard pressed to stay in business without it. The minimum practical connection is DSL. Next step up is fractional T-1, then full T-1, and on up from there. Cable is not really an alternative in business locations, although it may work fine from home offices. If none of these options are available where you are, you may have to fall back to a satellite link using the Hughes duo-system offering satellite TV and Internet connections in one dish. It’s not ideal, but is far better than dial-up connections. You’ll be using the Internet for everything from receiving faxes to ordering pizza for the office party. Everyone in your office will need access. Not only are high-speed connections faster, but you don’t need multiple modems and telephone lines either. Compare those savings to the cost of the high-speed single connection. But the biggest benefit is the time efficiency gained working this way.

What will you use it for? Your latest LOS version has direct access to LP on the Internet and DO/DU on the Internet. Other lenders have their own automated underwriting tools on the web. You’ll use it to get rates and product guidelines from your lenders, or your investors.

Already many of us use the Internet to order title, escrow services, signing services, mortgage insurance, and flood certificates, and to order and simultaneously deliver to multiple points, the closing document package. Forget messengers, delivery services, and couriers. Use instant delivery over the web instead. It cuts days off the process of creating, processing, funding, and closing mortgage loans. Of course, days represent dollars. Days saved are also part of your competitive edge.

Get a Network
If your office has more than one computer you should have a network. In a large company, this may include hundreds of computers working together. Even in small shops with only six or eight machines, the time saved, convenience of universal data access, and resource pooling is dramatic. Networks help you ensure that everyone is “on the same page,” working from the current data source, and using your approved products and fees. Conversation log entries (yes, there is some training needed here) help maintain the information flow and reduce workflow interruptions for quick status questions.

There is a new class of product for networks called a network storage device. This is a box you plug in anywhere on your network. It adds one or more hard drives to your network without having to shut everything down. Instead, these devices install themselves and are immediately available to store data for you. Trust me here, you will always need more storage on your network.

With a central database of loans in process, loans closed, and leads, you can easily focus your marketing efforts on just the right segment of your client base for the offer you want to make. There is a wealth of marketing data in your loan files. Not to use it condemns you to a lifetime of expensive prospecting. If you or your loan originators work from laptop computers, consider installing a wireless network hub in your office for convenience. That way, when you want to use the laptop, you can use it anywhere within range of the hub without running wires. Current products are a little pricey, but offer excellent convenience and 10-megabit speeds, which is as good as most wired networks today.

Consider wireless networking in your home office, too. That way you aren’t chained to a desk if the weather outside is delightful. Wireless network products are developing very rapidly. Check out the Apple “Airport.” It works with PC products with a simple adapter and enjoys excellent reviews and a bargain price.

Consider an ASP
Application service providers (ASPs) are starting to pop up in all kinds of places. Check your local newspaper and you’ll probably find one in most metropolitan areas. These solve the problem of data backup and can eliminate, or at least greatly reduce the need for your own computer specialist in-house or on-call.

Add the savings on hardware, maintenance, software purchase, training, and the availability of occasional use software you only need from time to time, and the ASP looks like an excellent option for many users.

This will be especially true if you use a virtual office structure with everyone working from separate physical locations; usually their respective homes. All your data is safe, secure, and centrally maintained for you-yet accessible from anywhere you can get an Internet connection. Because the ASP has additional security features, you’ll know who’s working on your data and when. And, you can decide who has what access, to what programs, and for how long.

Some of the LOS vendors are moving in this direction. You won’t buy software anymore, nor upgrades, nor install various options. Just pay as you go for the latest and greatest version of their product. It is an interesting model that would not exist without the Internet as the communication platform. Whether this new model will succeed is probably up to you and other users. While I don’t underestimate the paranoia many of us have concerning our loan files, there is good evidence that we can learn to trust a central data provider.

Consider Transaction Management Services
The idea here is to create a common platform that subscribing service providers can use to get more business from you and to deliver the results of their work. These are Internet-based.

Suppose you want to order an appraisal. So you call or fax your order to the selected appraiser. Then you wait, maybe checking back in a few days to be certain they got the order and to find out when the job will be finished. If you had used one of the platform vendors, you’d order by e-mail and get a confirmation of receipt. You can track the status online, too. Then, when it’s done, you get the appraisal online the instant the appraiser is finished. There are no more mail or delivery delays.

It’s the same idea for other inspections, title insurance, settlement instructions, loan documents, and so on. Order and track every element from every provider and receive the results over your Internet connection.

One early vendor in this space is Ocwen Technology Xchange with its REALTrans system. Another is First American Title with the FastWeb product. Both already have interfaces with POINT and Genesis 2000 completed. Byte and Contour are, or probably will be ready, by the time you read this. The interface means you can order what you want with a simple import directly from your processing software leaving nothing for you to retype. Just select the service or services you want and that’s all there is to it.

Use a Free Internet Fax Service
Every broker has the same problem. Each business morning the office fax is constantly busy receiving fax rate sheets from all your lenders. Hours go by, burning pages of paper, or tons of toner and ink. Then you have to manage all that paper every day.

Instead, consider using eFax.com, JFAX.com, or another Internet provider. There are mergers going on in this field right now, so the list may have changed by the time you read this. Our office uses eFax.com with a free fax number. All faxes come to our e-mail server and can be accessed by any of the staff at any time. First user changes the identifier on the fax header to the name of the lender. Everything is filed, by lender, in separate sub-directories and automatically sorted by date. Need to see what rates were last month? A couple of mouse clicks will get you there.

You can have eFax automatically send the same information to up to five separate e-mail accounts. That will take care of most broker branching arrangements, but more can be arranged for a modest fee if you need them. No separate phone lines needed. No separate fax machines to buy, maintain, and supply. Just the information you want directly to your e-mail account. Copy what you choose to, print what you want to, and just delete any faxes that you don’t need.

Instant Tax Return Analysis
Instant tax analysis is ideal for originators who work with self employed borrowers. Carefully, and correctly, analyzing complex income tax returns is not what originators and processors are skilled at doing. Nor are many underwriters. While tax returns are less and less in demand with automated underwriting systems, the ones you do need to get and analyze are all that much more complex. Many processors simply give up and include the return in the file for the underwriter to work with. They may make a stab at the income, but aren’t really sure they got it right.

Now, from Cipher Data Resources, Inc. you can download a free copy of Cipher 1 software from their website (www.cipherdata.com). Correctly perform a qualitative and a quantitative analysis of any tax return set you have. It doesn’t matter how complex or how many related returns there are. Your borrower can have as many trusts, small corporations, partnerships, and businesses as they desire. Correctly analyzing the return and developing underwriting income is now a simple clerical function and requires only minutes to complete. The software prints a detailed analysis of the income, points out any special items for underwriter review, identifies compensating factors, and generates a monthly income figure for your file. It will also report any “red flags” in the tax returns such a missing schedules, unbalances amounts, bad social security numbers, and more.

Get Staff Tech-Conversant
It’s critical that you get your staff current with your tech plans. Whether you bring them along enthusiastically or “kicking and screaming,” they have to be on the same page concerning the future developments.

If you haven’t already done so, assign someone to be the office’s technology manager, most likely the one who most enjoys being on the Internet and testing new software programs. Someone has to be the technology champion, to help you coordinate everything. Of course, smaller offices may not need a separate tech director. The office owner or manager may also wear that hat. You may have originators and others who are behind the curve regarding technology. Hold an ongoing series of meetings to demonstrate how technology can help them be more productive. If they’re not using e-mail as a communication tool, show how effective it is. Make database development the subject of another session and explain how this will help them grow their business. Laptop originating and automated underwriting can be the highlight of still another meeting. If your staff has advanced beyond these areas, highlight other appropriate topics.

Bring in outside speakers and trainers to discuss software programs and other tech topics. If necessary, send your people to conferences and other special programs.

Set an example. You should use the most current technology you can in order to get the staff to follow.

Provide reading materials on new technology, including newspaper articles, manufacturer’s brochures, and technology magazines. Make it an ongoing focus.

Certainly there are other technology areas to explore. These are some of the most practical, the kind to make you more productive right now.

Don’t worry about change. Get on with it. This world will change around you if you stand still. Old methods of conducting business are changing. Success lies in completing each transaction in less time and with greater accuracy than the last one. Select your trading partners with and eye to compatible technology and efficient use of such products. But above all, make a profit.

By Bruce Forge

Train Them Right and They Will Produce

“It’s a fact that quality training takes time and money, two things some managers and companies are not willing to provide.”

“Jamie” started her career as a mortgage originator six months ago. With a strong work ethic and a background in retail sales, she made the decision to give mortgage lending a try. Immediately after joining her new company, Jamie was placed into an extensive weeklong training program. There she learned about the business, mortgage programs, procedures, guidelines, and how to sell and market herself. Jamie’s manager clearly discussed his expectations of her performance, and together they mapped out a six-month development plan that included weekly one-hour meetings to review sales call plans and learning initiatives. Jamie’s boss also escorted her to several industry and client events to introduce her to top producing loan officers and real estate professionals who encouraged her success. Jamie was assigned to a mentor—another good originator in her office who would “show her the ropes” of the day-to-day business and allow her to shadow him on sales visits, application appointments, and loan closings. For the last six months Jamie has been reading, studying, asking questions, meeting people, making sales calls, and writing loan applications. Today, with a solid foundation in a new career, she is enjoying her job, making good money, and emerging as a future superstar.

“Keith” began his career in the mortgage business about the same time as Jamie. Fresh out of college with a business degree, a resume of good jobs, and strong references, Keith was ready to make the kind of money his manager promised was available if he was willing to work hard and apply himself. Unlike Jamie, Keith received no formal training. His boss showed him to his office, piled up a stack of manuals and guideline binders, and said: “Read these. Come and see me if you have any questions.”

Keith did have questions, a lot of them. What’s a temporary buydown? Who is Fannie Mae? Where are all these forms they keep referring to? Unfortunately, Keith’s boss was a producer himself, busy with his own customers and pipeline, and could afford little time with his new recruit. Keith looked for answers, but with no one to guide him, he soon got lost and frustrated. The other originators told Keith he needed to get out of the office and make sales calls. “But to who?” Keith asked. “What do I say? Where should I be going?” Focused on their own production, the other loan officers tried to help Keith as much as they could but time just wasn’t available. Keith did go out to see some real estate agents and with dismal results. Unsure of himself and what he was selling, Keith retreated back into his office and tried to make sense of the mountains of information and skills he needed to learn all by himself. Weeks went by and Keith was getting nowhere. After six months, Keith packed up his personal things, told his manager he was quitting, and walked out. Keith’s boss sat back in his chair, frustrated and lamenting: “Oh, well. I guess he just wasn’t cut out for this.”

In the movie Field of Dreams, Kevin Costner’s character was haunted by the voice: “If you build it, they will come.” Today, managers and mortgage companies hear another voice: “If you train them, they will produce.” But many managers are still investing little in their new loan officers. “Nobody trained me and I did all right,” they say. What they forget is that originating on the streets in the year 2000 is quite different from passing out rate sheets to Realtors in 1985. Today, those loan originators who are well trained, well skilled, and personally motivated, are writing loans. The rest are left behind.

It’s a fact that quality training takes time and money, two things some managers and companies are not willing to provide. “What happens if we spend the time and money to train them, they become successful, and they leave to work for another mortgage company?” they ask. It is true that if you don’t take care of them this could happen. The bigger question to ask is: “What happens if we don’t train them, they are not successful, and they stay here with us?” Now that’s going to be expensive.

While some managers and companies are still in the dark ages about training, it is exciting to see more and more lenders today investing in the success of their sales force. The following are four good examples.

First Horizon Home Loans
First Horizon Home Loans of Dallas, Texas (formerly FT Mortgage Companies) began a new initiative last year when they launched First Horizon University and their two-week program: The College of Loan Origination. Week one of the college introduces new recruits to the company, its products, procedures, and key support people. Students learn from the ground up about how a mortgage company operates, how to work with and qualify homebuyers, and the critical role originators play in bringing quality loans in the door. Week two is a series of workshops on professional sales and marketing with role-play training on making contacts, conducting meaningful sales calls, and building a personal marketing plan. Delivered every other month, the college has graduated over 100 energetic new originators so far who are equipped with the tools to get off to a successful start in the business.

This year First Horizon added another school, The Masters Program, as a three-day crash course for experienced loan officers joining the company. The Masters Program focuses on advanced sales skills and company-specific mortgage programs. These more experienced originators are also given a forum for sharing successful ideas they have used to build their mortgage lending practice.

Market Street Mortgage
Clearwater, Florida-based Market Street Mortgage (MSM) has taken a slightly different route to its training needs. MSM’s Web University is a “distance learning” network accessible through the company’s Intranet system. The Web University offers the Market Street Mortgage sales team more than 80 self-study training programs and resources. Loan originators in the field use their laptop computers to “dial up” training modules on topics such as Introduction to Desktop Underwriting, Telephone Selling Skills, and Compliance and Credit. Originators study and learn at their own pace, allowing salespeople to select the titles most beneficial to them.

This year, Market Street began a new library of sales marketing ideas in a program called Street Smarts. This series of white papers focuses on topical business development strategies such as How to Build an Affinity Business Relationship and Selling to Realtors Successfully—showing loan officers how to implement each concept step-by-step. Market Street hopes to expand their web university to a menu of over 100 different self-paced training programs by year’s end.

HomeBanc Mortgage
HomeBanc Mortgage in Atlanta, Georgia heavily recruits college graduates and successful salespeople into its nine-week introductory training program. This five days a week, 11 hours a day curriculum intricately covers every aspect of mortgage lending. To complement the program, real estate agents serve as guest speakers to talk about working with agents and students to complete a list of over 100 names they plan to contact as potential clients during the span of the program.

After completing the 500 plus hour course with its intensive series of exams and assignments, new originators are assigned to a mentor who acts as a personal guide and helper for another three months. Their retention rate of new hires has been remarkable and so has their performance. These rookies produce an average of $12 million their first year in the business with some outstanding achievers exceeding $20 million. HomeBanc complements its initial hire training with advanced sales training seminars and roundtables throughout the originator’s career.

HomeSide Lending
HomeSide Lending in Jacksonville, Florida generates sizable loan production via its consumer direct lending unit. A full time staff of eight training professionals is assigned to the 60-person telephone origination sales force and back shop production support group. New hires participate in a three-week classroom “boot camp” that covers mortgage products, paperwork, guidelines, sales techniques, and more. From there, a follow-up week of one-on-one mentoring with an experienced originator is completed before they take or make their first phone call.

HomeSide’s consumer direct training team is also closely involved in the production unit’s day-to-day operations. From product updates to procedure changes and compliance to credit and fair lending, HomeSide’s originators are schooled continuously in mini workshops, self-study manuals, and on-site seminars with the skills and knowledge it takes to do an effective job.

We’ve relied far too long on “seat-of-the-pants” and trial and error training to teach our loan originators what they should be doing. It’s no wonder that 30 to 50 percent of most company’s loan officers turn over every year. It is hard to expect people to do a good job when they’ve never been shown how.

Perhaps you feel you don’t have the resources like these companies to provide quality training. Keep in mind that training doesn’t have to be done on a grand scale. With a belief in the value of training, these same basic ideas can work for any size shop. Here are some recommendations:

Hire or appoint a training manager. Even if your sales team is small- to medium-sized, a good training manager who can design and deliver valuable skills programs will pay for his or her salary 10 times over in increased loan production over the course of the year.

Take advantage of vendor resources.United Guaranty, RMIC, GE Capital, and other MI companies have some outstanding training programs available to their clients. Partner with your MI rep to get this training in the hands of your originators on an ongoing basis.

Contract for speakers. The mortgage industry is blessed with several talented trainers and speakers who will work with you and your sales force to improve their marketing, sales activities, business knowledge, and personal motivation. Get them in your shop regularly throughout the year.

Leverage your wholesale alliances. If you broker to national wholesale venues, they can assist you in locating (and may even pay for) quality trainers to help your originators learn and your loan business grow. They want you to be successful for good and selfish reasons. Let them help.

Investigate local colleges. While mortgage specific topics may not be readily available, most local colleges and universities have continuing education courses on sales, marketing, finance, consumer lending, and banking. Fund your loan officer’s participation in these programs.

Tap the power of your industry associations. The MBA and NAMB offer many state and local presentations and workshops on a variety of mortgage topics every month. Be certain your people are actively attending these events to expand their knowledge and exposure to new resources.

They say that knowledge is power. But in this business, knowledge is money. The more your loan originators know, the better they can sell. The better they sell, the more profitable your business becomes. If you train them, they will produce.

SIX SHOPPING RULES THAT WILL GET YOU THE BEST LOAN

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

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

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

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

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

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

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

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

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

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

By Chris S. Salazar

Maximizing Your Lead Conversion Rates

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

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

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

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

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

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

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

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

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

Needs-Based Selling

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

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

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

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

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

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

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

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

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

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

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

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

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

Wholesale Lending RoundTable

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

They Make it a Referral Business

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Stop the Leaks in Your Sales Pipeline

Turning prospects into customers:
How to increase your conversion rate

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

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

Prospects == Applicants == Closings

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

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

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

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

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

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

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

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

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

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

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