Category: Management

The role of a production manager or branch manager is not to simply maintain the status quo, but to be proactive in driving the behavior necessary for success in a changed market. If your loan originators are still approaching 2017 with 2016 attitudes and habits, you have a problem. Purchase loans are now the name of the game and direct calling responsibilities are once again paramount. Therefore, from a manager’s point of view, the following questions are worthy of serious consideration:

1.  What changes in behavior will my production team have to make to succeed in a different market?
2.  Are all of my loan officers prepared to recognize and take advantage of each sales opportunity?
3.  Do they have a prepared and rehearsed statement with which they are comfortable?
4.  Will their personal statement help to differentiate them from the masses?

The prepared statement to which I refer is not a regurgitated company mission statement. Those are usually not stated with the enthusiasm and conviction necessary to sway or impress anyone. I am talking about a planned and rehearsed power statement that will create interest and a greater opportunity to develop working relationships. Your job as a manager is to be sure your team members have prepared a personal power statement. Because everyone is different and has a different approach both in language and personality, a power statement cannot be dictated from on high and be the same for everyone. It must be a disciplined and rehearsed statement that grabs the recipient. The enthusiasm and conviction required will only occur if it is created on an individual basis. Make sure this topic appears on your next sales meeting agenda.

By way of example, can you imagine the following conversation between a loan originator and Realtor, neither of who know each other, nor each other’s job?

Realtor: “Hi, my name is Mary what is your name?”
LO: “Pleased to meet you Mary, my name is Dan………..
Realtor: “And Dan, what do you do?””
LO: “I do loans”

Although Dan’s response may be true, the manner in which he responded is hardly going to entice or encourage Mary to probe further. In a world where first impressions are critical, and where observing the motto “Observe what the masses do and do the opposite” is mandatory, Dan’s response places him with the multitudes that never set themselves apart. When presented an opening to succinctly state what you do, you must be prepared to jump through the window of opportunity, not simply slam it and break the glass in the process.

The odds are good that some day you will attend a Broker or Realtor luncheon. Often the sponsoring entity will pull one or two lender business cards out of a punchbowl and allow those chosen to deliver a two-minute commercial to the meeting attendees. This is a window of opportunity. You can choose to be prepared ahead of time, and rehearse what you will say or you can do what most originators do and wing it. The latter approach will not set you apart; in fact you will become lost in a sea of lenders who don’t get it. No opportunity should ever be lost to make a marketing point or strengthen the perception your customer base has of your abilities and professionalism.

As a manager your loan officers should have a prepared statement that is concise, compelling, and memorable. Within the world of marketing this is called an “elevator statement,” whereby you can tell me what you do and the value propositions for why I should work with you or use your product in the amount of time it takes you to complete a short elevator ride. If it takes longer, your statement is too long.

If your loan originators were to be called in a random drawing during the next Realtor function you attend, what would they do? The reactions cover a wide spectrum. In my experience having attended hundreds of such meetings all over America, I have seen it all. Most are unprepared, some are so nervous you could hardly hear them. Then, there’s terminal TMI (too much information). Some are too short, others too long. Too many “ums” and “uhs.” For some, the color rises in their face from about their chest up. By the time they get to the podium you can visibly see their neck turn from flesh pink to red. Today’s originator must be a professional, in all senses of the word. That includes being comfortable in either one on one or group settings with a prepared “power statement”.

A power statement makes your product or service outstanding, understandable, credible (incredible), and buyable. It’s a memorable (nontraditional) statement that describes what you do and how you do it in terms of the customer and his/her perceived use or need for what you are selling. The objective is to persuade and motivate the prospect (borrower, originator, or Realtor) to think and act. It builds credibility.

If you took these power statement characteristics and began to formulate your own, you could start practicing today. The key characteristic is to make your power statement memorable. You cannot allow your statement to sound like everyone else. It must also include the value proposition of how the customer will benefit. The customer is always inquiring with either, “What is in it for me?” or “how will I benefit by using this person as a lender for my borrowers?” Your power statement must answer these questions.

Here are five steps to developing your personal power statement:

1. Write out a preliminary prototype.
2. Try it out on customers for a week and identify the portions you wish to fine tune.
3. Practice your statement until it is absolutely routine and does not sound staid or like you are reading it. The more conversational in tone you can be, the greater the attention and acceptance.
4. Find one thing you can hang your hat on that is not what everyone else says.
5. Do not be afraid to constantly change and fine-tune your power statement.

Assume you are addressing a Realtor’s weekly sales meeting and have been given an opportunity to say a few words to those in attendance. Given the fact that weekly meeting agendas are usually filled with more issues than time allows, you may be scheduled for no more than three minutes on some occasions. Do not spend your entire allotted time on your products, pricing, or reputation. That is what 95 percent of everyone else does. Remember this quote—”Observe What The Masses Do and Do The Opposite.”

For example, if you were addressing a Realtor, you might consider the following: “Your long-term success as a Realtor is dependent upon your continued referral business. _______________’s (your company name) commitment and my personal commitment to you is to absolutely make sure your borrower is so pleased with their entire transaction that they will not only return to you for their real estate needs, but continue to refer their friends and family to you as well. I don’t make this commitment lightly because my success is your success.”

Of course, that is just one example. Encourage your loan officers to begin working on their power statements today. In a changing market like we are currently experiencing, their sales skills will be tested. Make sure your production team’s personal power statement passes the test.

By Bill Evans

Avoiding your own business disasters.
“Preparation is the key to all things — except spontaneity.”
– John Edgerly

Most people in Southern California remember where they were when the recent fires came. San Diegans remember seeing the smoke shroud their city and many saw the flames with their own eyes, as hundreds of homes within the city limits were lost. It was the great Firestorm of ’03, and for thousands of people in the (once) Golden State, it was a cataclysmic, life-changing event. For 22 others, it was an event that ended their lives. For all of us, it was an example of courage and bravery that was betrayed by poor planning and shortsighted preparation.

As business people, we are challenged every day to manage within a set of circumstances we cannot control. If we could control all aspects of our business lives, it would be perpetually easy, which it certainly is not. So preparation is a constant in our lives, and as the old saying goes, “Fortune favors the prepared.” What must we do to anticipate the business wildfires that threaten our economic futures, and how can we assure the necessary assets are available to fight them when they come?

In firefighting, as in military operations, assets are key. But being the United States of America, bureaucracy can and does rear its ugly head, getting in the way of deploying the assets needed to achieve an objective. Mortgage originators are no strangers to roadblocks raised by bureaucracies; virtually every lending regulation we deal with today began life as a bureaucratic knee-jerk to a perceived problem. Ideally, we would plan and prepare to deal with roadblocks in order to avoid disaster. In the case of California’s Firestorm of ’03, there were unfortunate bureaucratic snafus that proved costly for many families.

Southern California is a center for military activity matched by few others in the world. Part of that presence includes hundreds of aircraft, many of which are easily rigged for dropping water or chemicals on fires. When offered the immediate services of a number of fixed and rotary-wing aircraft, the California Department of Forestry declined the assistance, even as their own assets were being overwhelmed. All of their aircraft were distributed throughout the state, leaving virtually none to combat the fire that would become the largest in California’s history. So why in the world would they prohibit the use of military aircraft flown by world’s best aviators? In two words, bureaucratic procedure. Their procedure required that all pilots and aircraft must first be certified by the CDF before being allowed to serve in firefighting efforts – a rule clearly aimed at civilian pilots and general aviation aircraft. But these weren’t traffic ‘copters waiting for orders on the flightlines, these were Navy and Marine Corps fliers, trained to combat fires on their own bases. Nope, the bureaucracy said, as homes burned and people died, they don’t count until we qualify them.

In emergencies, you can only be so prepared; surprises and contingencies arise which turn predictable circumstances into emergencies. Still, as Ben Franklin said, “An ounce of prevention is worth a pound of cure.” Preparation can keep an emergency from becoming a disaster. Had someone made the discovery that military assets needed to be certified before being deployed to fight fires, Southern California’s disaster might have been lessened substantially.

The fires will come to our industry, and in fact have already begun. Coming off the largest mortgage market in history, those left unprepared will have few alternatives to evacuating the business and finding refuge in another line of work. The time to prepare began months ago, but the low rates have bought a certain amount of time for late planners. Where does your company fit into this all-important timeline, and what form should your preparations be taking?

Change your personal paradigm. Even in a business as fast moving as mortgage origination, people can get set in their ways. There were many types of loans originated prior to the refinance boom, and there will be many originated when it is a fond memory. Consider new ones, rather than continuing to hunt for refi customers. Become familiar with home equity credit lines, subprime firsts and seconds, and the old standbys, FHA and VA. The good news: there are plenty of wholesalers ready and willing to help you make the transition to entirely new loan offerings. The subprime world, for example, tends to be countercyclical in nature, fairly immune to market swings. Subprime lenders expect minimal impact from the end of the refinance boom, since their loan products meet borrower needs that can actually escalate in slowing markets. Another growing market segment is the “Alt A” world, which caters to borrowers who have good credit, but are non-conforming in different ways. Above all, be open to changes in your personal paradigms and resist the temptation to avoid change.

Maximize your database. When was the last time you made good use of the database of borrowers you have developed over the last three years? If it was merely to form a mailing list for refinance solicitations, it’s time to do something different. If you’ve been harvesting information about your borrowers and their individual situations, use the information to create a new approach, like predicting their changing loan needs. A child nearing college age often means a need for tuition money, and possibly an interest in a smaller home as the parents become empty-nested. Kids approaching driving age generally presage a need for additional cars in the driveway, a good time to be recommending an HEL. You have the information, and there are dozens of ways to use it to your and your borrower’s advantage.

Invest wisely. As volume decreases, the natural reaction is to ratchet spending down to a bare minimum. But as you do so, don’t neglect the necessary areas of training and marketing. When the fires come, your competitors will tend to cease any kind of investing in their future, which leaves them vulnerable to growing stale and becoming unknown. Invest wisely, but invest in the future of your company by making certain your field representatives are the most professional and educated ones out there. Look into seminars for your field people; they are generally very reasonable and can result in dozens of new ideas to inspire and motivate loan originators. Invest in getting the maximum visibility for your company at a time when others are letting their name recognition dwindle. Do not ignore your advertising and marketing efforts in the name of economy, but rather become more creative in the ways you allocate your resources. You will stand out more, because others are disappearing into the woodwork.

Be demanding of your wholesale sources. Who offers processes that can help you do more with less? Which among your lenders has innovative programs or has a record of being open to ideas coming in from their field originators? The best ideas seldom begin in the home office; the smarter lenders realize this, and therefore may be eager to explore new loan programs to meet emerging needs (McDonald’s greatest success, the Big Mac, was suggested from the field, not the home office). These are the lenders with which you probably want to become allied. Along the same lines, some of them may offer co-marketing programs for niche markets and specialized products; your wholesale reps may regard them as “unadvertised specials” that you won’t hear about until you ask.

Reexamine your business model. You may find doing business as usual is an unattractive response to the changing market, even after you’ve installed a new set of product offerings. Sometimes smaller is better, and sometimes it is not. So then is net branching right for you? It might make sense to explore the possibilities of joining a larger company with greater resources and capabilities, such as more sophisticated systems, marketing and processing assistance. Many net branch companies can make it possible for you to downsize your staffing requirements without sacrificing service quality – and even improve on your current capabilities while enabling you to save on payroll. Or perhaps you might look into obtaining a warehouse line to gain “lender status,” adding to your income potential. This option will make your life more complicated, as having a warehouse line brings with it an entirely new set of business requirements and procedures. But it also offers the potential to grow your business if you are in a market that is underserved or offers niche growth, one waiting for a specialized entrant. Examples include ethnic neighborhoods or other similar affinity situations where you can offer differentiated services and products.

When the fires come in the literal sense, most of us can only imagine the magnitude of fearful anticipation a family might experience as they abandon their home to the forces of nature. Or the stress of not knowing for days at a time whether their home survived. Or returning to a neighborhood and finding nothing but ash and the cinders of lost memories built over lifetimes.

During the great firestorm of 2003, the fortunate had time to prepare and load their cars with photo albums, important documents, irreplaceable keepsakes, and family treasures. Others, owing either to the speed at which the fires moved or to the lack of preparation for broadcasting evacuation warnings, had no time to gather heirlooms and critical items – and escaped with the clothes on their backs. Next time, it will be different, because of the lessons learned. Building codes will be modified as neighborhoods are resurrected, procedures among the bureaucracies will be reevaluated, and hopefully fewer families will lose everything.

In our business, the threats looming with the sweeping changes ahead will be met more effectively if lessons are learned about preparing for a catastrophe before it strikes. To do otherwise courts disaster and leaves your company’s future to a hostile fate, when the fires come.

By James Hennessy

Over 30 percent of the population identifies itself as non-Caucasian. This number will increase to almost 50 percent by the year 2050 and will have a large impact on both your workforce and your clients. It’s critical that managers and others are in tune with diversity issues.

It is important to have a clear definition of what diversity is and what it is not. Traditionally, diversity has meant one’s race, gender, ethnicity, and age. Today, a more inclusive view considers religion, educational level, personality style, marital status, and socioeconomic background. Blended, all of these elements define the total person and influence their decision-making and communication methods. To “value” diversity is to consider, appreciate, and even celebrate these differences among people.

Valuing diversity is not to be confused with affirmative action, which refers to regulations and related programs designed to eliminate discrimination in the workplace and enforced by the Equal Employment Opportunity Commission (EEOC).

When planning any new initiative, a leader must evaluate return on investment. Valuing diversity in your organization is not only a positive influence in the workplace; it also makes good business sense.

One of the fastest growing segments in the mortgage industry is emerging markets. In this decade, the Census Bureau projects non-Caucasians will account for almost 80 percent of the total population increase. Companies are dedicating valuable resources to tap into this growing segment of the population. It is critical that companies have a workforce that is representative of their clients. This includes staff members who can understand not only their clients’ language but their cultural norms as well.
Most people agree that a company’s greatest resource is its people. One way to become an employer of choice is to develop and maintain a proactive diversity program, including hiring employees of different races, genders, and age groups. Talent acquisition is easier and employee turnover rates are lower when people feel valued and appreciated. This is a powerful tool during job fairs or college recruiting.

Another reason to promote diversity in the workplace is the inclusion of different perspectives when tackling business challenges. Through their experiences, people develop their own lens, so to speak. Viewing differences as an asset instead of a liability can foster creativity and help ensure all viewpoints are taken into consideration. This increases the likelihood that the best solution will be developed.

Companies can take several proactive steps to facilitate a successful diversity program rollout. A program with executive commitment and grass roots support is more likely to succeed than one without these components. It is also critical to obtain the support of senior managers. Employees must believe there is a true commitment from management via employee meetings, articles in company publications, and other strategies. Otherwise, the program could become or be seen as a “flavor-of-the-month” initiative.

Communicate diversity program goals to employees frequently. Obtaining early input provides employees with a sense of buy-in and strengthens their commitment to the success of the program. Clearly establish the benefits of the program to the employees, as opposed to maintaining the status quo.

Here is a partial list of what some companies are doing to promote their diversity efforts:

• Ensure that senior management actively supports and champions the diversity cause.
• Create a vision or strategy statement discussing the company’s diversity goals. Cascade this information down to all levels of the organization and post to the corporate Web site.
• Ensure all written policies and employee handbooks include the diversity strategy.
• Develop a comprehensive diversity training curriculum for managers, supervisors, and employees.
• Build a mentoring program to provide people with the tools for advancement within the company.
• Utilize focus groups or employee surveys to obtain feedback on how well the diversity program is performing.
• Create employee networks to represent different groups within the company. This enables various groups to elevate any concerns and support the company’s efforts.

Promoting and valuing diversity is not just the right thing to do. It is a way to differentiate your organization from the competition. By attracting and retaining the best people for your company, you ensure the long-term success of your business.

With the overwhelming loan volume that we’ve been experiencing and the potential strain on office morale, there is a tremendous need to attend to our assistants, processors, underwriters, and operations staff. We should all be trying to compensate the staff for their extra time and effort in this busy market. I have heard stories from people at several companies about their overwhelmed back offices. This includes their processors bringing loans home nightly, tempers raging, and underwriters and closers working well into the night and weekends. It’s all management can do to maintain the situation before the support staff burns out. As loan originators, we can make a difference. These people make us look good and help us get through the tough times. Do something nice for your staff. Recognize that you are the one reaping the bulk of the financial rewards.

I recently saw how stressed my assistants had become from the day-to-day grind in their work and personal lives. We are experiencing the same hectic work environment as everyone else with volume-related issues and it was beginning to take a toll. It was apparent that I needed to do something to show that I cared, that I knew what they were going through.
I created what I thought would be a great experience for my team. At 10 a.m. on a Tuesday morning, I called a quick office meeting. I told them to grab their jackets and purses, go downstairs to the building’s entrance, and prepare for a “field trip.”

Awaiting them downstairs was a black-stretch limousine. Their driver took out an envelope and read them a letter I had prepared in advance. The letter explained that they had gone above and beyond all expectations and that I wanted them to take a little time off for themselves. The driver then gave them each an envelope containing two things—a personalized note expressing my gratitude for continuing to make our office and my business a success, and cash. He took them to the designer outlet mall to shop and have lunch. They were told that I had one stipulation—they could only spend the money on themselves. Meanwhile, I would cover the phones while they were away.

Shortly after they left, I received a call from the limo with three excited women. They were ecstatic. This was completely unexpected and needless to say, well deserved. But it wasn’t the money or the limo ride that made the real difference. It was simply the fact that someone took the time to recognize their hard work and dedication.

My loan manager, Pam Mahoney, said, “Words can’t describe how great this was! To be told you have to leave your job on company time to go shopping and have lunch was the second greatest thing that ever happened to me, (the first was marrying my husband). I honestly feel that I am being recognized for my efforts!”

Joanne Flaherty said, “I truly feel appreciated. It was such a nice gesture. It was time away from the office in one of the busiest markets in history and Mike is taking time away from his job by answering the phones and taking messages for us while we are out having fun.”

“This was just incredible,” said Dawn Pirrotta, coordinator of client services. “It came out of nowhere and I still can’t believe it. We had a blast seeing each other out of the office environment, and now feel that we truly make a difference and are being rewarded for it.”

You should have seen them when they came back from their trip. They walked back into the office with lots of shopping bags. And from what they told me it was truly an adventure. They had many stories about what they did, where they shopped, and how the limo drove through the Burger King drive-thru.

The assistants got out of the office together. They had such a fun time bonding in a non-work related environment and realized that they were important to the day-to-day success of this office. But what I think made the most difference is that they knew they were appreciated and that they were given this “field trip” during working hours. I realized that it wasn’t necessarily the best use of my time as a loan officer to cover the phones, copy, and fax for several hours, but it was definitely good for them and, in the long run, for me as well.

This brings home the reality that most of the office staff in mortgage companies are probably overworked to some extent. Recognizing your team doesn’t have to include a limo ride or shopping trip. You just need to find the best way to show them that they are appreciated and that what they do every day makes a difference.

By Michael Dunsky

It is more cost effective to keep a valued employee who understands your company’s culture and products than to incur the costs associated with hiring a new employee. 2002 was a very busy year for the mortgage industry, and many companies found it difficult to hire the right candidates to fill the positions required to handle the increased volume and employee turnover. Successful companies are shifting their efforts from hiring to employee retention. This applies to all the job families in your company: loan officers, operations staff, and even temporary employees. Here are four ways you can keep your good employees:

Training. It is essential that you provide learning opportunities to enhance the professional skills of your staff. Even if your company does not have a formal training department you can leverage the internal expertise of your seasoned employees or managers. You can minimize impact on office productivity by holding “lunch-n-learn” sessions. Cross-training your staff provides them with the ability to perform multiple tasks that will give you the flexibility to handle normal spikes in volume. Another option to increase employee knowledge is to have them take correspondence or Web-based industry-related courses. These are usually cost-effective and can be completed during non-business hours. You may also wish to establish minimum training standards for all employees, e.g. all employees must attend 40 to 80 hours of training per year. If your company offers tuition assistance, encourage your employees to participate in this program. This will increase their loyalty to you and the company.

The Mortgage Bankers Association of America offers instructor-led, Web-based, and print-based courses to meet the industry’s training needs.

Recognition. Many people think that money is the only way to recognize and motivate employees. It is important to pay a competitive wage, but people want to feel appreciated. A common mistake is to give all employees approximately the same merit increase. It is important to pay your “star” employees more, showing your staff that you reward hard work. Take the time to publicly praise individuals for going beyond their normal duties. Another powerful recognition tool is a hand written thank-you note. This will have more impact than an e-mail acknowledgement. On occasion, you may wish to buy lunch for your team to show your appreciation for working extended hours.

A unique way to recognize your staff is to provide them with office or desk accessories that are different from other employees’. You could provide a nicer chair, a larger monitor, or a nameplate that distinguishes them as one of the best. These gifts are useful and let visitors know they are a high-performer.

Communication
Employees quit managers—not companies. You should meet individually with your staff at least twice a month. Ask your employees about their goals and family. Busy managers cancel appointments with staff first, which is unfortunate. During these challenging times, employees need to feel they are being heard. This lowers stress and keeps them motivated. Remember that people have their own individual needs and you cannot handle everyone the same way. Treat others the way they want to be treated, not the way you think they want to be treated.

It is a challenge to communicate with geographically dispersed teams, so you should all meet together as often as possible. One cost-effective method is using a Web-cast service. Several vendors can provide means for communicating with your staff for meetings, training, or product rollouts. Purchase a small video camera for your computer, and your staff will also be able to see you. This is especially important for newer team members.

Collaboration. Ask your employees to provide you with suggestions to streamline business processes, change company policies, or improve the working environment. They are closer to the situation than you are and will appreciate the fact that you asked them for their opinion. Of course, you can’t implement every idea you are given, but take the time to actively listen. By getting your staff involved, you are showing them that you respect their talents, which will enhance their self-esteem. If you do implement an idea, recognize the person who made the suggestion. Let everyone know why the suggestion was implemented, e.g., reduced approval time by a certain percent or saved the company a certain amount of money. As an incentive, provide a monetary payout based on increased revenue or expense reduction to motivate the staff.

Even if you do everything right, sometimes a good employee will tell you that they want to leave. When this happens, give them your undivided attention and determine the root cause of the problem. Try to solve the problem and convince them to stay. If you cannot, wish them luck and let them know they may be able to return if things don’t work out for them.

The bottom line is: If you treat your employees with respect, they will treat your customers with respect, ensuring the long-term success of your company.

By Mark A. Draganescu

“Life is what happens while you’re making other plans.”
–Various attributions

Planning is a pain. Which is precisely why many of this magazine’s readers tend not to plan beyond the current month’s originations and closings. If you are one of these, do not feel alone; it happens in much larger companies all the time, because planning causes pain. There’s just so much to do; who has time to project what is going to happen in the future?

The refinance era—it has gone on so long now, surely it can no longer be merely a “boom”—has contributed to the natural reluctance to plan. Fire a cannon in a mortgage-industry hiring hall, and you won’t hit a soul. Given the continued demand, the industry is close to full employment, indicated by the levels of activity out there. No one has the time to do much of anything besides prepare for month-end.

But they must. We must, if we are to persevere as an industry, and for precisely the same reason that we have been so busy for the last few dozen months: refinances. While they are enriching us at the moment, their absence will sound a death knell for many current industry practitioners. There is inevitability here similar to a hard drive crashing—it’s not a matter of if, it’s a matter of when. And if it’s like that hard drive, it will be at the least convenient time.

Why Plan?
Having a good plan can help you survive when the post-refinance Era comes, and to thrive in the interim. It’s a difficult time in business. Not just our business, but any business. Stock prices have fallen, resulting in lower market caps, affecting companies’ abilities to innovate and expand. The difference in large, public companies is, of course, their resources in strategic planning. Many of them have platoons of analysts preparing all manner of contingency plans involving tens of thousands of people. Among mortgage lenders and securitizers, this is less true. Most of them are thinking about industry consolidation and survival, while at the same time trying to be as competitive as possible for the loans generated by the origination community. Originators, being mostly small businesses, are trying hard to do what they do best—serve the customer. Which is a good thing, and the reason they control somewhere north of 60 percent of the retail transactions out there. But the high activity levels can leave them with reduced energy and resources to plan, or even give the concept serious thought.
So it is a great time to lay in a New Year’s resolution to plan for the future, with all its inevitability. The process doesn’t have to be overly painful. In fact, you may just find it revealing, recharging, and even inspiring—if you follow some simple steps.

Take charge. A business plan will help you take control of your future. It will help you deal with your creditors and potential financiers, it will serve to communicate your vision to your associates and support personnel, and it will help you crystalize your own thoughts about the future. At the same time, it will force you to pay attention to key issues that affect your livelihood—and your survival.

Make sure it’s workable. An unrealistic plan can do more harm than good, because it leads to disappointment and failure. 100 percent market share doesn’t work for anyone, and a billion a week in fundings only works for a handful of mega-lenders out there. Keep your plan items within the realm of possibility, but don’t be afraid to stretch a little and challenge your people to achieve. It’s a delicate balance.

Remember that it’s a “living document.” Historians will tell you that a key weakness of Japan in WWII was the inflexibility of the Imperial High Command to deviate from carefully created strategic plans. In business, companies of all sizes have to be as nimble as possible to benefit from rapidly changing market conditions. You have an advantage over large firms because of your size and ability to effect course corrections quickly. Not so easy for your large competitors, with committees, task forces, management hierarchies and budgets set in stone.

Make certain your plan allows for deviations and changes dictated by the market. It should be a “living document” that is constantly examined and amended to meet current needs and future challenges. If, for example, you are concentrating on government loans in your market area, but prices are edging up into more rarified “jumbo” air, perhaps it is time to rethink your plan. Shifting focus into different neighborhoods or migrating away from government loans may be the way to go, rather than stubbornly fighting a losing battle for a larger share of a diminishing market.

Don’t get hung up on formality. It matters less what your plan looks like than what it says. You can spend a lot of time worrying about form and format, playing with templates and making it pretty, but it may not improve the content. If you are clear about your short-, medium-, and long-term plans, they can be memorialized on a cocktail napkin and be effective. This is not the recommended final form, of course, but it is better than having a beautifully finished, leather-bound document that is of no real value.

Help is available. A variety of resources can help in the process, depending on the desired result. A Web search will reveal dozens of alternatives in software packages and advice available from all manner of experts. Most of these are aimed at creating a business plan for funding or capitalization, but there are permutations that are designed to help you plan your work at an existing enterprise.

The Process
Whether you run an origination department for a lender, are an independent mortgage broker, or are a loan officer within an origination company, your plan should reflect your personal goals and priorities. Think of a permutation of a business plan that serves as a guide when you plan your work: a career plan. Ultimately, your career plan should flavor the business planning process by leading you in the direction you most want to go. While a business plan describes the steps that will get you to a broader goal, the career plan will describe something more. In simpler terms, one plan will be tangibly oriented toward “What do I want to have/How much do I want to make?” The other plan will address deeper directional values, namely “What do I want to be/Where do I want to end up?”

Think short-, medium-, and long-term. Given the immediacy of the mortgage lending business, “short-term” means 30 to 90 days. “Medium-term” means 90 to 180 days, and long-term can mean 180 to 360 days or longer. It is important to make these differentiations, as they will drive your priorities as the year develops.

The plan as an elaborate “to-do” list. The difference is the scope and breadth of each “to-do.” Instead of language like, “Call Bob regarding Web site design prices,” the statement might be something more like:Web Site Redesign Initiative: Determine redesign look and feel by March 1. Requires prices from three sources by January 31 and decision on design provider by February 15. Provider must be able to deliver for go-live date of April 1 and stay within budget of $____.

Specific is a lot better than vague. A vague plan item works in a narrative summary section, but is useless in a list of plan line items. For example, “We’re going to do all the business we can as long as the market holds” is nice, but useless. Of course you’re going to do all the business you can as long as the market holds—but how? Current customers who have refinanced within the last three years are a good place to start, but instead of modifying the statement above to read, “We’re going to do all the business we can with existing customers,” a plan line item like this might be more productive:

Develop Business from Current Customers: Quarterly mail campaign to current database. Follow with phone follow-up and/or voicemail broadcast. Dates: Feb. 1, May 1, August 1, and November 1. Design: Seasonal themes, designed by George and Martha, with special value offer TBD. Delivery: Mailings R Us. Deliver database 10 days prior, final copy 5 days prior to drop. Follow-up: Issue leads to LOs three days following mail drop, for completion within seven days following drop.

Specific is better than vague, and should include time sensitivity and available resources, as well as any other quickly stated input you care to include. The purpose is to provide a road map, but not necessarily every turn and stop sign, at least not at this stage.

Quantify everything you can. If you know how much income you want to have, work backwards to determine how many loans you have to generate. This simple step will lead to a multitude of ideas for steps that will be required to help you arrive at those numbers.
Each of the subject areas may have many pieces, which you will uncover by giving each of them thought. Before you know it, the plan will take shape, and you may be surprised at the level of detail you are carrying around in your head but never memorialized on paper.

Consolidate and organize your specifics. Once you have thought of major initiatives you need to undertake over the course of the year and have broken them down into specific steps, check your list for duplications and items that can be linked to others. Some, for example, will have dependencies on other action steps, and can be added as bulleted items below those steps instead of being steps of their own. Consolidating your specifics this way will add crispness to the finished document, will reduce its size (thereby reducing the intimidation factor), and add to the chances for success.
After consolidating the specifics, organize them into related results areas, using your word processor’s cut-and-paste option. After organizing, the product should be a series of major results desired, followed by a bulleted list of steps needed to achieve them, all in a readable, logical form.
Congratulations: you now have a business plan. Or at least a rudimentary one, which puts you in a high percentile among your peers.

Test the plan. “Test” in this instance means a read-through for obvious fallacies, unfounded assumptions, or outright blue-sky that has no chance of coming to pass. In all likelihood, you will be its worst critic. An acid test of the plan is the question: “Does this help make me what I want to be?”
For example, assume for the moment you do not want to be dependent on refinances for the rest of your professional life. Is there a step in the plan that steers you back toward the purchase market? If so, what are the action items that will add to your success, and how do they impact your budget? Training from a pro who specializes in Realtor business like Greg Frost can be acquired, but requires a certain amount of time, expense and commitment. Be sure steps like these are included to keep your plan from being too general.

Share the plan. The people you work with are great resources. If you are comfortable doing so, bounce the plan (or portions thereof) off them and see how they respond. You will probably get some additional suggestions, and more importantly, may find you have overlooked some potentially major opportunities.

Set the plan in wet cement. No good plan is permanent. As mentioned, a good plan is a fluid and living document, requiring constant attention and tweaking to be truly effective. But that does not mean you shouldn’t commit to the plan. Think of the plan in the same light as a long-term personal relationship. They are never static and require loving attention to sustain over the long haul, two qualities inherent in most successful commitments. So even if you are not carving the plan into stone, at least set it in wet cement, allowing for course corrections and never quite becoming permanent.

To work the plan, you must read the plan. The worst thing you can do, aside from not creating the plan in the first place, is to put it in a drawer and forget about it. Instead, keep it someplace where it is regularly reviewed and used to inspire you.

Parts of it will affect and inspire your organization, so capsulize those parts and post them where everyone can see them with frequency (at the copier, in the break room, and around workspaces, for example). Another tip is to schedule a read-through of the plan at regular intervals.
The power of planning is as old as time itself, and given that we are fairly intelligent human beings in this industry, it is odd that so many of us do not have annual plans for our businesses. Given the results practitioners feel when the plan is created and followed with a successful result, it is especially surprising more people don’t follow the process religiously. With 2003 shaping up as a year full of challenges for mortgage originators (saturated markets, uncertain investors, retail-hungry mega-lenders, and RESPA, to name a few variables), a well-conceived plan is looking more like an essential than a luxury. Even if it doesn’t become a religion per se, it might be just the thing to give originators a prayer.

By James Hennessy

“Working smart” is becoming the best method to successfully manage your business and employees. It allows you to manage for the best return on your time and effort. To work smart you need to know how to measure up, hire the right people, make your money work, select the right vendors, and take care of yourself and your team.

Measure up. Many business books advocate that you should have a mission statement. Most of us have probably seen mission statements on corporate walls filled with lofty, unrealistic expectations. Why bother with one? Because, when you provide the means to live up to the statement and a method to measure the results, it works.

HomeSmartz is a company that understands why it exists. In fact, their reason for being is backed by a guarantee. Jason Hellman, vice president of HomeSmartz, explained that the company’s guarantee is a four-part promise to their clients:

1. You will always work with a trusted mortgage professional.
2. You will receive smart financial advice.
3. You will experience brilliant customer service.
4. We will provide the lowest overall cost loan.

Hellman went on to say that “We believe trust, customer service, and loan cost are fundamental requirements of our industry. Our success is based on providing these fundamental requirements and by differentiating ourselves by providing smart financial advice. We routinely evaluate our internal business, as well as our mortgage plans, looking for smart choices.”

If you don’t want to call it a mission statement, try keys to success. I liked the Web site for strategy ideas to make your mission statement work for you. Have a look at Module 2, The Three Strategy-Making Tasks (vision/mission, objectives, and strategic choice).

Hire the right people. We have all done it—hired someone who interviewed well, had the background and to our surprise, it didn’t work out or we lose them to the competition. A company that measures up can communicate its needs and where it will take a potential hire. Take the time to really think through what the aim for a new recruit is.

United Mortgage’s president, Kelly McGuinness, took a successful approach to measuring up and hiring the right people a few years ago. I called her to ask her how she manages to always attract the right team members. McGuinness told me that her entire staff participated in an offsite meeting to define the corporate culture. With that established, they tackled what they wanted from team members, in particular their loan officers. They researched the loan officers who have worked at United to see what made a good or a bad fit for the company. A few of the items they developed to work smart are:

• A recruitment strategy document.
• A multiple method, multiple person interview process finalized by voting on the candidate.
• Ads designed to attract the candidate that fit their culture.
• Ten questions for phone interview elimination process.
• Materials about the company that are mailed to the top candidates prior to the interview.
• Well thought-out questions for the top candidate first interview and the second interviews.
• Candidate ratings check lists. One of the lists smartly included the impression the candidate made on the receptionist.
• A test to determine mortgage aptitude including role-play responses and a test to determine how sales candidates perceive success and failure.
• Recruitment checklist that serves as a summary page; candidate basic information, test scores, rating scale data.

It is clear to me that the steps McGuinness took in 2001 paid off; her company is doing quite well. If you don’t have a formal hiring process, schedule time to create a process. There are many Web sites that will help you throughout the process and help you design your own tests.

Make your money work. When you have to buy things for your business operation, make that money work for you. If you do not have a company credit card, you may want to take a look at one. Desert Document Services pays every bill it can with American Express for the valuable reward points. The reward points are used for a variety of items including travel, office supplies, gifts for customers, and more. Offering credit card payments to our customers was the next step. One customer has plans to use his points to send his Super Star loan officer on a reward trip to Hawaii. The points can cover airfare, hotel and some meal tickets, a nice use of the points.
Select the right vendors. A vendor must improve your ability to measure up, attract the right employees, and make your money work. While assisting one of our customers with building a scorecard for selecting technical vendors (accounting, loan origination software and customer retention tools), I found a great resource for checking references.

Jimmy Sawyers, director of consulting, at Reynolds, Bone & Griesbeck PLC published an insightful “20 Questions for Vendor References.” Sawyers works with financial institutions in the areas of strategic technology planning. His questions work for just about any type of vendor reference check. Whether looking at LOS vendors or CPAs, knowing how to check their references is important. I found five of the questions helpful when calling on a reference to check a vendor’s performance.

• What other vendors did you review?
• If you had to make the decision all over again, would it be the same? If not, why?
• How well does this vendor interface to third-parties? (A good question when you are looking at LOS systems).
• Please tell us about the support you get from the vendor.
• Phone calls are returned within _____________ (minutes, hours).
• Are support people knowledgeable?

Before selecting a vendor, check to see if they will improve the service you give your customers and your employees.

Take care of yourself and your team. Can you believe that changing the light bulbs can impact your bottom line? If you are thinking energy efficiency, you are on the right track—people energy. The work environment should make you and your team more productive. Lighting, chairs, desks, and even computer equipment all contribute directly to the amount of energy each employee brings to their job.

Make sure that your team has the computer and Internet bandwidth to get the job done. They are more and more dependent upon the resource available on the Internet. Give them the ability to reasonably and efficiently access the Web. Work with reputable vendors that provide secure access. Monitor for inappropriate access to your systems by hiring someone to put in a firewall. Cisco PIX 501 is a common firewall that a lot of techs know how to install and is cost efficient.

When is the last you updated your equipment? Your computer equipment should support the latest Web browser. Walk around your office and have a look at the monitors your team uses. Reduce eyestrain headache and replace that monitor with the fuzzy screen. The good news, it is not that expensive to replace and, you will experience production increases.

Working smart involves several areas. The first key is to make sure that you have a strong mission statement. Follow the rest of the guidelines and visit the listed Web sites for additional insights.

By Ruth Thompson

In my job, I get the unique opportunity to ride in the field with quality lenders form all around our country. When I am doing so, I get to perform the best part of my job—actually conducting sales calls on Realtors, mortgage brokers or banks with my retail, wholesale and correspondent lending clients. This is becoming more of a trend as companies are looking for better, more consistent account penetration and understanding how to achieve this is the issue facing many lenders today. I will focus on how the training staff as well as senior management can put some ideas into play to develop a sales force that gets the most out of every call and captures a larger market share out of each relationship and account they are calling on. Sales is not just making the call, it is about understanding what each opportunity represents and making sure you are asking for as much as possible once you feel you have earned the right to do so. Let’s look at some key things to put this concept into motion.
The first question that needs to be addressed by the training staff and the management team is, who is our customer? Is it the brick and mortar establishment or the individual within the building? Today more than ever, it is paramount to a lender’s success to focus on the individual relationship within the account more than the company they work at. This focus will allow the originator calling on the account to properly identify and target key individuals and put a game plan into motion to satisfy their unique needs. The primary focus, therefore, needs to be on the number of working relationships one salesperson can effectively handle. With our customers in both the retail and wholesale distribution channels of loan generation, those numbers break down as follows:

Retail Between 20-30 individual Realtor-based relationships
Wholesale Between 50-75 individual originator relationships

Correspondent clients need to be addressed more from an account, versus an individual secondary marketing contact perspective.

The second question the training staff should put out to the sales force, is the identification of your current customer base complete and accurate? How many people are currently referring buyers to you or submitting loans to you in the past 60 days? Subtract this total number from the above minimum customer base target and that is their selling challenge for 2002.
The next training issue is the technique that the salesperson will need to achieve their goal of a better and more profitable working relationship with their customer. They must really re-think their sales approach. We become so comfortable with many of our existing relationships that we forget to continue to sell to them and therefore, business opportunities pass us by every day without our being aware of them and even worse, asking for the chance to look at that business. By far on my field travels, this is the most indiscretion I see in today’s lending world. The training department has an obligation to lead by example and get out in the field or make it possible for the management team to do so as this is where the “rubber meets the road,” and reviewing a pipeline report is not enough to manage your business. It is a reactive document that lulls organizations into a potentially deadly slumber that some never arise from—don’t let that happen with your staff. The tools to offer are these key areas of increased sales awareness:

• Create a questioning plan for your staff that they can use on existing customers. It focuses on taking the relationship from a friendship to a deeper business partnership.
• Utilize your company resources to bring in “added-value” to the relationship to strengthen it and solidify your working partnership. For example, provide open house fliers for Realtors or cooperative advertising; with brokers provide sales training or fliers for their customers that are professionally prepared to enhance their marketing efforts. (Be sure to follow RESPA guidelines.)
• The salesperson should be asking these key questions:

How much business are you currently doing?
Who are you giving your loans to? Why?
What would you improve with those lenders?
When we meet you business needs, what percentage of business will I receive?

The key to this process is opening the mind of your salesperson to ask more and more questions on every call and above all to take nothing for granted in their existing accounts. The business is out there; the question is, do you know who is doing it and are they working with you? Sales in not a complex process when it is done properly, lots of opportunity unfolds right in front of your eyes. Keep them open and you would be surprised how much your profits will increase.

By Dennis M. Black

“Leadership is not rank, privilege, titles or money. It’s responsibility.”
— Gen. Colin Powell

Life has changed for General Colin Powell, but he’s used to that. As a soldier, he weathered the Cold War, first as a young officer and later presiding over its historic conclusion as Chairman of the Joint Chiefs. He served America in Vietnam twice, surviving a helicopter crash and wounds inflicted by the enemy. And he founded America’s Promise, a network of charities designed to benefit the country’s youth. His new challenge as Secretary of State changed entirely on September 11, 2001; he is now trying to hold together a fragile coalition of feuding countries and attempting to quell age-old conflicts in the Middle East to avert a global conflagration. Clearly, this is a man who has been well served over a career filled with history-making events by a closely observed set of rules. And these are rules that apply just as well in the boardroom as on the battlefield.
In his autobiography, “My American Journey,” Powell summarized his observations on leadership succinctly at the end, but readers came away with vivid impressions on their application in the stories Powell weaves through the narrative. He dealt with leadership and management issues most of us will never know, but he also had decades of experience sweating the small stuff—which is what most of us do every day. Powell is an unassuming man, highly approachable and down to earth. Those fortunate to hear him speak at the National Home Equity Mortgage Association convention a few years ago learned that his favorite relaxation pastime is a holdover from the necessities of humble military paychecks: he enjoys tearing down car engines and rebuilding them, especially older Volvos. No privilege-bred politico he, but rather someone whose extraordinary life has been guided by rules that speak eloquently to practitioners in our business.
Here are Colin Powell’s rules, as outlined in his autobiography, and how you can apply them to your business:

1.  It ain’t as bad as you think. It will look better in the morning.
   Disasters happen on a regular basis in the mortgage business, since every deal is driven by the minutiae inherent in the lives of its customers. It doesn’t allow a lot of room for discouragement, and resilience pays off for those who hang in there. This rule is closely associated with rule 2.
2.  Get mad, then get over it.
   Note that it does not say, “get even.” Problems are not always caused by people who mean you ill; just as often they are caused by oversights and dropped balls from vendors, service providers, clients, and yes, employees who are normally reliable. Dwelling on problems is nowhere near as effective as getting over them and spending energy working on constructive ways to avoid them in the future.
3. Avoid having your ego so close to your position that when your position fails, your ego goes with it.
   In short, don’t let pride get in the way of flexibility, and don’t assume you have all the answers. To do so is to set yourself up for disappointment and worse, to lose the confidence of the good people around you who want and need to lend their opinions and expertise to the enterprise.
4. It can be done!
   Positive thinking must be the most written-about aspect of competitive business. There’s a reason for that: it’s one of the easiest things to talk about and one of the most difficult mindsets to maintain. See Rule #1. In addition to positive thinking, you want your organization to have a strong sense of “can do.” Resolve to overcome obstacles in order to reach a worthwhile goal is a corporate value most readily supplied by leadership.
5. Be careful what you choose. You may get it.
   Before committing to a course of action, be open to the input of the people with whom you have surrounded yourself. As a leader, you must then choose and move forward. Just make sure you haven’t made a choice you’re not prepared to live with. If, for example, you decide to tackle a specific lending niche at the expense of an existing core business source like Realtors, is success in your best long-term interests?
6. Don’t let adverse facts stand in the way of a good decision.
   If something seems logical, feels logical and sounds logical, it probably is. The mere fact that someone else tried it and failed only means that there is experience from which to benefit—not that it cannot be done. Take advertising, for example. If you offer a compelling value proposition that differentiates you from your competitors, you may find a very receptive audience once you get the word out. Just because your “me-too” competitors failed to get the desired result doesn’t mean your investment will be wasted.
7. You can’t make someone else’s choices. You shouldn’t let someone else make yours.
   Once you’ve assessed the opinions of those whom you trust, be decisive and own the decision. Taking responsibility for decisions is highly liberating; blaming others for mis-steps is a cop-out. In his famous 1834 autobiography, “A Narrative of the Life of David Crockett,” the author put it simply: Be sure you’re right, then go ahead. Ten gazillion young baby boomers wearing coonskin caps learned this message from Fess Parker in the 1950s.
8. Check small things.
   The devil is in the details, especially in the mortgage business. If you’ve ever had a closing held up because of a relatively insignificant piece of documentation that had nothing to do with the borrower’s creditworthiness or the merits of the deal, you know this. Details can also be lost to “transaction fatigue” on those deals that wear you out from all the attention they require. General Powell used to keep a rubber chicken handy when he ran a battalion, and at briefings would toss it at an officer who dozed after an all-night exercise. No one wanted the honor of being pelted with the rubber chicken, and it lightheartedly kept people on task despite fatigue.
9. Share credit.
   The only people who don’t do this are either running for office, or are very insecure. They hog credit for successes, then look for others to blame when things go wrong—as taught in Large Organization Survival and Gamesmanship 101. Avoid these types of people, especially as employers. Leaders who share credit earn the respect of those they lead, and teach their successors to bring out the best in people.
10. Remain calm. Be kind.
    This is a tough one when you deal with your customer’s most important financial transaction, especially when delays can change the dynamics of the deal and become costly. Remember that the measure of a leader is someone who can keep his or her head when all around them are losing theirs.
11. Have a vision. Be demanding.
    If you’ve done a good job in hiring, you have people in your organization who take a great deal of pride in their work. Generally speaking, good people like to have the best demanded of them. Company pride is part and parcel of this concept, and the best way to communicate the mission of the company (or department) is to create a “vision statement” that spells out how you, as a leader, want the organization to be perceived. If you have people who consistently do not respond either to the vision or to the service levels you’ve set, replace them.
12. Don’t take counsel of your fears or naysayers.
    We all know people who will find reasons not to do something, whose fear of failure freezes them into “analysis paralysis.” We know people in business who are either natural pessimists or who feel better about themselves when they see others fail. If you let them guide your business decisions, you’re sewing the seeds of mediocrity. See Rule #7, above.
13. Perpetual optimism is a force multiplier.
    Once again, the power of positive thinking will give you wings. By “force multiplier,” General Powell refers to the military concept of magnifying the advantage of a limited number of assets by using strategy, field position, and weaponry. Your “troops” are your production people, and your perpetual optimism leavened with sound tactics will give them the power of a vastly greater force. The highly competitive marketplace requires optimism that finds few obstacles insuperable.

The mortgage origination industry has shown itself to be populated with resilient, positive leaders. How else would its members have risen from obscurity to dominance in less than two decades? Mortgage brokers have maintained market share in the face of every sort of competition from institutional lenders who have access to huge amounts of capital, endless marketing budgets and brand recognition to rival the top retailers out there. How can independent originators manage to thrive in the face of such adversaries?
The answer lies in the core competency of the originator: serving the customer. As long as originators continue to offer high-touch service levels that elude the big banks, their place on the competitive battlefield will be preserved. General Powell might be amused at such a metaphor, but he would no doubt see the applications for his rules of leadership—rubber chickens optional.

By James Hennessy