Category: Management

The mortgage business, like most businesses, must be well managed to succeed. But today a successful mortgage branch or company requires more than capable management to succeed in a challenging industry. It requires leaders to guide, inspire, and maintain every employee’s focus on the immediate tasks as well as important goals and objectives to be realized.
A mortgage team can be managed to an established or known set of rules and still fail. In the mortgage business seldom does a day go by without challenges. We can be confronted with obstacles on a specific loan, processes that are not working or understood, and differences or conflicts between employees that distract others from the work to be done. Any of these challenges—and many others that arise—can be handled in accordance with policy, procedure, or custom and fall short of what is needed and certainly far short of what could be accomplished.
Leadership is what makes the difference in how well managers succeed. Management and leadership are not the same. It has been said of managers that they “do things right,” but leaders “do the right thing.” Managers need to know what must be done and how to do it. There is no substitute for job knowledge. But managers who are leaders know how to temper policies, procedures and customs to work in the specific environment and situation they face. They understand how to make decisions in the context of where they are and the goals to be accomplished. Leaders take charge and make decisions. Their judgments may not always be the most desired, but the team nevertheless respects them.
Some people may be born with the innate skill to be effective leaders. But you do not need to be a natural leader to be effective. You just need to recognize what it takes to be more effective. The following seven skills can help improve your leadership abilities. Review each one. Evaluate yourself. Work on any area that may need more focus and you will become a more effective manager and leader.

Define Core Values
Values are the principles, standards or ethics by which you want to operate your business. These values shape the character of your team. Daily management actions reinforce these core values. Everyone on the team should know what attributes and actions are valued most and how employee performance will be measured.
Defining these core values is the responsibility of the team’s leadership. These are the business and workplace values important to management and the ones employees would be expected to exhibit. It is terribly difficult, if not impossible, to be something you’re not. If your team is to exhibit values you believe important, management must live by them too.
Hard work, teamwork, and integrity are core team values crucial to me. I would also add entrepreneurial spirit. You may have others or different ones that you believe are most important. These values are what you look for when hiring new employees and promoting and advancing others. Managers must coach their team to embrace and build upon a defined core value system.

Create a Common Understanding
Every team must have a common framework by which to work. The team must have a clear understanding of the most important core values to go by. This common value system must be consistently communicated and reinforced to all employees. Values are lived every day. They are not dusted off occasionally and spoken about.
The team must know where they are going. What is the vision and what are the strategies and timeframes to get there? Strategies, plans, and directions must fit within the context of the team’s values.
Good managers ensure their teams know what to do and what is expected. A leader works constantly to ensure every employee has a common understanding of what is important to the team and where and how the employee fits in. Internal and external factors inevitably change operating environments. Reacting to change and taking advantage of opportunities requires good communication. Make sure everyone is on the same page, moving in a common direction and at the same time. It is challenging, but when done, it makes a big difference.

Consistency is Critical
Management decisions and actions must be consistent with core values and the team’s vision and direction. There is nothing more confusing and ultimately debilitating to team’s morale and spirit than inconsistency in decision-making. The result of inconsistent decision-making is an increasing unwillingness by managers to make decisions.
Ultimately you want everyone on the team to be a leader, able and willing to make the right decision. Getting to this point happens in progressive stages. It starts with everyone understanding the core values and then understanding the goals and directions. When decisions and actions are consistent, the team will be more able to consistently make the right decisions themselves.

Be Decisive
Decision-making can be difficult. There is seldom one right answer and there is seldom only one approach to solving issues or ways to take advantage of opportunities. Getting all the facts necessary to make a decision may not come easy. But, despite the difficulties, decisions must be made quickly.
Some smart person once said that “time is money.” Making the wrong decision also costs money. Not making a decision or making it too quickly will cost money either way. Managers must quickly get the facts, ask questions for understanding, make the decision and move on.

Have a Bias toward Objectivity
Managers and leaders must have the facts when making decisions. You may have noticed that some people with a particular point of view typically have facts that support that view. Other people with different views have somewhat different supporting information. Decisiveness is important, but it is also important to be right.
Good decision-making requires objectivity. Decisiveness can save money or make money, so make sure you have asked questions and understand the pros and cons before using your best judgment. There is nothing like having some solid information when making small and big decisions.

Everyone is Different
Every employee or team member is different. They have different levels of knowledge, different goals and aspirations, and are motivated by different reasons. No single management style or approach works for everyone. Good leaders recognize they need different management approaches to motivate and guide each employee’s development. This will help each employee achieve greater results.

It’s Not About You
We all have egos. Some have bigger ones than others, but egos do drive performance and results. But the team’s success is not about the leader; it is about the success of the team. It is important to take “I” out of what is being done. The team doesn’t want to hear “I did this or I want this.” The team wants to be included and recognized for it what it can do and what it can contribute.
The goal must always be individual action and accomplishment. Accomplishments must be directed to where the total organization is headed. It will take everyone working together to succeed.
When managers become leaders, and employees recognize they have an opportunity to demonstrate personal initiative and be a leader, the results can be exponential. Do not miss this opportunity.

By Jerry Baker

The training and development of your company can be one of the best experiences originators and others participate in or it can end up being nothing more than a waste of time.  In this article, I will discuss the five most common errors that cause a training program to be an “event,” not a “process.”

Management is not committed to manage the training after the course. The area of biggest concern and failure is in the commitment senior staff has to follow-up and reinforce the training program.  Without this focus, the sales force or operations staff will know they just have to bide time before they can go back to old habits or methods without management scrutiny.  This is a very big issue in our current market conditions due to the constant pressure to get work through your system and out the door.  The necessary follow-up may easily slip to the wayside, which will cause your training program to have little to no measurable results.

A quality training program will attempt to modify the behavior or system currently being used by the participant and this modification will require time to have an impact on their productivity.  The key time frame for this to have a chance for success is the initial 60 days after the course. After that, the skills taught and reinforced tend to become learned behavior and the process will have long-term benefits.  Without this attention, the results will definitely suffer.

Choosing the wrong participants.  An area of primary concern is just who should attend the program.  I have seen many training courses not have the impact on production or operations they should have had due to the selection and mixture of the participants in the class.  It is the responsibility of management to carefully choose the group that will go through the various training courses.  Part of the criteria is the long-term employment chances for someone you are investing in.  However, this can be a “double-edged sword.”  One side argues that you shouldn’t invest in someone unless you know you are going to keep them and they have a chance to make it.  The other side asks, “How can this person make it without some behavior modification or skill enhancement?”  A wise person once said, “Don’t worry if you train them and they leave; be worried if you don’t train them and they stay.”

Picking a poor learning environment.  If you have the initial two elements in place, you now need to make sure the environment for the program is conducive to learning the material delivered.  This can be taken for granted and often overlooked but is equally important in terms of the outcome of the program.  For sales training, we recommend taking the group off-site, as participants tend to be less distracted and can be more focused on the message.  For example, they won’t be concerned with checking with an internal staff member at the breaks. Secondly, if the program is more than one day, it gives them a chance (if they are staying at a hotel), to work on the evening assignment in groups and benefit from being with fellow employees with common and/or different issues.  For operations training, we suggest you do it in shifts so as not to disrupt your customers too much with the staff being away from their job for two full days.  Have one group go through a morning session on both days and the other an afternoon session.  The other way is to conduct a weekend program, which can be negatively perceived and more costly.  Finally, pick a room that is comfortable to be in and not cramped so the student can take notes without constantly bumping into their classmate.  Nothing can sour the experience of learning so fast as being in the wrong environment.

Failure to test the learning retention.  Training is a process that requires testing for student retention at different stages of the program.  The first test should occur on the second day of the course with some form of role-plays between the instructor and the student to evaluate the grasp of the process that was delivered on the first day.  Whether it is in videotape format, audio tape, or just class observation with feedback, some methodology of validating the student’s retention of the material is what makes a program have results.  Without some form of testing, the student can say they got the content but may be just patronizing the trainer; as they aren’t put through a situation with their peers that require their new  skills to be implemented.  More than anything else, this is where training fails and doesn’t provide the results management desires.

Making the implementation of the training a task versus a reward. Finally, once you have overcome all the other pitfalls to a successful training course, don’t forget to make the process rewarding once participants return to their job.  The mentality of demanding the training be used and/or monitoring the student after the class with tight inspection of every detail will create a backlash and a hostile environment.  Conversely, hoping they will use the training and just verbally asking, “How is it going?” is equally ineffective, as it shows no effort to reinforce the process they went through.

One idea to make the rollout of the training program fun, versus a burden, is by having a short-term contest. Pay particular attention to the first 60 days after the training for an effective contest to bear fruit.  Have it focus on a particular component of the training, which currently is your company’s biggest need for improvement. Offer a reward that is not costly but still worth pursuing. A weekend at a local bed and breakfast may only cost $300, but is enough to get people enthusiastic about winning.  Your goal is an increase in activity from your sales force, or better customer handling skills by your operations staff.  Thus, the contest is a minor cost to make it fun and drive home the results.

By addressing these five areas, your odds of having a productive training session are greatly enhanced. Then it is up to you to deliver a quality message.

by Dennis Black

“Often, not enough attention is paid on how to efficiently reach out to customers to initiate and complete a refinance.”

One thing is absolutely true about the residential mortgage lending business; there is no function more critical than sales “one-on-one” with the customer. The value of loan officer and customer relationships should never be taken for granted. The only function rivaling it is keeping the customer “sold.” These functions are formidable, and require skilled, motivated and well-supported mortgage sales professionals.

Performing these functions profitably is not easy, nor is it getting easier. Regardless of mortgage company size, creating better results is vital. Improvement is complicated by a lot of things, not the least of which is the fact that many branch managers wear three hats. Typically they produce loans directly, oversee operations, and manage the sales force. Few can execute all three of these responsibilities well. Loan officers are equally challenged by the ongoing need to develop new business sources, stay in frequent contact with customers and referral sources, and keep up-to-date with new products and new sales techniques.

While these challenges are formidable, the effectiveness and profitability of production operations can be greatly enhanced by focusing on a few areas that create value. Some actions have immediate impact; others take more time to execute and produce results. These opportunities encompass seven key areas:

• Reshaping immediate results
• Improving short-term efficiencies
• Doing more with less
• Mining for greater results
• Repositioning for greater value
• Investing in sales management support
• Forgetting the past

Reshape Immediate Results
Mortgage production is critical. Most ills are solved with production volume, assuming each loan contributes at least some level of profitability. Efficiency is also important, but you cannot “save” a mortgage company into prosperity. Unfortunately, we can sometimes miss the obvious, in trying to make the branch or company as profitable as possible.

Remember to regularly review pricing, including all fees charged. Knowing the competition’s pricing may be interesting, even useful, but don’t focus too much on it. There is a lot that’s not reflected in rate sheets. In reality, there is often room to increase your fees. There may also be room to increase the gross margin of some or all of your production. Margins should be reviewed on a product-by-product basis. Take a good look at your overages by product. This is a good indication that you can improve your profitability by increasing fees and price margins. There may be reluctance to change for fear of losing business, so spend time making sure managers and loan officers know what is required to be profitable. When the company does well, it assures continuing opportunities will be available for everyone.

Don’t forget to look at expenses too. Pay attention to efficiency and performance metrics. Are the processes and workflow within each branch as efficient and productive as possible? Is staffing geared to current production volume and how much growth or expansion can be absorbed? Make sure you are spending only what is absolutely necessary to produce loans, and make sure any expenditure that goes beyond what is necessary adds real value.

Improve Short-term Efficiencies
Beyond staffing efficiencies, evaluate whether or not origination and closing processes are as streamlined as possible. Can the work be done more efficiently? Can it be organized differently? Valuable time and money is wasted in processes that don’t work well. The staff knows what works and what doesn’t. Listen to their input. Improve efficiencies now, as it is especially critical during periods of increased refinance opportunity. Fannie Mae, Freddie Mac, Ginnie Mae and other investors have streamlined processes for refinancing their product. Every guideline for refinancing needs to be reviewed and incorporated into your processes.

Often, not enough attention is paid on how to efficiently reach out to customers to initiate and complete a refinance. If you send a postcard to inform customers that it is time to refinance, it only generates calls that consume valuable time and resources. Why not offer a refinance at a specific rate, and an opportunity to quickly accept the offer with a single call and schedule the closing. It should be this simple. This type of streamlined process allows for a finite group of loan officers and support staff to increase their production capacity.

Do More with Less Effort
One challenge for retail loan officers is to continually create better sales results. The notion that non-personal Internet origination and closing would replace retail mortgage sales professionals isn’t happening. The dot-com mortgage companies came in with a flourish and are going out with a whimper. Yet loan officers need to embrace the Internet to increase their effectiveness and efficiency in handling customers and prospects. Loan officers can do more with less effort by using the Internet as part of their process in communicating with referral sources, prospects, and customers. It is rather simple today to direct prospects to a loan officer website to send relatively minimal data; submit the data with credit report information to an automated underwriting system (DU for example); and receive back quickly what is required to close the loan. I do not believe many customers want to close instantly but they do want to know the deal is done. With help from the Internet and good staff support, the loan officer can be on the way to the next deal, and the next deal. That’s the way it has to work.

Mine for Greater Results
It helps to have your customers, prospects, and referral sources on a database, with sufficient information about individual customers and transactions to utilize, or mine, for months and years to come. The computer is not absolutely necessary. You can still take a 1003 by hand and keep detailed customer information on 3 by 5-inch cards. The question is, “Why?” The PC makes the origination process easier and faster. It also makes consistent communication to a continuing stream of business opportunities (customers, past customers, prospects and referral sources, and prospective referral sources) easier. A consistent investment and reinvestment in a well thought-out communication program can double loan officer business in 18 months. Why not commit to doing it?

Reposition for Greater Value
Mortgage companies and mortgage loan officers must find new ways to add greater customer value. In terms of individual transactions, there is no more valuable service than helping people finance or refinance a home. At the same time, loan officers can or should perform other valuable services. Referrals to an array of other resources (Realtors, insurance services, and local information for the new resident) can be value-added services. More time needs to be focused on forging these alliances. The result is an ability to “reposition” individual loan officers as able to provide more service than the already valuable home-financing service. The consumers and referral sources’ perception of the value of individual loan officers needs to be continually enhanced. It is not just a loan officer’s responsibility; the company and managers must find ways to help differentiate them from the others.

Invest in Sales Management Support
It is rather typical for the top 25 percent of an organization’s loan officers to do 50 percent of the volume. The bottom half, and the last quartile of loan officers in particular, are not very productive at all! Remembering that many branch managers have sales management responsibilities and produce loans makes the formalization of the sales management function critically important. Management needs to help branch managers with this process, by helping to formulate procedures and create tools that facilitate sales management support, without spending too much time or reinventing the wheel. Requiring lower-performing loan officers to be more disciplined can help increase their production volume. Discipline allows for easier oversight and review, until the loan officer is where they want or should be.

Forget the Past
Perhaps one of the hardest things to do is to forget the past. Forget about how you are doing business today, or even the day after tomorrow. Focusing instead on what the mortgage origination business will be like in five years can be valuable.

What will not be different tomorrow is the role of the sales professional. The loan officer who differentiates himself or herself by offering more value-added services is miles ahead. Alliances with insurance, investment and tax professionals are also beneficial. But go a step or two further. Some loan officers will have training and licenses to sell insurance, brokerage services, and/or training in financial planning.

It isn’t necessary that these licenses and skills be combined in actual practice, because it could be more of a distraction to the sales process of getting new customers. In a sense, there would be so much to do that not much would get done. However, the real opportunity may be in partnering with even more experienced professionals in these specific disciplines and, in effect, co-managing individual customer relationships. The value is that the license or licenses allow for greater income generation, because income can be directly received for the non-mortgage services provided. Consider the potential. Consider the customer value being created. You can more easily forget the past when you consider the possibilities of the future.

“The key to realizing any opportunity, is having the right people put a workable plan together that can turn it into a viable reality.”

Last month I wrote about managing teams through adverse situations. Overcoming unexpected obstacles is critical to achieving necessary results in mortgage lending. Dealing with adversity is only one important part of the business, however. Seizing opportunity is another. Taking advantage of opportunities as they come to light can be difficult, but it does not need to be elusive. There are plenty of opportunities to grab if they can be recognized, corralled, and executed effectively.

Managing your team and resources to take on opportunities can present a challenge. It can be hard to get managers and employees to move out of comfort zones and accept new opportunities. You may have heard comments such as, “We cannot do that, we don’t have the time,” or “We are already doing too much, how can we do that too?” Opportunities to build stronger, better organizations are everywhere, and are there for the taking. In my view, the number of available opportunities almost always exceeds our vision. There are simply more than we realize. If we could only organize ourselves to exploit them, we could see improvements in all aspects of our business. To successfully take advantage of opportunity, you must first recognize it. Next, get your arms around it, ensure that everyone knows what you are trying to do, and define and execute thorough operational plans. This requires committed, effective leaders.

Recognizing Opportunity
Everyone on the team must keep their eyes and minds tuned for opportunity. Opportunities abound and seizing them can result in reduced costs, improved processes, the development of new markets, or the acquisition of a new company, branch, or strategic partner. Everyone in a mortgage company, department, or branch, has a lot to do. But no matter how busy they are, everyone has the responsibility to look for opportunities. Emphasize to your employees that everyone’s job description includes finding and implementing new opportunities. Operational managers and staff must always be looking for ways to improve processes and reduce costs. Production managers and staff have the same responsibility. Management time needs to be spent asking for and reviewing new opportunities and recognizing contributors. Unexpected new business avenues abound. Everyone should be on the lookout for the serendipitous, but in recognizing possible opportunities, it helps to have a clear understanding of where your business plan is taking the company, and the immediate and short-term needs. It pays for everyone to know the company’s game plan, especially for growth, so they can better determine whether or not a new opportunity fits into the overall direction.

Put Your Arms Around It
Too often we jump at a perceived opportunity without thinking it through. How big is the potential, really? It may be an expense disaster waiting to happen. These opportunities can take the form of a new potential branch acquisition, a few new producers, or a new product, or software application that can do wonderful things. Or so it seems.

Put a financial pencil to every potential investment. Estimate, as best you can, probable revenues and cost. It pays to create a definitive financial plan or proforma for every new venture, in order to determine if there is real value before committing resources. There is a very good chance that you will discover that it will be a long time, if ever, before any bottom-line profit is ever realized.

When you decide to seize a new opportunity, set very clear expectations for results and when you expect to realize them. Then, hold the responsible team accountable. Long-term investments can be great, but know how long it will take to be profitable, and how great the upside potential is before getting started.

Also, evaluate how well each new opportunity fits into the overall strategic direction. Everything should mesh well together. If it doesn’t seem to fit, the opportunity may not be a good move.

It is important to prioritize the opportunities you wish to pursue. There are good ideas and there are great ones. Resources, including staff, are not unlimited. Opportunities need to be prioritized to execute the ones with the greatest potential first.

Developing Operational Tactics
The key to realizing any opportunity, is having the right people put a workable plan together that can turn it into a viable reality. Every area of a company is typically involved in executing a new opportunity. For everything to work smoothly, key members of the team must meet and review how the direct and supporting process will work. This always reminds me of an old boss of mine, who is a true mortgage-banking icon. He didn’t care what it took to get something into the field. His message was always, “Take no excuses, just get it done now.” His point was a good one and it was well taken. Too often there are human and physical barriers that are thrown in the way of initiating anything new. I suppose you can take the view that an inch given can be a yard taken. Speed of execution in our competitive mortgage-lending environment requires new opportunities to be quickly rolled out. While speed is important, quality of execution is critical. A knowledgeable, cross-functional team will insure that no processes and critical functions are forgotten. The time to get something executed may vary by the size of the organization. But, always set a specific timeframe, review and execute. Be thorough, but avoid unnecessary bureaucracy at all costs.

Creating Clear Communications
In order to take advantage of a new opportunity, its execution must be exquisite. Opportunities often require fast action. Sometimes speed is what creates the opportunity in the first place. I’ve seen many good ideas and good intentions fail because the left hand did not know what the right hand was doing.

It is critical that everyone knows about changing priorities, new directions, and new opportunities. You cannot afford for new efforts to be derailed, because key people on the team don’t know the plan and/or what’s at stake. Once the decision is made communicate to everyone on the team.

Leaders Make It Happen
It takes a team of people working together to turn opportunity into reality. It also takes leaders. There are many points of truth in every organization, where employees look to other employees for direction, commitment, and leadership. Leadership is not just a top-down thing, or something limited to only a few.

There are leaders throughout an organization, whose active involvement in anything new is critically important. Understand and cultivate these leaders. They are key to successfully implementing new ideas and new opportunities. In my book, managing opportunity is far more important than managing adversity well. Your organization can get stronger handling adversity, and doing it well will maximize what you have. However, it is really only improving the status quo. Managing opportunity is bigger and ultimately more valuable. It addresses growth and building a better and bigger company. Both results are critical in today’s competitive mortgage lending marketplace.

by Jerry Baker

“Every problem or situation that causes stress can be effectively handled if you remember to approach it one step at a time.”

Stress comes in many packages. In an era of change, including mergers, consolidations, downsizing, right sizing, or just plain getting out of the business, it is difficult to avoid a lot of stress. This is especially true for managers.

There is no easy solution for handling stress. It can result from many sources and not all are business related. My personal experience has been that work-related stress is magnified by family, health, and religious problems. This article is not intended to deal with non-business stress causes, but work, family, health and religion are all important aspects of our personal lives. One way to visualize the importance is to picture a four-legged stool. If any one leg is not solid, the stool will wobble or topple. Maintaining a solid family or home situation, keeping yourself physically fit and well connected to your religious beliefs all contribute to your ability to effectively deal with stress at work.

What is stress? In my view, it is the anxiousness you experience and feel when you have too much to do, or when there are too many new experiences for you to process. You may not know which way to turn. You may not be making your production or profitability goals and you’re feeling the heat. You may have a task to do that you don’t like, don’t do well, or don’t want to do. You may have to counsel someone who is under-performing, or who needs to be put into another position or terminated.

In short, stress is an inevitable part of daily business life. It results from a myriad of tasks, issues, and responsibilities that managers must deal with effectively. There are probably all sorts of ways to cope with the challenges of the mortgage business. Some ideas and hints are explored in the following paragraphs.

Reduce Stress
Everyone has experienced business issues, challenges or problems that initially appear overwhelming. There are situations that seem so big that you want to avoid them, run away, or at least “think about them” for a long while. There can be challenges in mortgage lending that appear so big that you don’t know where to start.

Every problem or situation that causes stress can be effectively handled if you remember to approach it one step at a time. It is always important to break any challenge or formidable task into bite-sized pieces. It is amazing how stress can be reduced when the tasks before you are broken into manageable portions. In my view, this is the only way to tackle difficult problems. This piecemeal approach reduces the degree of stress felt by the manager, and by the team involved in the task at hand.

Planning Reduces Stress
It should come as no surprise that the most difficult issues and challenges, especially those you don’t really like or want to do, need to be planned out and thoroughly thought through. This does not mean endless analysis without getting after the problem. A “never act” approach that resolves the situation only creates greater stress. What is needed, is a plan proportional in content to the magnitude of the challenge.

What I advocate is a written plan that addresses the situation. Understand what the real issues or challenges are and what approach you want to take. As you lay out the actions necessary to accomplish the goal or resolve the issue, you begin to realize that it really can be done. You also better understand the need for such action(s). The result is much less anxiety and stress for you and your employees, that is if you explain the situation correctly, openly, and honestly.

Set Expectations
A big cause of frustration, anxiety and stress is not knowing expectations. A manager has a responsibility and obligation to be certain that employees know what is expected of them. Too many times new and existing employees do not clearly understand their job requirements, and are not provided an adequate orientation. Stress on the employee and manager can be avoided, and goals more easily accomplished, when a proper orientation that details expectations is delivered.

In tough times or changing market conditions, particularly when it becomes necessary to change employee roles and responsibilities, it is especially important to make sure everyone knows what is going on and what is expected of them, both individually and collectively. Troubled market conditions create a variety of employee concerns, and without clear direction and performance expectations, employee morale and work performance will decline.

Communicate
Lack of communication and miscommunication is by far the greatest cause of frustration in the workplace. During times of change, particularly when people are, or may be losing their jobs, it is critical for managers to communicate clearly, honestly, and frequently with their staff. This includes listening to employees to understand their views and perceptions of the situation. Everyone must know what is going on. Never forget that few employees can afford to lose their jobs. It doesn’t take much of management failing to communicate about the company’s strategy, plans for the future, and financial health, before the fear and stress of losing a job is too high and employees begin to look for new employment.

Keep the Whole in Mind
As a manager, it is important to regularly step back from the current business situation and determine what is in the best interests of the company. In times of market downturns, managers must remember that individual decisions belong in the context of the overall company, its direction and health. For example, decisions made to reduce staff or change responsibilities for specific employees are done to maintain the financial health, or long-range stability of the company.

Keep in mind that failure to make these changes can jeopardize employment opportunities for other employees. Remembering what you are in business to do, and that your decisions affect the lives of those who remain a part of the team, can help relieve some of the stress and anxiety created by the decisions you, as a manager, must make.

There are many joys in management and in being a manager. However, there are also responsibilities that create stress. Maintaining a balanced personal life and taking on challenges one step at a time can be a big help in reducing stress. It also helps to size issues and prepare a plan of action that is proportionate to the size of the issue or challenge at hand. Set expectations to avoid ambiguity among employees and managers, and communicate, communicate, communicate. The more difficult the situation, the more important it is to communicate to everyone openly, honestly, and completely.

“Learn to think tactically and globally; it helps add the perspective required to manage others.”

Is your to-do list getting longer? Does it seem there is more to do every day to effectively manage your business? The mortgage business can tax anyone’s management skills, regardless of the interest rate environment. It is as hard as ever, if not harder, to manage successfully.

For the last several years, the mortgage industry has reportedly been in transition. This simply means the business is in the midst of a significant change, from a business of predictability to one far less known. Today, managers face new competition from traditional and non-traditional players. Mortgage companies are going out of business, either through acquisition or business failure. New technologies are bringing new methods, new challenges, and perhaps new barriers to the business. Finding competent sales and support staff that fits well with your company is getting more difficult. To meet the challenges, you need a personal game plan.

Your plan should contain the major management challenges to be conquered. Lists may vary, depending on individual responsibilities. Consider the 10 challenges outlined below and keep a similar list in front of you at all times so you can work on them regularly.

Keeping Your Winning Edge
The business issues facing today’s managers are formidable. The to-do list can be quite long and include many critical tasks. With so much to do, it is easy to forget that at the top of your list must be making sure you’re keeping your own “winning edge.” You must be at the top of your game every day if you are to direct and lead others to be the best.

If you are a producing or an originating manager, you must make sure your own business is solid. Keep on top of your business plan. Reassess what is working and what isn’t. Review your plan regularly and don’t take what you have built for granted. Don’t neglect your own business. Be as disciplined and organized as possible so you can more effectively coach and lead your team.

Whether a producing manager or not, you don’t want to be so single-minded that you forget what is going on around you. Keep yourself informed about what is going on in your area of responsibility, your market, and in the overall mortgage industry. Keep a list of major events and trends and what it could mean to your business. It may also help to find a mentor, someone you respect and trust, so you can discuss ideas and directions and have a sounding board. Learn to think tactically and globally; it helps add the perspective required to manage others.

When your personal production is solid and you are well informed about the mortgage business around you, with knowledge of major trends and someone to share ideas, you should have the confidence to keep your winning edge.

Basic Business Growth
Growing production volume can solve a lot of challenges. Managing expenses is critical, but increasing sales is always important. If you are a producing manager, you know the challenges firsthand. Use your market knowledge to make sure your business plan is one that works today.

Everyone in your organization should be focused on sales. Every loan officer must have a personal business plan. You or a sales manager should review the results of each plan regularly. Make sure everyone knows what sales results are expected.

Get everyone into the referral business. Everyone should produce leads. Make it a contest. Post each new individual and team sales records. Celebrate success. Make a winning team part of your culture.

Creating the Best Team
Having quality people in every position can be a challenge. Recruiting, training, and retaining staff to create the best mortgage team should be part of any game plan.

Assess your staff regularly. Make sure everyone is an “A player” or has the potential to be one. If there are weak team members, make sure you and they know what is expected. Reassess their skills to do the job. Know what skills are needed and sharpen your recruiting efforts. Keep a list of the people you need, including new loan officers, and make it a weekly task to search for the best people you can find.

Don’t forget training at every level. As long as you have people willing to learn and commit to the team, you can build a better business.Training should be ongoing and a regular part of how you do business.

Maximizing Bottom Line Profit
Production is critical, but profits determine your long-term success. It is easy to not earn enough and waste money in the process. Part of the reason for not collecting enough fees or spending too much on travel or business supplies is that employees do not understand what it takes to be profitable.

Take the time to review your company’s sources of revenue and expenses with your staff. Discuss areas where fees and other revenue can be increased. Do the same for all expenses. When everyone sees what it takes to be profitable, there is a greater interest in looking for ways to improve the bottom line.

Creating a Success Plan
There is no practical way for your employees to help execute your plan if it is not in writing. This does not mean you should create a document suitable for a Harvard Business School case study. It means a plan that everyone on your team can understand and work toward achieving.

At a minimum, you must outline specific goals and the strategy to achieve them. Define everyone’s role in accomplishing your goals. Everyone must have specific, measurable goals. Their results must be reviewed monthly, if not daily or weekly. Be prepared to make changes quickly because market conditions change.

Impact of Technology
New technologies are being introduced almost weekly. Deal with technology by first keeping things simple. You need some innovation to be competitive today. You need an efficient loan origination system; connectivity to Desktop Underwriter, Loan Prospector, or some automated underwriting engine; contact or database system to manage the sales efforts; and company and loan officer websites. Laptops for loan officers are useful, but not yet critical. These are the basics.

As you hear or see new technologies being introduced, add them to a list for evaluation. Learn enough about them to estimate the impact on your business and the associated costs. Don’t get caught up in the hype of what’s new. Make sure it adds real business value.

Handling Change
Handling change effectively must become part of an organization’s culture. A fact of life in mortgage business today is dealing with change. We must handle regulatory and technology change. New products, investors, and a changing interest rate environment are a way of life. New business models, new systems, and new operating concepts are changing the mortgage business forever. Don’t react to every change, new idea, or concept. But be ready to evaluate each one objectively.

Motivating Success
No matter how good the team or how big the commitment is to success, they individually and collectively need to be recognized, rewarded, and motivated to continue to work toward success. In the midst of everything there is to do, something falls through the cracks. Don’t allow celebrating your team’s success to be forgotten.

Don’t Forget the Customer
One element of your business is to satisfy the customer. In the midst of trying to maintain, grow, and build a team, the customer’s needs come first. This is not the loan officer’s sole responsibility. Everyone on the team can influence customer satisfaction. Discuss how each person’s role impacts the customer satisfaction and find new ways to impress the customer in the future.

Remember the Unexpected
Just when you are doing everything needed to be successful, the unexpected happens. It may be that your company is bought or buys another. Or, unfortunately, it goes out of business. These events are happening. The unexpected can happen, but don’t let it be a distraction. There is always a place for a solid, profitable team. Good people are wanted everywhere. Make sure you have the best and your and their future is better assured.

by Jerry Baker

“Being a small, nimble, and opportunistic company is an advantage.”

Every year we start with a business plan that we believe will work. But things change. Interest rates move differently than planned. Some key people leave and others join the team. Mistakes are made and good breaks come our way. These changes alter what we had planned. So at this time of the year, it is important to reevaluate your business plan and determine what changes and corrections need to be made.

I was recently talking with a group and indicated that with all of the changes made this year, I believed I could see that light at the end of the tunnel. Someone said, “Are you sure it’s not an oncoming train?” That’s a sobering thought. It is not unusual for many of us to feel so confident that we become overly optimistic. How many times have we said, “This month wasn’t the best. But applications looked okay and we just added more loan officers, so next month will be more profitable”? Is it really getting better? Are there signs that suggest business won’t improve?

It’s easy to be so involved with day-to-day activities that we fail to take stock in where the business is really going. Are we profitable and making the progress we expected? To find the answers to these questions, we must take a reality check when we reach mid-year. We also need to take a detailed look at where we have come from, where we are, and when we will reach our goals. Do you need to re-vamp your business plan? To find out, ask yourself the following questions:

• In which direction are the major business indicators moving?
• How does the business look in the details?
• What is working the most and the least?
• What opportunities were not considered?
• Is it time for a new plan?

Analyze Your Business
There are basic truths in every business, which are proven every year. In the mortgage business, it is true that loan volume dictates revenue and without it there is no business. It is also true that the proper management of expenses drives profitability. Given these two simple principles, there are many business metrics that tell a story. They describe the health of the company and the individual branches. Review the total application and funding volume, the funding and applications per branch, the volume and number of loans per loan officer, and the number of loans per salaried staff. It is also important to review the mix of loans and the market value per loan. Fees collected and overage per loan are also important business revenue indicators.

Given these basic business measures, how well has the business done month-to-month, quarter-to-quarter, and year-over-year? Are the trends positive and how do they compare to what you expected? Are the number of support employees and the fixed overhead in line with current volumes?

If the trends look good overall, then most likely your business is performing well. It is more than likely with the current interest rate environment that the trends show weakness. But even if this is not the case, overall financial results mask individual successes and failures.

Review Branch Level Trends
It has been said, “The devil is in the details.” It is certainly true in mortgage lending. It’s good to start at the top and evaluate how well the company is performing overall, but it is best to evaluate performance on the branch and department level. Even if interest rates rise and the competitive market tightens, the impact is not felt at the same intensity in every market. Product mix may help some branches and not others. Some branch sales and support teams are stronger than others and have better performance. Business can be improved if adjustments are made at the branch level.

Branch level trends are critical. If some branches are unprofitable, how unprofitable are they? Have there been changes in management or sales staff? What are the trends by branch and by market area? Is business getting tougher? Is competition what was expected or are there significant competitive changes that must be evaluated? Compare one branch to another. Evaluate the strength of each manager and the effectiveness of each loan officer.

If there are managers or branches where you were waiting to see improved performance, you probably cannot afford to wait any longer. If the last three months’ production trends and branch revenues are not favorable, is anything really going to turn it around? Are expenses under control? Is there a definitive business plan in place that management is committed to and has confidence that it will be achieved?

Pay careful attention to economic and interest trends and the health of each market. If the situation in each branch and market is not likely to get better, then it is time to make sure that expense levels are adjusted to support the most likely volume of origination and revenue. If the trends are moving in the wrong direction, they are not likely to get better soon. It is time to make those hard decisions.

Reevaluate Your Current Initiatives
As the year started, initiatives and actions were planned that you expected would move the business ahead. Perhaps it was additional branches, new investors or products, specific marketing strategies, or a number of other possibilities. Well, how well has each one done? What progress has been made? How much time and resources have they consumed? Have you received what you expected from the time and money invested? Be as objective as possible in reviewing each one.

Money becomes especially tight when business softens and competition tries to hold onto the business it has. There may be an opportunity to improve your specific situation by reevaluating your new initiatives. Can the most successful of these strategies or initiatives expand to create more revenue and bottom line profit? Review each initiative to make sure value is maximized. If a strategy or tactic has not been successful, it may be time to change the plan or stop it altogether. Correct what is not working or determine if it is best to abandon the effort completely. With less revenue coming in, your business cannot afford to invest in ideas or programs that do not work.

Identify New Opportunities
As the year has progressed, undoubtedly new ideas or opportunities become evident that were not initially anticipated. Maybe the competition is trying something that is working and you need to counter it. Perhaps new employees have brought ideas that need to be explored. Critically evaluate these opportunities. There may be enough time left in the year that they can have an impact on your business. Don’t let the barriers of “it wasn’t invented here” stop progress on ideas that will add to your bottom line.

More than likely it will be necessary to make a tradeoff. You cannot afford to do everything. By eliminating previously planned initiatives that are not contributing immediate economic value, you may be able to afford to try new opportunities. If you’re not a particularly big company (and in the mortgage business there are only a few really big companies), you will need to be able to regularly reinvent your business plan. Being a small, nimble, and opportunistic company is an advantage. Make sure you develop a culture in your company to recognize opportunities and create the ability to quickly take advantage of them.

Critique Your Plan
It is particularly important to review your plan and make sure the one you have will ensure profitability and keep you moving forward. If something isn’t working, change it.

From an employee’s perspective, no one wants to work for a company that is stagnant and not reacting to change and market conditions. If you are not moving forward with a plan, the troops will get restless — and for good reason. So once you have committed to making changes, make sure that everyone on the team knows why the changes are necessary and what results are expected from the change.

by Jerry Baker

“Many companies are unfortunately finding the mortgage business difficult and unprofitable.”

The status quo may be good in for some industries, but not in the mortgage business. The best scenario for our businesses is to do what it takes to have improve our loan volume, cost to produce, sales skills, and profitability improving. This can be a difficult management challenge, but as each month during 2000 goes by, there continues to be plenty of opportunity opportunities to improve these performance measures by strategic and, opportunistic growth.

Many companies are unfortunately finding the mortgage business difficult and unprofitable. Rising interest rates and unrealistic price competition, often driven by continued excess capacity, are taking a its toll. Some companies have failed and some have chosen to be acquired rather than loose money and or have its business fail. deteriorate. Both situations create tremendous opportunities for companies to grow, and t. These opportunities should be exploited.

During tumultuous times (, which is exactly what we have been experiencing),, branch managers, loan officers, and support teams can get very nervous about their futures. As the financial security of their company comes into question, or if they have negative perceptions about the management and direction of a new company if an acquisition is going to occur, it is natural for employees to look for other options. These anxiety–causing situations create opportunistic -growth for other companies that are prepared to react to the situation.

For your company to take advantage of the opportunity to grow origination capacity and add quality staff, it is important to have a basis for evaluating your opportunities. This is exactly when you need to revisit and review your long-term business plan.

Your plan should include the following:

Define growth needs
Make yourself attractive
Be organizationally flexible
Be logistically prepared
Create an integration team
Go for it

Define Growth Needs
It is great to take advantage of growth opportunities, but make sure it adds the most value by having a business plan that provides direction for future growth. Whatever is done should mesh coincide with your strategic direction that is defined and outlined in your plan. What Ask yourself what markets offer the greatest opportunities.? Are there markets or product niches that you’ve missed or have been unable to penetrate? Where does your present organization need strengthening? How big do you want to be? Where do you want growth to come from?

At any time, but especially times like such as these, you may be presented with business opportunities that you’ve never considered or contemplated. You may want to take advantage of them, and when you have a plan and a strategic direction, you will be better able to make the most of them.

Make Yourself Attractive
The best people can go to work anywhere, so it is important to make your company as attractive as possible. Why should a potentially valuable employee choose to go to work for one company versus another?

Often new employees are often seeking a compatible direction and along with good leadership. This may have been missing in the employee’sir current situation. Make sure you can articulate your vision, direction, and objective. If it is written down, all the better. Compensation and benefits are also important and must be competitive. They are worth reexamining every year or so. With all of the growth opportunities in the market, it is important to revisit them and analyze these benefits.

Tools for success are becoming increasingly important are the tools for success., which these may include loan products , competitive pricing, laptop computers, loan origination systems, Desktop Underwriter, LP or other loan approval underwriting engines. Sales, product and process training, web sites, and direct marketing support are also crucial. Any or all of these tools may be important, including the flexibility and the autonomy employees have need to succeed. Assess what it will take to attract the best talent and make your company an even better one to work more attractive to potential employees.

Organizational Flexibility Reorganize Your Company
If you’re going to take advantage of growth opportunities, it is important to keep in mind the possible need for organizational flexibility. It may be necessary to completely reorganize your company, or at least parts of it, to make the new opportunity work.

The situations or options available to you may be variedvary, ranging from new individual managers, loan officers, or support staff to the possibility of picking up a complete branch or branches. These situations can create conflict within your current organization because of an overlap with existing staff, responsibilities, or territories. It may be necessary toYou may need to be pragmatic and entrepreneurial. It is likely that these opportunities will not be as you envisioned, so it is important to evaluate every situation in light of your strategy, the company, and what is best for the staff involved.

Logistical Preparation Prepare for Growth
If you have an opportunity to add five people or fifty 50 people, or more you should ask yourself if you are really prepared for it. Someone once said that you should be careful of what you wish for because you may get it. Growth is great, and change is necessary, but your team must be ready to accept and accommodate it.

Your ability to handle growth will depend on the size of your company and the size of the opportunity. It is advisable to consider in advance how you can accommodate different growth scenarios. First, what and how much can you afford to do? Too many times growth is done in the absence of understanding the financial implications. New space, furniture, and equipment may be needed—plus , plus the cost to carry this new expense until revenue catches up. What can you afford? Know in advance what to expect as much as possible in advance.

Let’s assume that you can afford to grow. You need to be prepared and to have a plan to provide the necessary space;, increase your computer or data network;, provide human resources support;, train new people in your products, policies, and procedures;, and to provide the necessary marketing support tools. While you may not have the time nor inclination to prepare everything in detail, it would be helpful to consider all the logistical issues you will likely encounter and have a plan to deal with them. It is recommended that someone be specifically assigned the responsibility and to be accountable to manage the details.

Create an Integration Team
It may be important, depending on the scope of change, to create a specific team in order to make the integration of new staff work smoothly and to avoid losing any production volume through mistakes or delays. If you know there is an opportunity to add new people or new teams, make certain that all functional areas are organized to facilitate integration.

Define who is specifically responsible for communicating employee benefits, signing up new employees, coordinating phone numbers or phone systems, providing laptops and computers, getting business cards and stationery, integrating existing web sites, communicating with referral sources or providing materials to effectively communicate with these sources, and setting expectations, etc. Whether you are hiring new staff in ones or twos or in large numbers, you want to make the experience as smooth and as non-disruptive as possible. As mentioned previously, have someone specifically assigned to manage the overall effort.

Go For It

Growth in the past or future may have been or may be at a deliberate pace, as it may be in the future. Now, however, there is an opportunity to take advantage of a situation that may come along once every three to five years. Fast action may determine the outcome. Whether the potential new staff chooses your mortgage company or another one, the decision could have a profound effect on your company’s future and continued financial success. Don’t just react and see what happens.; Act quickly by having a plan. With preparation and forethought, you can know how to do it smoothly, efficiently, and in a way that takes full advantage of the opportunities. The best advice is to go for it.

by Jerry Baker

“It is important to look at what you are already doing to see if you can increase your loan size without decreasing your margins”

I remember sitting in a seminar in 1994 and listening to a top producing loan agent talk about how hard he was working and how many transactions he was doing. He felt that he couldn’t do anymore. He then made the observation that if he wanted a raise, he needed to increase his loan amounts. Ever since that seminar, I have made an intentional effort to increase my average loan amount each year. I have actually raised my average loan amount by 80 percent since 1994.

Decide What’s Right
First of all, you must decide if working on larger transaction amounts is right for you. In most cases, a 20 percent increase in your average loan size equals a 20 percent increase to your bottom line income. I believe this is true whether your average loan amount is $80,000 in Indiana or $300,000 in Connecticut—regardless of whether your clients are mostly purchase or refinance transactions. However, there are certain circumstances when originating higher loan amounts is not profitable.

It is important to look at what are you already doing to see if can you increase your loan size without decreasing your margins. Do you mostly originate FHA or government loans that limit your loan amounts? Do you have the confidence to charge similar margins? Do you have the technical ability to work with move-up or higher-end clients? In this case we will consider higher-end customers to be professionals, business owners, and executives. Do you have the confidence it takes to approach and communicate regularly with these higher end customers?

Now that you decided it is a good idea to increase your loan amount, let’s look at several strategies to increase your loan amounts.

Expand Knowledge and Confidence
Knowledge is power. To work with this market, it is essential to know your business. Take time each week to learn what loan programs are available for higher-end clients. Don’t be afraid to meet with your lender or investor representatives to get better acquainted with these loan programs. You need to be well schooled on easy (EZ) or no documentation programs, first and second combination loans, immediate adjustable rate mortgage (ARMs), high loan to value jumbo loans, negative amortization, and conventional ARMs.

You will need to be perceived as a financial mortgage consultant. Remember with these and all clients it is imperative to not only obtain a loan for them, but it is also important to consult with them on what loan programs are available. We need to help these clients by giving them all the information so they can to make informed decisions. Consult on why a 5/1 ARM might be a better choice then a 30-year fixed, or why they do not qualify for a conventional 30-year fixed, but they qualify for an EZ doc ARM. You also need to let these clients know that you are a financial consultant who specializes in mortgage consulting. Your job is to manage their mortgage, isn’t that what an investment advisor does? It is important to look at your client’s complete financial picture. Take into account all debt and the borrower’s goals when making suggestions and recommendations.

Don’t Discount
Perhaps the most important part of an intentional increase in loan amounts is not to discount your services because your transaction is larger. You must believe your services are valuable and your consulting is making a difference to the client and the transaction as a whole. This is a mindset. If you believe in your service, your margins will remain the same or will potentially increase.

Target Your Market
Know your own numbers and market, look at your past two years, and determine your averages. Research your local market and look at what is available. Are there neighborhoods or cities that have values higher then your average? Ask yourself who are living in and buying these homes (doctors, lawyers, executives, business owners, and other professionals). How do these people find someone to consult on their mortgage? Is it the Realtor, CPA, financial advisor, friend, or through an ad?

Now that you know your own numbers, you need to decide the market you want to go after—either demographic or geographic. Demographic would be deciding on the type of client you want. Some demographic segments include professionals, executives, doctors and business owners. Geographic would be picking a neighborhood, city, or maybe a vacation home area.

Target your involvement to industry specific associations that can lead you to the upper-end transactions. Target specific segments within that industry (i.e. builders that make custom or upper-end homes). Remember you get the business you go after. Start meeting with business advisors that can refer you upper-end clients, or meet with Realtors who work the geographic area that you have targeted.

One way of getting meetings with business advisors is to look at the advisors of your existing clients. Call your friends or past clients who are an upper-end client and ask them to help you with your business. They can help make introductions to their advisors and Realtors.

When you meet with these potential referral sources, it is important to have something to say. You need to show that person that you are a financial mortgage consultant and not “just a loan officer.” Talk about how your objective is to make the referral source look good. Inquire about how they operate their business. How do you know how you can fit in until you know how they do their business? Maybe find out what is a good client for them. To become referable at this level, you must gain their trust. You will do that by demonstrating knowledge, confidence, and ethics. The referral source needs to know that you know your business, and that you will be professional throughout the transaction and always do what is in the best interest of the client. Remember it is not what is important to you, but what is important to them. Always try to bring value to them and refer clients back. It is amazing how much business you will receive when you become an advocate for your advocates.

Market Your Skills
I have found it to be difficult to attract these types of buyers by conventional advertising and consumer direct methods. However, if this is part of your marketing plan, here are some suggestions. Make sure you position yourself as a higher-end specialist. Develop the image you want and always remember the audience you are trying to attract. I used to show elephant legs on many of my marketing pieces that said I was the jumbo king.

If you want to be known for working with higher end clients, include what type of clients you specialize in and are looking for in your marketing. Over time, people will begin to recognize you as an expert in those types of clients.

Target certain professional groups and make a mailer or advertising specifically for them. Offer them a special offer or discount, and let them know you specialize with that type of clientele. In a refinance market, target your mailers and market to specific loan dollar amounts. Offer them no cost refinances if their loan is over a certain amount. When advertising, remember who you are trying to reach. You may consider an upscale city magazines as advertising vehicles. Also, look at real estate publications that are specialized for the geographic area you are trying to gain your market share in.

Upgrade Your Peer Group
Upgrade your peer group including people you are currently working and surrounding yourself with. Network with associates who are tops in their fields. Get involved in a mastermind group that Napoleon Hill made famous within his book Think & Grow Rich. The group I am involved with is made up of top quality people in other professional service businesses. The group meets once a month, and we discuss each other’s businesses in detail. We act as each others personal board of directors. The key to the group is the quality of people who are involved. Find a mentor who already has systems in place to work with the upper-end transactions.

Move up your own social environment when possible. If joining a gym, tennis, or country club make sure it is the nicest in the neighborhood. Go out socially with other successful people. Join the local rotary club. Get season tickets to your local professional sports team and take your clients and referral sources.

Invest in Yourself
To take your business to a higher level, you cannot be penny wise and dollar foolish. It helps to be on the cutting edge. You need to have good communication tools, such as a cell phone, to immediately get back to your referral sources. Use e-mail and the Internet because clients want to communicate many ways. You need to have your own professional e-mail address. The Internet and the information available must be at your fingertips at both home and office. If you are using a 56k modem, you should consider upgrading to a DSL line.

It is essential to have a recent Pentium II computer to run these sophisticated programs. Having good loan presentation software that can show clients loan program differences that they can understand will help you be perceived as a financial consultant. Maintain a well-designed database to market and track all your clients and referral sources. Invest in yourself regularly and go to at least two seminars a year—maybe one industry specific and one that is generally motivational. The best place to improve your business is by networking and listening to others in our industry who have the systems already in place.

The bottom line is invest in yourself and your business. That doesn’t mean throw away money. Instead, make good choices. If it is something to help your business in the long run then try and make the investment.

There is no overnight answer. However, if you take a long-term approach over the next 12 to 24 months, you can shift your business to attract longer transaction amounts. It is proven that you eventually get the business you go after over the long-term. It is important not to forget about your existing client and referral base while you target this strategy.