Category: Management

If the mortgage sales manager is the most critical position in terms of developing a team and growing local market share, then the mortgage sales meeting is the critical vehicle. I have facilitated my fair share of sales meetings and sat through even more as an originator. Been fortunate to have some great leaders and equally fortunate to have some pretty lousy ones too! I learned a great deal from all. Ask the average originator to give an opinion of the average sales meeting and you will get an earful. A waste of time is the typical response. Our collective challenge—sales managers have a hard time sticking to the Sales Meeting Golden Rule. Those who have mastered the Golden Rule lead sales meetings that mortgage originators want to attend.

Sales Meeting Golden Rule
The Sales Meeting Golden Rule is quite simple since it is based on the classic 80/20 ratio. Keep your meetings comprised of 80 percent sales and 20 percent or less operations and office issues. Anytime I hear “housekeeping” it makes me shiver. All those salespeople sitting through a meeting reviewing memos that were either distributed earlier in the week or could simply have gone in mailboxes or e-mailed out to the team. We continue this time-tested, time-wasted practice principally because many originators don’t read memos and training materials. However, we should set the proper expectation, starting with the interview stage, that originators are required to read all memos and e-mails sent to them from the company. Yes, some will slip through, but setting this expectation and managing to it will begin reversing this practice. Reading these in a sales meeting is not only an ineffective use of their time, but those who actually do read the memos will stop doing such if they know they will be covered during the next sales meeting. Following the sales meeting Golden Rule is respectful of your originators’ time and creates a meeting environment more conducive to honing sales skills that will grow your team’s production.

Assuming you follow the Sales Meeting Golden Rule, I strongly suggest you have weekly meetings. Sales managers who don’t run effective sales meetings probably will question the weekly time commitment; I say give it a chance for one month. See if a more structured approach to sales management might not actually help you manage your time more effectively by managing your team’s production one primary time each week, rather than one-offs all throughout the week. The additional benefit is more focus on sales, which is typically followed by greater production. Alan Greenberg, former Chairman of Bear Stearns, is renowned for his unique memorandums to his employees. A collection of these unique memos is the basis for “Memos from the Chairman,” by Alan C. Greenberg. He found a way to make the most ordinary communication tool interesting. If he could do that with the memorandum, imagine what you can do with the sales meeting.

The 80 Percent Concept
This 80 percent segment of your sales meetings is what drives your success in the market. Yes, you may have a hotshot or two that brings in great numbers and doesn’t see the value of the old sales meeting, but your reformatted meeting following the golden rule will benefit your core team and those few seasoned professionals.

Most sales meetings start with the housekeeping segment to get that out of the way, then move onto the substance of the meeting. I suggest flipping this around and commencing with the sales portion followed by the housekeeping segment. Should you run out of time, the housekeeping segment is by far the most expendable. Another suggestion to keep meetings vibrant is to hold at least one outside each month. Why do we interview candidates outside our office? Why is it better to have serious employee discussions in a room with a round table rather than sitting across the desk from one another? The same reason we need to take our team to a different environment on occasion. We have their full attention in a different and more comfortable environment.

Here are some suggestions for getting the most out of the 80 percent:

• Plan your sales meetings; winging it works for birds, but not mortgage professionals.
• Have an agenda and keep to your time allotment, generally two hours or less.
• Hold at least one sales meeting a month outside of your office, such as in the conference room at chamber of commerce (if you are a member), back room at a local restaurant, someone’s house or hotel conference room.
• Don’t try to conduct each sales meeting yourself. Rotate facilitators between you and your originators. Assign topics or let them pick their own.
• Rotate who brings snacks or breakfast. For example, requiring the lowest producer from previous month to bring the refreshments provides great motivation to succeed.
• Go to your community library or go online and rent motivational videos. They have great collections.
• Form your own “Book of the Month” Club. Pick a different book each month and give a copy to your originators. One suggestion is “Raving Fans,” by Ken Blanchard and Sheldon Bowles. Assign a chapter to your originators to present to the group at the next sales meeting. Your originators will also appreciate your gift and the fact that you are investing in their business.
• Assign a product per week to a different originator to discuss and train other LOs in depth.
• Invite spouses/partners to join the meeting at an appropriate venue. Have the meeting the first two hours then invite the partners to join in at the bar, bowling lanes, or other location. Have fun and be creative. People seldom leave a company solely because of basis points.
• Create a Jeopardy or Wheel of Fortune board and have a contest with categories like underwriting or products. Play the game in your sales meeting each week for a few minutes and give out a few prizes. Pick prizes that are business development related such as books, newsletter or magazine subscriptions. Make it educational and entertaining.
• Invite a top producing Realtor or builder to come in and discuss what he/she looks for in a new originator.
• Role-play effective sales calls and phone inquiries. This could include how to turn rate shoppers into buyers, how to sell against an option-ARM, how to sell points and other topics.
• Start a file of articles and clippings that you can discuss in sales meetings. Pick a topic each week to focus on and discuss. Make it easy for you to find material for your meetings.
• Zig Ziglar espouses on the value of scripting as one of the keys to selling excellence. Introduce scripts to your sales team by coming together as a group and composing scripts for objections like, “your rate is too high” or “your fees are too high.” Get all to agree and then memorize them.
• Invite a CPA or divorce attorney to discuss leads and the best way to build relationships with these professionals.
• Have the group come up with a sales contest and implement the contest.
• If your team supports bank branches, periodically invite bank department heads to discuss their areas and how to cross sell more effectively.
• Ask each originator what calls they made last week, what they have set up this week and what is on their schedule for next week. Be very specific so no one can hide. This is the best exercise in which to predict short- and long-term success.

The 20 Percent Segment
Use this time to discuss important operational issues within the office or company. Don’t review memos you recently sent out. However, if the topic deserves additional discussion this is the proper time. I realize some will say eliminate this portion all together. I have tried that but I just don’t that that is realistic with all we juggle on a weekly basis in our offices.

I once had a sales manager who would allow IRS representatives to visit our sales meetings to speak on the tax code as long as they brought bagels. Drove us crazy. Invariably, it was a closing agent or attorney no one ever would use who would feed us, talk about why we should use their company and leave after 30 minutes or so. Well, that is a big percentage of the typical sales meeting. I tried a different tactic as a sales manager when approached for time in my meetings. I asked the vendor to partner with my originators first and then I would put them on my schedule. I even coached many of them by suggesting they partner with specific new originators by setting up appointments with Realtors or builders with whom they had relationships. Nothing is more effective than a warm referral. If they proved they could help us build relationships and grow our business, I would gladly give them face time in my meetings.

By investing the time to have well planned and designed sales meetings, you will realize multiple key benefits. Your team’s production will grow. Your retention rates will increase because your people are more successful. Your quality of life will improve, as you are managing with a plan and I bet you find yourself with less management headaches. Your recruiting will be easier because increased production and retention is a powerful ally on the street and competitors will take notice and so will their originators. Plan, implement, be creative and have fun and then watch your team’s production take off.

By A. Blair Glenn

Creating an environment of success in the mortgage industry is a challenge at best because of the multiple dynamics management has to consider. From different levels of commitment to staying in the business for the long run and not for a quick buck, to the level of experience of originators, processors and underwriters, managers have a lot to contend with in any given mortgage office. On top of that, there is the ever-present need to train people on the latest technology, policy and procedures, and new products.
Even with all of these dynamics, there are a few key elements to management success. Frequently, we forget to look at the big picture of how our organization is run and focus solely on today’s or this month’s sales. We must realize that many subtle factors, including the ones below, affect sales and the long-term success of a company.

Hire right or correct bad decisions quickly. Be sure you know who you are hiring and do not simply fill a position, because if the person does not fit, it will never work. For example, a loan originator will more than likely have to handle calls on leads; therefore a call-reluctant, shy person should not be hired for this position. While the person maybe qualified on paper, the personality will not fit the requirements of the position. This might seem simple, but managers make this kind of hiring mistake every day. The time it takes to hire the right person is less than the time it takes to fire, re-interview, re-hire and re-train a replacement.

Inevitably, all good managers will make some bad hiring decisions. The vital thing to do when this happens is to take corrective action quickly. Unfortunately, managers may leave a bad hire in place far too long because they hope that the employee will get better. Sometimes improvement is possible—when the problem is a training issue, for example. But oftentimes there is a fundamental problem with the employee being a good fit for the job and when that happens, the employee often will spread low morale around the office like a bad case of the flu. And worse, the problem can become cancerous, which will require drastic disciplinary measures and sometimes multiple terminations. A good manager must make these problems disappear for the health of the rest of the organization, and like a bad disease, treatment is best performed early.

Provide proper tools for success: training and education. A good manager knows that training does not stop when a new employee closes his or her first deal. It must be an ongoing effort that is integrated into the office routine. Proper equipment and technology are also required tools for success in today’s marketplace. Be sure to continually invest in your organization to continually be competitive.

Communication is critical. Many organizations have great people who all aspire to achieve the same goals but fail miserably. Often they are all working on similar projects without knowing it, which is why clear and frequent communication is essential. In our business we sometimes find that our loan originators and processors do not communicate with each other, and an originator does not communicate well with lenders and vendors (Have you ever had a closing delayed because the appraiser said he never received an appraisal request?) Communication starts at the top of the organization and must be maintained at every level of the company, but more importantly management must be a role model of effective and timely communication.

Create variable compensation. It should be based on something of which the recipient has control. I find that management often sets commission or bonus programs for an employee based on criteria that are not in the control of that employee. A great example of this is paying a production manager based on net profit but not empowering the production manager to manage basic operating expenses. The only way for that manager to create a higher bottom line is to bring in more top line revenue and hope that whoever is spending the money does not spend anymore. Another example is paying a processor a bonus based on the number of files closed in a given month. That works when you have more files originated than is realistic to process with the number of processors available at the time. But realistically the processor has no way of controlling originations and is often precluded from obtaining a bonus when he or she is doing an outstanding job. Perhaps a better way would be to bonus processors based on achieving turnaround goals or based on what percentage of files given to the processor close within a certain time frame. Only then are you providing an incentive that is within the processor’s control. If management sets bonus programs based on goals outside of the employee’s scope of control, we set everyone up for disappointment.

Abolish the “Yes” people. Every organization needs employees who are encouraged to and are given a forum to speak their minds. Management is not the source of all good ideas. The receptionist, processor, loan originator and copy clerk have ideas that can change the way things are done for the better. But if they do not express those opinions because they are always agreeing with the boss, the company will not only miss out on great ideas, but the company will become very one dimensional with employees who feel more like factory line workers than team members who are charged with helping an organization succeed. Encourage employees to speak their mind, but be sure they also know that whenever management makes a decision, everyone should fall into place to work as a team.

Share success stories with acknowledgement. This can be accomplished by randomly recognizing outstanding achievement as well as healthy competition in which people who have reached their individual goals and encourage others to become better. Create sales contests, but also recognize support staff. The support staff in a sales organization is often passed over in recognition programs. Additionally, do not recognize only the top sales achievers. Too often the same group of individuals wins all the awards because they are always leaders in sales. Recognize the most improved, the best mentor, the highest quality files or some other achievement that is not necessarily related to sales. Remember that while sales directly affect the bottom line, many other factors go into a successful organization. Keep all recognition positive. Never ostracize—even in a joking way—those who do not win awards.

The small things count. Management should demand that offices be kept clean and neat and make sure the break room is always spic and span. Offices and cubicles should always be tidy—even in areas that are never seen by guests. The environment does not have to be fancy, but tidiness is essential. It creates a cleaner mental state in which to work and productivity is higher in an organized and clutter free office. Other small things count as well, such as bringing in lunch for the office randomly, offering free coffee and tea service, current newspapers or magazines in the lobby, monthly birthday recognitions, employment anniversary recognition, and the like. Study after study reveals that employees will stay at a lower paying job where they feel important and wanted in a good environment over jumping ship for a higher paying job where they may feel more like a number. In the late 1990’s, a dot-com executive claimed it was too expensive to compete with other dot-coms in terms of expensive benefits and stock options. He said his company’s least expensive employee benefit was by far the company’s most popular and cost approximately $12 a month. It was ranked in surveys as a high-ranking factor in job satisfaction among the company’s employees. The benefit: free sodas, juices and snacks. Small things count.

Foster teamwork. Even in a sales environment, there should be team spirit. In mortgage shops, people tend to think that teams are for companies where employees are not commission-based, or when there is a group effort in business-to-business sale situations. After all, each LO gets paid on his or her own loans, right? Wrong. When a team environment exists, one LO is happy to take a call for another to create good customer service, one LO will gladly take a loan application for another while his co-worker is out sick and one LO will gladly give up an early closing time with an afternoon closing time at the settlement agent when his teammate has an important purchase closing and his own closing is a refinance. Processors and LOs understand that they are co-dependent and work together to achieve common goals and solve common problems. Therefore, a good management team facilitates the development of relationships and gets to know employees as people with feelings, hobbies and lives outside of work. When employees feel a human connection with their colleagues, they are far more loyal than when they feel like another number. An organization that focuses on team building will always out-perform an organization of individuals.

Establish the rules. Management should have written policies and procedures. It is difficult to fault someone for not following the policies and procedures when they were never clearly defined. As the phrase “good fences create good neighbors” applies to a good living arrangement, the same applies with employees and employers. People generally want to follow the rules, but so often the rules are murky or unknown. The policies and procedures created by management should be regularly updated. A living document of this type has no page numbers but does have chapters with broad subjects and within each chapter it would be beneficial to create a policy number. So, if chapter one is “Origination Policies” and the first two topics in that chapter are “Timing of Disclosures” and “Rate Lock Policy,” they would be Policy 1.1 and 1.2, respectively. Now, within chapter one management will have the ability to create an infinite number of policies without ever repaginating the manual, thereby making it easy to maintain.

Empowerment and delegation. No matter what the role is, empower the employee to blossom within that role. Delegate the right work to the right people; teach them how to do it and then watch it happen. Sometimes employees must be given the room to fail and realize the failure so they can do a better job the next time. Unless that failure will cause the company true harm, the manager must allow it to happen.

Management in the mortgage industry can be trying and require creative approaches because of the very nature of the business. However, if a well-crafted management plan is put in place, success is inevitable. And a successful management team knows the importance of constantly making improvements to meet the changing needs of the business.

By Daniel Jacobs

Let’s be honest. How hard has it been to find a few loans per month the last few years? Even our rookie originators made money and covered draws. There was so much business that it seems everyone obtained his or her mortgage license. If they didn’t, they know someone who is an originator. Today presents us with a different challenge; one we have not faced in many years. With the market slowing down, acquisition of new business is the primary strategy of most companies. If that doesn’t create the impact needed to drive operations and profitability, you will start seeing even more staffing reductions in our industry. As the engine is to the car, the mortgage sales manager is to our industry. This position significantly impacts what happens next; therefore, making the right hire is critical.

When interviewing and managing mortgage sales managers, I try to determine where they fit in my “O.H.G.P. Mortgage Sales Manager Profile.” Identifying enough examples of past behavior, one will be able to determine future behavior. Yes, I agree this is a BFO (Blinding Flash of the Obvious), as Todd Duncan likes to say. But I have seen way too many instances where sales managers will not ask probing questions to get “down and dirty” in the details or roll up their sleeves to fix a complex issue. The results can be devastating for an organization; especially in a down market when recruiting smart, sales management and expense control are the order of the day. Situational questions during the interview stage, conversations with industry insiders and former employees can help you effectively identify past behavior. So, once you learn to identify traits, you can recruit and manage for optimum results.

The O.H.G.P. Mortgage Sales Manager Profile:

Ostriches
We all know these sales managers. From pricing issues to underwriting challenges, there is rarely a day when something doesn’t come up that requires problem solving or crisis resolution skills. Maybe a complex deal is blowing up at the table. Maybe the company is tightening pricing. Whatever the challenge, it seems the ostrich is not effective in problem solving, dispute resolution, or strategic planning. They pretty much disappear when the going gets rough. We see a lot of talk, but not too much in the way of results-oriented action. It is amazing how many ostriches survive in our industry…but they do, primarily when they also report to an ostrich. The million-dollar question is: how do we manage ostriches? I have spent too many valuable hours on ostriches in the past. I realize I spent so much time because I hired the ostrich and didn’t want to admit my hiring mistake, so I kept trying to get them to perform as expected. I am learning to cut my ostriches as quickly as possible. Your best management strategy for ostriches is to avoid hiring them in the first place. Ostrich resumes are easy to spot—a lot of job-hopping is one obvious sign. They also spend more time telling you what their past companies didn’t have than what they will do during their first 60 days to perform at your company. Ostriches rarely come prepared with detailed plans.

Hyenas
These folks are the ones who complain about everything…the market, the company, pricing, products and especially their last bonus. You always hear them during breakout sessions at sales rallies, but they are smart and try to blend in during these events. But the minute a negative is thrown out, they pounce and show their teeth. Their bigger problem is they rarely have solutions and never create anything worthwhile for themselves or their team. Hyenas have possum-like tendencies as they are both scavengers at heart and have a lot of energy. I would equate a hyena to a high-maintenance, low-producing originator. Obviously those two traits together are poor. But I will take high-maintenance and high-production all day. If the hyena can transfer the negative energy into helping us fix the issues, we have a winner. Someone who is viewed as a complainer is a good person to have in your company if those complaints are followed by ways to improve upon the issue.

Managing a hyena isn’t easy, but some drivers are honesty, respect, and empowerment. First, explain how the hyena is viewed within the company. Then discuss how many of the issues brought up are valid, but lacking is the solution. Empower the hyena to run a task force to research and recommend solutions to one or two issues. Create an environment where the hyena can take stake in the solutions. If we can channel that negative energy into positive actions, we could end up with a possum.

Gators
These people know how to adapt and they will make a correction, but it will take time and their regions or offices will suffer during the transition. They know they have originators who will not make it, but they take too long to require call reports or put originators on probation. When they lose a top originator, they start recruiting the replacement. They can be successful in replacing, but the result may be three or four months of reduced volume, which could blow the quarter and possibly the year. The gator may get around to doing the things they need to do, but with closer supervision and direction, they can be pushed to do it quicker. Most gators lack the drive or strategic thinking of the possum so expecting to grow to possums may set them up for disillusionment. Understanding the weaknesses and managing to those will help a gator realize results quicker.

Possums
Being from the South, I have always admired the possum. Talk about adaptability! If a possum’s food source dries up on Monday, I guarantee they have found a new one by Tuesday. If we take down a tree a possum lives in, they quickly find a new home. The possum is a master in the art of survival. As such, the possum manager makes changes within the shop quickly and before too much harm is done. He or she also collects good market data before complaining about pricing to corporate, knows the competition well, makes decisive decisions and is always thinking about surviving. A possum is rarely swayed to gamble on weaker producers, but typically goes for the better hire even if it takes longer to get. Most importantly, the possum is a self-starter, needs little motivation or direction and is adaptable enough to change with the market or as your company needs them to change.

Mortgage sales managers are the key drivers in our organizations. Selecting the right leader for a team, or to build a team, is a critical decision that has far-reaching impact. Every company is different and unique. Some are highly political and others purely numbers driven. Being able to identify the four management profiles not only helps make better hiring decisions that fit your organization, but also allows you to use situational management skills with existing team members. You would manage a possum differently than you would manage an ostrich. An ostrich would require hands-on management with very frequent assessments and guidance. A hyena does best surrounded by positive strong-willed people and hands-on management. Don’t allow the hyena to surround himself with other hyenas—unless you have no interest in attempting a conversion to a possum. Gators represent your steady leaders, your rocks. Getting those gators to be more proactive and more aggressive will significantly impact results.

By A. Blair Glenn

We sure don’t seem to have much downtime in the mortgage industry today. We are either struggling to get loans processed, closed, and underwritten due to spikes in volume or working overtime to strategize on growing our application numbers. In the meantime, we hold sales meetings, send memorandums, and personally coach our originators on the value of investing in themselves by reading sales-related publications and books to improve themselves personally and professionally. As sales leaders, we need to practice what we preach. The problem is, who has the time? Well, you need to find the time, or, I guarantee your originators will not find the time either. You are their example. If it isn’t important to you, it sure isn’t important to them.

I recently re-read one of my favorite books, Swim With The Sharks Without Being Eaten Alive, by Harvey Mackay. Whether you are a 100 percent outside-sourced originator, inside originator, mortgage sales leader, or homemaker, this book is packed with exceptional sales ideas and lessons for life. I first read the book back in the late eighties and have revisited it every few years since. A co-worker with our bank noticed my copy of Sharks when we were flying recently and we spent a good portion of the flight discussing how each of us has used Mackay’s lessons. I have put many of these lessons into practice and find their application to our industry is highly effective. I have pulled out just five Mackay lessons that can have a significant impact if implemented by mortgage sales leaders.

Lesson 4: The 66 Question Customer Profile
The obvious interpretation of this lesson is knowing your Realtor, builder, and affinity referral sources so you can be more effective when making sales calls and supporting the relationship. I suggest we take it further to include other “customers,” as mortgage sales leaders have both internal and external customers. As leaders of our respective organizations, we should consider our originators, originator prospects, sales support team members, and vendors as customers. Mackay writes, “All of us gather data about other people—especially people we want to influence. The only question is how well we understand it and what we do with it.” Some suggestions and observations on using the Mackay 66 (TM) with your originators and prospects:

• Originators: Utilization of the list of questions. You know what motivates your originator and how best to manage to achieve maximum results for you and maximum benefits and job satisfaction for originators. Use this list to continue supporting (and continue recruiting) your originators after they have joined you.

• Originator Prospects: The collection of knowledge and the capacity to effectively use it is what makes a great recruiter. Lets face it, mortgage sales leaders should always be recruiting. The Mackay 66 is not a tool to be completed in front of a prospect at one sitting, but a vehicle by which you can collect and store information on candidates over a period of weeks, months, or years. It sometimes takes years to hire top candidates. The more information you have about the candidate, the more effective you will be in the recruiting process. If a candidate likes to fish, then charter a boat and go fishing. When the candidate’s college football or basketball team is in town, invite them to go to the game with you. Does their spouse or partner like the opera? Send them two tickets. The object is to get to know the recruit personally and your success rate will increase.

Lesson 10: Short Notes Yield Long Results
I remember when I first put this lesson into practice. I started writing a note to each selling and listing agent on every application I took. I included my card and my processor’s card and I know they contributed to my success. Personalized notes are not only great sales tools, but they can be significant tools when recruiting originators and leading your team members. When was the last time you received an e-mail from someone, a minute ago? Maybe you received 10 since you started reading this article. Now, when was the last time you received a handwritten note from anyone? Was it this week, last week, last month? With the onset of instant e-mail communication, handwritten notes have become a dying communication tool. But I suggest it is an extremely effective communication and sales tool for our industry. Do you remember the airline commercial a few years ago, which featured a manager handing out plane tickets to his salespeople so they could go spend face-to-face time with their customers? I still think that was a tremendous commercial. Sending a personal note is the same thing just on a smaller and less expensive scale. Some practical suggestions for implementing and using personal notes:

• Send one to each recruit you meet with. You may not be interested in the candidate, but they will remember being treated with respect even after you inform them of your decision. The candidate may have the opportunity to give someone their opinion of you in the future, or they may turn into a SuperStar who you may want to approach in the future.
• Send a note to vendors thanking them for their support, referrals, and extra special attention to the relationship. Vendors can be your unpaid sales and recruiting force if you treat them with respect and show some appreciation.
• Send to your top producers, rookies who had a good month, sales leaders who hired a top recruit, bankers who referred a big deal to you, joint-venture partners, and sales support team members such as processors, closers, and underwriters.
• Take Mackay’s lesson one step further and create customized notecards personalized with your photo. Customers, referral sources, and originator prospects will remember your face more quickly than your name so take advantage of an opportunity to put your “face” in front of the reader.

Lesson 14: If You Don’t Have A Destination, You Will Never Get There
“One of my good friends gave me her definition of a goal, and it’s the best one I’ve ever heard,” wrote Mackay. “‘A goal is a dream with a deadline.’ Write yours down-because that’s the only way you’ll give them the substance they need to force you to carry them out.”

Yes, this is another great sales leader telling us to have a business plan. You can’t pick up any leadership or sales strategy book without at least one chapter devoted to business planning. There is a simple reason…they work. What do you do the night before the last day at work prior to a weeklong vacation? You plan everything you are going to do that day. On the last day, you come in early, you don’t participate in idle chitchat, you manage each minute, and accomplish a few days work into one day. We always say the day before a vacation is our most productive day. Why? Because we developed a plan, implemented it, avoided being sidetracked, and reviewed it periodically throughout the day to ensure we were doing everything on our list. It sure works perfectly the day before a vacation, so, why do so few mortgage sales leaders and originators have a written plan? I imagine many of our originators feel it is a one-time exercise each fourth or early first quarter and the plans are rarely referred to again. The “day before vacation plan” is easy to monitor and track results. A yearly plan is not if it’s completed in December or January and seldom reviewed again. Do you, the leader, have a plan you refer to on a continuous basis? Is it is living document you update and manage to, or is it completed and shelved? Many mortgage sales leaders have the greatest intentions but we get busy with our day to day business of meetings, fire drills, operational flow issues, pricing problems, guideline changes, program roll-outs, personnel issues, and the like. However, if we are not leading by example and also periodically reviewing individual plans with our originators, why put much effort into the process? Well, we must get away from the completion of the plan being a task to it being a part of our formal sales process. The plan needs to be a living document referred to monthly and updated consistently. This starts with sales leaders leading by example and dedication to review plans on a monthly basis with our originators.

Lesson 49: It Isn’t The People You Fire That Make Your Life Miserable, It’s The People You Don’t
This is one of Mackay’s shortest chapters because most agree this is the one of the most obvious management lessons. Why do we as mortgage sales leaders continue to believe that originators who consistently produce below expectations will finally “see the light” and become contributors? Why do we accept poor service levels from originators whose customers call us to complain about unreturned phone calls, improper expectation setting, expired locks, and poor service? I believe we do so because we naturally hate confrontation and don’t want to give up on someone we may have personally hired. Think about your headaches day-to-day. I bet they are caused by a handful of weaker producers and maybe a high producing/low-scoring originator.

High maintenance I can live with, but when you add low customer service scores, that is a recipe for disaster. While we may move slowly, we will eventually ask our weaker producers to leave if they don’t respond to coaching. However, our track record in dealing with the “high/low LO” is not good. It happened to me the other day. There are red light blinking on my phone, I check the message and listen to a frantic customer complain about an originator’s poor execution. I think back to how many times I asked this originator’s sales manager to get the service levels up or get him out. You no doubt have experienced the same scenarios, but then the originator has a few great months, makes you some money, and you move on. The resulting problem is not only the impact to your company’s reputation on the street, but you have lowered the “service bar” for your office. If left unchecked, you will see a slow decline in your overall service level.

Lesson 63: I Have Never Seen A Bad Resume
I don’t know about you, but I have made my fair share of hiring mistakes. There are two critical hiring mistakes sales leaders tend to make: hiring flash without substance and hiring originators who may not fit your business model. I am guilty of hiring an originator because of attire, gift of gab in the interview, and talking a “big game.” Mackay Envelope Company is extremely selective in hiring and the process is long and arduous. He also warns against hiring based on a great resume. Mortgage sales leaders should take this lesson to heart and implement immediately. I have seen “guarantee jumpers” move from lender to lender. I wonder how they keep finding employment and the answer is simple. They are sharp, dress well, say all the right things about database management, investing in themselves, etc. Then they talk about lack of processing support, changes in leadership, poor management, bad underwriting, can’t close deals…on and on. And we believe them.

While I still make some mistakes, I have learned over the years to use probing questions during interviews to determine if the candidate has the motivation, drive, sales skills, intellect, work ethic, and industry knowledge to be a successful originator with our organization. Don’t just ask about percentages of volume from different referral sources; ask the candidate to name these sources and tell you about each one. You will quickly know if these sources are “referral partners.” I have been in this industry a number of years and I have had only one other sales leader call me to get a reference on a former employee—only one. We shy away from calling our sales leader peers in fear that they may try to hire the originator back to their company because, if we like them why shouldn’t they?

By A. Blair Glenn

Reaching Higher to Become more than just the average originator.

I’ll bet you remember the day you got into this business as a mortgage loan originator. I’ll also wager to say that you started out with the motivation and determination to become a smashing success. You probably didn’t tell your family and friends: “I intend to be mediocre at this new job, average at best.”

Nobody wants to be seen as “mediocre,” but the fact is that many in this business are. If you are not in the top third of the loan originators in your market or the bottom third, you are in the middle. Your performance is mediocre. If you produce, on average, three to five transactions a month, your production volume is by most standards, in most markets, and at most companies, “mediocre.”

Please don’t shoot the messenger here. I am not trying to make you upset. I’m your friend and your coach and I am really trying to help you. I want you to see that maybe you have lost that motivation and determination for success you once had and consequently have conformed to mediocrity in your performance and your results. I know that this article is speaking to perhaps 33 percent of the loan originators in America who, whether they are willing to admit it or not, are “average” loan officers. Perhaps I am speaking today to you and making you think: “He’s right! That’s where I am! Why have I conformed to become an average originator? What happened to my dreams of success I had when I started this career? What is holding me back?”

Motivational master Anthony Robbins says that the only reason people will change for the better is because the pain of change is less frightening than the pain of staying where they are at. He’s right. While many loan originators will stay mediocre throughout their careers, others will break out of the pack and rise to the top because they are tired of being mediocre at what they do for a living. Even though becoming better might mean hard work and sacrifice and doing things differently, they are ready to go for it. Does that include you?

Let’s be brutally honest and look at why some loan originators are mediocre at this business. More importantly, let’s look at how to break out of that “average” level of performance, and move your success forward this year:

1. Time. Many loan originators are mediocre because they can’t or won’t put forth the time it takes to become a success. They work “part-time” hours, coming in at 10 a.m. and leaving at 4 p.m. They don’t work late and they don’t work weekends. When they do come to work they rarely get a lot of work done, allowing personal matters, distractions, and errands to rule their day. Great originators will tell you that success is an investment of your time. Hard work has rarely created a failure.
   How many hours do you work every day and every week? How much of your time at work is actually spent working? Are you ready to make a commitment to as much as double that this year? If not, your results could remain mediocre. The top third of the loan officers in America out-produce the other two-thirds mostly because they out-work them. Plain and simple.
2. Money. This business requires personal investment of the monetary kind too. It costs money to buy a good cell phone, a home fax machine, quality marketing materials, advertisements and a database contact management system. You have to reach into your pocket to pay for good instructional books, CDs, seminars, coaching systems, and tools to run your business. Top producers do this. Maybe that’s why they are top producers.
   Is this something you are willing to do? How much money did you spend on your business and your career growth during the last six months? Are you ready to write checks for hundreds, if not thousands of dollars to capitalize your success? There are no cheap seats if you want to sit with the superstars.
3. Fear. Many mediocre loan officers stay mediocre because they are afraid of something. Some have sales call reluctance. They fear nearly all forms of prospecting, they shy away from using the phone to set appointments, and they rarely make any sales calls. Others are afraid of trying something new like targeting a new market (builders) or selling a new program (interest-only loans). This fear is stifling. It keeps them frozen in mediocrity and waiting at their desk for the next safe and comfortable opportunity to find them.
   Are you afraid of doing the things it takes to create success? Why? Is that fear worth you having a “marginal” career? In the end, on the day you retire, what will you tell that person in the mirror you were so afraid of? Everyone’s afraid of something; that’s only human. The key is to accept your fears, face them, be bigger than they are, and get to work.
4. Desire. One out of three loan originators has a passion for this business, and that’s why they succeed. One out of three doesn’t want to be in this business, and that is why they fail. It’s the mediocre loan officers hovering in the middle group who can’t make up their minds. They can’t quite taste the desire for the business the way a top producer can. They want the fame and fortune, but lack the forward thrust to race ahead. It’s hard to get excited about working 50 hours a week, investing $1,000 a month in your business and making hundreds of prospecting sales calls a year if you really aren’t sure if this is the right business for you.
   How would you measure your desire to be in this business? On a scale of one to 10, how would you score your passion, your enthusiasm, your desire for the profession of mortgage loan origination? What will you have to do to increase that? How can you get really excited about what you do for a living? Like anything, if you want it bad enough, you’ll find a way to get it. Desire drives success.
5. Effort. I often tell my seminar participants that there are two ways to achieve success: by effort and by accident. Look at 2002 and 2003. Many loan originators produced successful results by accident. Writing mortgage loans in record refinance years didn’t take a ton of brainpower or sales prowess. It took showing up for work and answering the phone. Many were successful by accident. But in a normal purchase loan environment like we have now, success will come by effort. And effort equals work—hard work. Somebody has to make those sales contacts. That somebody is you. That same somebody also has to build a business plan, study new programs, attend Realtor events, work trade show booths, participate in community activities, distribute flyers, send faxes, book appointments, deliver seminars, and a hundred other things to generate the leads, loans, and referrals you need to raise your results from mediocre to great.
   Are you willing to put forth that kind of effort? Do you see the connection between activities and results? If you are serious about moving out of the “average” group, it will take above average performance, the willingness to do the things most average loan officers won’t do (as previously mentioned). As I learned a long time ago, in the mortgage business effort and execution are everything.

So, have I enticed you? Did I strike a cord with you? If so, good. Your job is to decide that being mediocre is no longer for you, that average isn’t good enough. Your job is to set your sights on belonging in the top third of the mortgage loan originators in your company, your market, and this industry. You can do this. Your journey starts with your conviction that you are done being mediocre at what you do and that nothing, absolutely nothing, will stop you from becoming a success.

By Douglas Smith

“Our goal is to meet and exceed customer expectations.” This statement has become a common refrain for businesses building customer loyalty through exemplary customer service. Although many aspire to this noble goal, achieving it is virtually impossible without first discussing, documenting, and understanding what those expectations are. A goal cannot be achieved unless it is first quantified, otherwise how will you know whether or not you achieved it?

If you are a wholesale lender you count brokers and correspondent lenders as your customer base. If you are a broker, you count Realtors, financial planners and borrowers as your customers. Customer service levels are measured on perceived values. As we all know, fact does not matter, perception does. Setting proper expectations is one thing but even more critical is doing so mutually. This key step in the expectation formula is all too often missed. A business relationship, strategic alliance, partnership, whatever you want to call it, is a two-way street. It is a communication between two parties, ostensibly for the mutual benefit of both. Setting expectations should never be a one-way street, but that is how many travel this road.

Your Job
If you consider your business to be relationship-based, as opposed to transaction-based, identifying and discussing expectations is your job. No one else will do it and why should they? This is your business. As the “president” of your business, it is incumbent upon you to know the baseline against which your customer will measure your service and the value you bring to their business. The bottom line is, if you don’t do this, it will not get done. If this step is ignored, there is no way expectations will be met, because you will not know what they are. Non-quantifiable criteria remain non-quantifiable and therefore a candidate for subjective customer review. This ‘review’ can often result in a failing grade.

In addition, since this is your business, you must realize that it is you who must take the initiative to address this issue with your customer, not the other way around. Unfortunately, self-fulfilling prophecies often become a major stumbling block. If you are uncertain or even remotely hesitant about entering into a mutual discussion about expectations, it will show in your body language and verbal communication skills. Some even go as far as saying they would not be comfortable in having this conversation with their customers, for fear of the negative issues that may arise. If this is your current perception and attitude, it is time to start rethinking it. The upside potential far outweighs the downside risk. Have you considered how impressed your customer might be about your sincere desire to strengthen your working relationship? Have you considered the potential of your customer telling his or her peers about your desire to move your working relationship to a higher level resulting in more success for you both? Identifying and discussing expectations is your job. .

When?
It is never too soon to start discussing expectations. Not discussing expectations or worse yet, doing so after it’s too late, is not the most efficient method of communication. It is critical that expectations be identified in any business relationship as early as possible. If you have established business relationships already, you may not be comfortable in going back to your customer for a “heart to heart.” Get over it. If this is an exercise you have never before contemplated, let alone completed, identify your top ten customers and approach this challenge on an incremental basis. Set a goal. Do three a month for the next three months.

How to Generate Reciprocation
Expectations go both ways. “This is what you can expect of me, and this is what I expect of you.” If expectations are ever discussed, it is too often a one-sided conversation. It never should be. If building a long-term and mutually beneficial relationship is your goal, then mutually sharing expectations is key. Go ahead, put the cards on the table. Be open and honest with each other. Pre-position permission to address difficult issues up front. When they do come up it will be easier to bring them to the table because you have already established that expectation. We all know the value of reciprocation (“you give me a lead and I’ll send you more business”). The value of ‘reciprocate’ also holds true in setting and quantifying expectations. It is also imperative to identify how you will quantify and measure expectations.

How to Begin

1. Set an appointment with your “customer”—this could be a Realtor if you are an originator, a broker if you’re a wholesale lender, and so on. Tell them up front that you are moving your business to the next level of professional value and service and would like a few minutes of their time to mutually discuss strengthening your existing relationship.
2. Do not blind-side your customers. Give them ample opportunity to think about your meeting. You may even say, “I’d like to commit to three things I can do to help your business be more successful and if you are willing, I’d like you to reciprocate and commit to three things you can do at your end to help me be more successful. I’m committed to the success of this business relationship and I want it to grow—and it won’t unless we work on it together.”
3. Don’t belabor the issue. Get in and get out. Make the focus of your meeting forward not the past. If you achieved nothing more than identify five critical issues that seem to be stumbling blocks or obstacles to your business you have succeeded. Building relationships is about opening up channels of communications, not shutting them down.

Stepping to the plate and mutually discussing specific expectations, how they will be achieved and measured are the actions that will earn trust and lead to successful partnerships for lenders and brokers, originators and customers or Realtors—or any other “team” you may be a part of.

By Bill Evans

One of the saddest sights a trainer can see when entering an office is the company “resource center.” This is often a library consisting of sales books, videos, tapes, CDs, DVDs, and workbooks. When you brush off the dust you may find several thousand dollars worth of material. This is emblematic of the adult professional learning environment – seminar oriented one- or two-day learning episodes.

If you think back to any of your own seminar experiences, you may find some commonalty with most people who say that they learn one or two things at a learning event. But there is also a great deal of motivation gained from the learning experience. We always see a pop of activity in students after a seminar—increased call frequency, more complete time management, and a studious attention to trying the theories espoused during the class. The problem is that there is less than complete treatment of the seminar topic in the seminar environment. This results in a cycle of motivation and disillusionment that can leave the student with the impression that they aren’t able to learn appropriately.

What’s the Problem?
Most people don’t learn well in short, concentrated bursts of time. That is, they can absorb a limited number of facts, but principles that are introduced verbally aren’t put back into practice. This creates retention shrinkage. The Chinese saying “I hear and I forget, I see and I remember, I do and I understand” is an illustration of why any training program must include practical applications in order to cement or lock-in the information being presented.

I discovered this in my mortgage training business. We looked at the difference in key concept retention between students who had been through traditional “sit and listen” seminars and students who had been forced through drills, testing, and homework projects. The students were given five narrative questions (not multiple choice) to answer in an open-book format. The difference was astonishing. In five areas, students who had recently attended “seminar style” training courses with no proficiency measurement had markedly lower retention than those who reinforced the learning. Obviously, students were hearing the information—enough to gain a familiarity with the data they were being given—but they had no chance to really retain it enough to use it. This shows that students don’t have a basic proficiency in the major concepts unless they are given an opportunity to put them into context or into practice.

The bigger problem is that without this information, most new loan officers will not be able to advance into more detailed understanding of the business, requiring additional weeks to learn information on an ad hoc basis. They need to focus on sales, but do not have a basic understanding of the business, so do not feel comfortable venturing from the office.

Changing Habits
Steven Covey talks about creating new habits as a success tool. Many of us have habits that help or hurt us. Work habits are as intractable to change as a more tactile habit like smoking. Basic problems like poor time management, lack of self-motivation, or procrastination are impediments to success as much as lack of product knowledge or a solid sales strategy. But these are much more difficult to teach. Many people possess learned behaviors that have served them well throughout their lives. These must be undone before new behaviors can be created, so this process requires a commitment to personal change.

If we can recognize that the path to reaching our goals is to identify the behaviors it takes to reach them, then what seemed to be an impossible challenge—changing people’s behaviors—becomes part of a system where we, over time, unfailingly meet our objectives.

Creating a Learning Culture
The steps to creating a learning culture are simple in concept:

1. Identify the behaviors and skills that lead to success.
2. Break them down into their smallest components
3. Establish a daily routine that reinforces this behavior
4. Benchmark a time frame for the individual in which those behaviors become second nature.

For individuals who work in a structured office environment, such as operations personnel or call-center sales staff, it is much easier to identify, create, and monitor these habits. These roles are “templates” and rely less on the ability of an individual to structure their life, and more on the daily flow of business. For outside sales people, it is more challenging.

Entropy, or the tendency of things not to change, is why it takes a vision to execute this strategy in the real mortgage world. The reason is simple: for the last 40 years it has been sufficient to allow people to sink or swim—loan officers who can’t make it are assumed to be suffering from a character defect. We allow natural selection (survival of the fittest) to choose who succeeds and who fails. Why not? For employers, this system is free! Loan officers are commissioned, and if they close a few transactions and leave the business, as employers we haven’t lost anything. In fact, we made a few bucks. The problem is who survives and why.

There are not many examples of people who have the vision or resources to create a learning culture in any business, but it is even more rare in the mortgage business. When we find them, we want to understand what they have done and try and emulate it.

Visionaries Working to Create a Learning Environment
Ralph Masella is the Eastern regional manager for Columbia National Mortgage, which was recently acquired by American Home Mortgage in New York. Like many managers, he worked his way through the ranks as a loan officer, running a branch and a small area before assuming responsibility for a huge region. His region was consistently at the top of the company’s production and had remarkably low turnover. How did he engender loyalty and how did his people out-produce their counterparts elsewhere?

Masella would be the first to tell you that there was no single thing that he did, but one thing immediately set him apart. He brought an outside training company in and he wanted to find out what they could do to help his people. Already he had taken a step that many in the mortgage business are unwilling to take, which is to assess how he could help his people in concrete ways. In addition to implementing a sales and initiation training program, he created incentives for loan officers to automate their business and contact management systems. The result was a slow but steady change in the perception of the loan officers. Instead of eschewing changes in technology for the inevitable learning curve issues, they began to embrace them for the way that they eased marketing and business management. The company wins too, because now customer and relationship databases are shared, so that if a loan officer quits, the company has still gained knowledge and contacts in the marketplace.

Masella’s business model included an approach that supported and encouraged bringing new loan officers into the business. From his perspective, the ability to spend a small amount in training and evaluation to determine the most suitable candidates was a substantial savings over investing in two to four months of draws to a loan officer who ultimately did not produce.

Pat Casey, a regional manager at Suntrust Mortgage, had a different problem. With a growth plan that called for hiring over 140 new loan officers, there was a supply and demand factor at play. There were simply not enough experienced candidates in the marketplace. Meeting the quota would require adding inexperienced or “rookie” loan officers. Suntrust had the training resources in place—a six-week Loan Officer University. But the approach of branch managers forwarding recruits and expecting them to return trained and ready, did not work. The new loan officers still needed an inordinate amount of hands-on training and the managers, already taxed with personal production and corporate reporting demands, couldn’t be available.

Casey envisioned a coaching program where the company’s mortgage trainers worked as surrogate managers and mentors for new loan officers, helping them to navigate the sales and marketing set-up process, and to answer the multitude of questions that invariably come with newly initiated loan officers. In doing this, Casey created a learning environment in his region, because new loan officers had a venue where they did not have to be afraid to ask questions and challenge their beliefs. One of the side effects of the Suntrust program was that new loan officers, once introduced into the mainstream, learned that they were stigmatized for being “rookies.” This caused some to reject the learning environment.

No solution is a panacea, and with each success there are setbacks, but as a business the mortgage industry is beginning to understand the learning process better. Companies with significant resources often commit substantially to training, but fail to create a culture where daily learning, including learning from mistakes, is acceptable. The statement “mistakes are the best teachers,” is a truth and most managers are unwilling plan for and accept mistakes as a part of doing business. As a consequence, organizations that punish learning and questioning in favor of the status quo will never be able to foster a learning culture. Those that are able to, however, will not only find that their short term learning needs are better met, but that their organizations are more suited for adaptation to changing business conditions.

By Thomas Morgan

What separates the top 10 percent from everyone else?

It was Italian economist Vilfredo Pareto that came up with a mathematical formula describing the unequal distribution of wealth in his country, observing that 20 percent of people owned 80 percent of the wealth.  Pareto’s 80/20 principle has since been used to describe many similar situations, including the phenomenon in sales and mortgage origination where often the top quartile (25 percent) generate over 50 percent of a company’s production. When we dig further, often the top 10 percent generate the majority of the business.

This principle has always concerned me—wouldn’t you rather see at least the second and probably the third quartiles produce as much as the elite top 10 percent?  Is this possible?  Certainly it is, but not unless individual loan originators really want to improve their results and create a more secure long-term financial future for themselves and their families.

One obvious question is: what do the top 10 percent of elite producers know that the other 90 percent don’t know?  And could it be replicated?  With the goal of finding out, the dean of our Loan Officer University, Doug Smith, asked the question of our top performers.  It should surprise no one that there was a reoccurring theme throughout the answers.  There are some very clear common denominators that make up the 10 percent difference.

In reverse order of recurrence, here are the top loan originators’ answers to the question, “what makes you a top 10 percent producer?”

10. Become a student of your profession.  Loan officers have been told for years that the key to success is to learn how to become successful from others already there.  Top producers understand and practice this philosophy.  They invest in training, coaching, personal development, and themselves.  Other originators don’t take the time or spend the money for personal development.  As a result they rarely improve their results or their careers.

9. Have a dedication to the job.  Many loan officers appear to be in this business for the short haul; as a job and not a career.  This inability to “stick with it” causes them to fall short in most things they do.  When you are not passionate about what you do, it is hard to be passionate about helping your customers, continual learning, investing money, or anything else that matters for success.  By contrast, the top 10 percent are men and women consumed by the business and truly dedicated to what they do for a living.  They put their heart and soul into their jobs every day, with sincerity, integrity, and a strong emotional drive for success.

8. Be out there selling.  The elite producer out-produces everyone else because they out-prospect everyone else.  They are true salespeople looking for new and more lending and referral opportunities.  This includes regular sales calls to key referral clients, attending industry events, asking for referrals, community involvement, and more.  To write 300 to 700 loans a year you have to be selling and prospecting constantly.  This consistency of contact keeps their phones ringing with calls and new business opportunities.

7. Provide superior service.  It should be no surprise that top producers in a service-oriented industry are obsessed with great customer service.  Mentioned time and time again, superior service is a common trait of the top 10 percent.  This “wow factor” includes many things, from fully informing the customer up-front to handwritten thank-you cards, attending closings, and continual follow up after the closing.

6. Set specific plans and goals.  Top performers are driven by goals.  They do business “on purpose” with specific tasks in mind every day.  They write and follow annual business plans.  They continually strive to reach the next level of success.  It could be said that top producers go further than others because they are clear on where they are going and they have a plan to get there.

5. Follow-up.  Top producers have the discipline to deliver great follow-up.  They are responsive people who also can be counted on to follow through on actions and promises.  Top performers know that we work in a time-sensitive business and that to serve clients well and capture business, you must act fast and you must follow-up again and again and again.

4. Build a team around you.  It is difficult, if not impossible, to originate huge volumes of business alone.  It takes a lot of people working well together in a team environment.  Top producers have been successful at assembling a team of talented people that support their multi-million dollar sales effort.  Having a strong team means that things get done without undue tension, repetitive work and chaos, or blame and finger pointing.

3. Maintain a solid work ethic.  A key attribute of the top 10 percent is simply an unrelenting work ethic.  These people are fully engaged in their careers and are willing to put in the hours that it takes to be successful.  It would be impossible for a high performer to produce $40 million to $100 million a year without investing the time it takes to get the job done every day.

2. Market yourself relentlessly.  Top performers are great marketers.  They realize that the business does not find you, you find it.  These producers sponsor events, buy promotional items, manage database mining campaigns, and dozens of other business-generating activities.  Continuous marketing is integral to their success.

1. Build clients for life.  Some mortgage loan originators work deal to deal.  Because they must spend so much time prospecting for their next transaction, they have little time left over to do anything else.  Top performers have learned the importance of aligning themselves with customers and clients who can help take them where they want to go.  They understand that the mortgage origination business is a business of relationships—with borrowers and referral partners.  These strong relationships keep a steady stream of business coming in the door month after month and year after year.  Mentioned more often than any other single attribute, the willingness to build clients for life is the #1 distinguishing practice of the top 10 percent.

Of the hundreds of loan originators who are not in the top 10 percent, there are many who aspire to achieve success.  To get there, it makes sense to follow in the footsteps of those who are already there.  Knowing, understanding, and following these 10 common practices will lead dedicated sales professionals to enjoying the riches and rewards of a successful and very profitable mortgage career.

The “Top 10 Percent Difference”

Ten things separate the top 10 percent from everyone else.  These characteristics are consistent among all high performers.  To recap, along with what some of the top 10 percent had to say about what made a difference:

1. Build clients for life.  “Customer service sets me apart.  Taking time to understand what they actually need.  Do what you say you are going to do and do it better and faster than everyone else.”
2. Market yourself relentlessly.  “Keep in touch with your referral sources with mail, e-mail, phone calls, lunch, or whatever.  Reach out and touch someone!”
3. Maintain a solid work ethic.  “I am not afraid to work whenever and for however long.  There is no sign on the front door saying we are closed on Sundays.  I let my client know that if they are working, so am I.”
4. Build a team around you.  “We think the difference is that we really believe our team has unique and unmatchable value in our marketplace.  We just rebuilt our entire system from the ground up.  Our team is completely networked.  We are a marketing machine.  We are 100 percent game-ready every day.”
5. Follow-up.  “I am ‘systematized’ in that I have a system and everything to guarantee consistency and follow up.”
6. Set specific plans and goals.  “The 10 percent difference means that you follow through on your plans.  Plan your business in advance and then make it happen.  You will never get to the level you desire if you do not have a road-map to success.”
7. Provide superior service.  “Exceed service-level expectations with both the client and the referral source.  Insure that communication is a top priority.”
8. Be out there selling.  “Arrive at your office early every morning so you can get a leg up on the day so you can spend the majority of your time out looking for new prospects.”
9. Have a dedication to the job.  “Being committed to working the entire day as efficiently as possible, learning from my mistakes, and continuously growing to be better made the difference for me.”
10. Become a student of your profession.  “I seek others’ advice and opinions.  I firmly believe that ‘one’ is too small a number for greatness.  I have always had mentors and sought coaching.”

By Jerry Baker

A new survey suggests that mortgage brokers may need to improve their customer relations.

Lending professionals are fond of saying that making loans is an art, not a science. It’s still pretty true, but decision-making is more of a science now at any time in the past. Mortgage origination – now there’s an aspect of the business that’s more of an art than a science. Origination is all about high-touch, customer-centric activities that are influenced by factors often beyond the originator’s control, particularly if it is an independent originator. Through it all, mortgage brokers have been the consumer’s first choice for more than a decade. Is that extraordinary preeminence threatened after all these years? An independent study indicates that the entire lending business has been alienating consumers, and mortgage brokers receive significantly lower marks than the rest of the industry.

What happened? After almost 20 years of building market share, independent originators are facing a real crisis from the very customers who made them a success. Just as surprising, consumers rate the overall loan process lower than any other financial service, as specified by the American Consumer Satisfaction Index. If you like your managed care health insurance program as an example of a customer-friendly process (read in a highly sarcastic tone here), you might be astounded to learn that consumers found it on a par with getting a mortgage. That’s serious.

The study was performed by Claes Fornell International last year and involved what CFI deemed a representative sampling of homebuyers and refinancers, though numbering only 378 people. In the study, respondents gave their recent mortgage experience a 69 out of a possible 100, inferring that almost a full third of the audience was dissatisfied with their transactions.

In comparison to other financial services, retail banking scored 74, five points higher, and life insurance scored 79, a whopping 10 points higher than mortgage lending. Experienced borrowers, already bloodied by previous transactions, apparently had lower expectations than new borrowers, who gave lower ratings to the process.

Most disturbing were the responses from those who used a mortgage broker versus those who did not. As CFI’s press release stated, “Those who used a broker give dramatically lower scores to the process across the board. This poses a serious challenge both the broker community and to those lenders who use brokers as a product delivery channel.” At last reckoning, that was still most of the transactions out there. A “serious challenge to the broker community” may be an understatement; it could represent the leading edge to a trend that could reverse a decade of progress in professional mortgage origination.

The edge given non-brokers to brokers is not an insignificant one. In every category, without exception, brokers were rated lower than their competition.

Based on the results of originators’ efforts over the years, this is beyond surprising – it is shocking. Especially in the areas of personalized service and willingness to refer to others, the results of this study mean either that the current crop of mortgage brokers compares poorly to those of the past, or that the other channels have come a long way in improving their capabilities. We know that over the years, institutional lenders have made their retail channels look more like the independent equivalents; the basic LO position is pretty much interchangeable. In most instances, affiliated loan originators can offer products outside their own employers, whereas in the past they were limited more to their own offerings. Something has changed over time, and the long-held mortgage broker supremacy in the origination sector could be a thing of the past, unless something happens soon.

One of the more ominous implications comes from the statement, “This poses a serious challenge . . . to those lenders who use brokers as a product delivery channel.” What would happen if wholesalers lost faith in the third-party origination model as it relates to mortgage brokers? They could conceivably restrict their business development to institutional lenders’ offices, since those offices often broker out anyway. In the height of the refinance boom, the sheer numbers of loans requiring attention would have taken care of this problem, but the world is changing rapidly. Market size estimates as of this writing still forecast half the volume for next year from the previous years’ levels. If mortgage banks and other institutions have an edge, it may well be in their ability to throw money at marketing, deploying the resources necessary to capture a greater share of a declining segment.

It can certainly be argued that the sampling size is too small to have validity. Can 378 borrowers out of the millions who obtained loans really represent the actual trend of the marketplace? A.C. Neilsen has used similar demographics for 50 years to chart the trends of television audiences, and there has certainly been a great deal of debate as to whether their findings represent a true picture of the nation’s viewing preferences.

Although it is not readily apparent how the sampling was created, GFI took care to balance purchases and refinances to reflect the first half ’03 market, at 34% and 66%, respectively. Of the 378 borrowers surveyed, 181 worked with a mortgage broker, while 198 worked with a “lender only.” Of those who worked with a “lender only,” 165 had a specific representative (presumably an LO) handling their transaction, while 33 did not. Overall, those who worked with an assigned representative rated their transactions significantly higher than those without, 76/67. So that’s an encouraging sign, supporting our long-held assumptions about the value of high-touch.

What can be done to increase general consumer satisfaction in the loan process, and the success of originators, whether independent or affiliated? According to CFI, three areas are of most interest to borrowers. These included processing time, the convenience of the process and the closing, as well as the energy and expertise of the loan representative. Fix these, and we’re on the way to nipping future problems in the bud.

Processing time should be improving, with all the automation we have at our disposal. It could be said that delays in the process over the last few years were caused by volume, not be inefficient processes. While that might be true, few loan professionals will tell you the process is efficient; just look at all that paper, after all. The process should be more digital—the technology is certainly available, waiting for lenders to put it to use. Closings are prolonged by all the paper, both moving it around and getting it signed, and digital solutions have been in place for years. Perhaps with the refinance boom winding down and lenders begin to worry about things other than loan volume; some of these fixes will be made.

As to the importance of the lender representative, that should be the easiest to fix. As the chart indicates, borrowers are saying, “Tell me accurately, tell me quickly and in language I can understand. Then, keep me informed and answer my questions promptly.” What could be simpler, and harder? Mortgage originators have worked hard to maximize their exposure over the years. But customer satisfaction is now demanding some of those resources. It is no longer enough to drag in the apps just to become complacent about service, knowing there’s another borrower coming in right behind the one you lose. That attitude might have worked over the last year or two, but it is doubtful it will play in the months and years ahead. Back to reality, ladies and gentlemen.

Another area of apparent interest to borrowers arose from the study. “Our analysis suggests consumers may be very receptive to the idea of a guaranteed mortgage package,” according to Roger Park, CFI Senior Consultant. It’s not hard to understand why they would be attractive to consumers, hungry for simplicity in this complicated, transactional space. Of course, HUD has been all over this, but with the departure of Mel Martinez, it is difficult to know how soon RESPA reform can be expected. It is clear, however, that lenders that have run with the GMP concept, such as ABN Amro, have had tremendous success with it. Consumers have spoken, as they will often do, and it’s up to the industry to listen.

The bottom line of this whole surprising development was well articulated in CFI’s announcement regarding the study, in which they pointed out the obvious: “Mortgage lenders will increasingly need to differentiate themselves in these areas to meet with success in the marketplace as the era of ‘how low can you go’ interest rates and huge refinancing volumes draws to a close.” Those who find ways to make the experience simpler and easier to understand, and who stay in close contact with their customers, will become the providers of choice.

Rather like the professional mortgage originators of the previous almost-20 years, come to think about it.

How is Your CSI?
If you don’t have an ongoing program of Customer Satisfaction Indexing, now’s the time to start. You can make it simple by developing a quick questionnaire to send your borrowers using a mail merge from your organizer software. A few critical tips: First, be sure to include postage for the return of the questionnaire; Second, keep it customer-friendly by making it brief and easy to complete – no more than 60 seconds of your customer’s time, unless they elect to add comments.

If you get some surprising answers, consider getting more detail from the borrower with a follow-up phone call. You may have a problem with someone’s attitude within your organization that surfaces using CSI. If you do, research the matter carefully and take appropriate action. Be generous with your thanks to customers for taking the time, and consider a premium, such as a discount on a future service, as an incentive to respond.
Your mailing can be as detailed as you like, or as simple as this:

At XYZ Mortgage, your satisfaction is our greatest concern. You can help us to serve you better by taking a moment to give us your feedback on your recent transaction. Please rate us from 1 (low) to 10 (high) by circling your choice on each item and return it in the enclosed stamped envelope. Thanks for your time!

Friendly, helpful attitude: 1 2 3 4 5 6 7 8 9 10
Answered all my questions: 1 2 3 4 5 6 7 8 9 10
Returned my calls quickly: 1 2 3 4 5 6 7 8 9 10
My Loan Rep was easy to reach: 1 2 3 4 5 6 7 8 9 10
Kept me informed of my loan’s status: 1 2 3 4 5 6 7 8 9 10
Made sure I understood the process: 1 2 3 4 5 6 7 8 9 10
Was convenient to deal with: 1 2 3 4 5 6 7 8 9 10
Gave me the best possible rate and fees: 1 2 3 4 5 6 7 8 9 10
Were knowledgeable and professional: 1 2 3 4 5 6 7 8 9 10
Overall satisfaction with my transaction: 1 2 3 4 5 6 7 8 9 10

Any other comments for us?

If you would like to recommend our services to a neighbor, acquaintance or family member, please let us know how to reach them!

Once you have the customer feedback in hand, take the necessary steps to correct any real or perceived negative opinions. In addition to calling unhappy customers, you may need to enhance your overall customer service program and expand your marketing efforts to help tell your positive story.

–James Hennessy