In this RoundTable, three wholesale lender reps discuss the foundations of successful relationships.
Steven R. Rosko is a senior wholesale account executive at Bank of America, Brea, Calif.
John Naclerio is regional branch manager at American Mortgage Network, Newhaven, Conn.
Debbie Grimm is branch manager at First Magnus, Overland Park, Kan.
What is the key to a mutually beneficial wholesale lender rep/broker relationship?
Rosko: The key areas for productive and long-term relationships are effective communication, product knowledge, consistency, and sincerity. There are many pieces involved in creating a business relationship beneficial to both parties, but these four points are really important to me. I have found a group of brokers, some of whom have been in business for 15 or more years, and its their stability and wide-reaching knowledge that has helped cultivate a long-term business relationship.
I worked on the retail side of lending many years ago, and I remember how frustrating it was when a lender didn’t return calls, didn’t know their own products, or wasn’t efficient with their loans. It makes you feel like they simply don’t care about you or your customers. I have been able to draw on that experience—every one of my brokers knows that I will “go to the mat” for them. I’ll make their problems my problems and internalize those issues until I get them resolved.
Naclerio: Mutual respect is one of the most important aspects of doing business with brokers. As wholesalers, we have to understand that the brokers have to solicit business, and that there is a customer at the end of every transaction. We know that our performance reflects directly on the broker, and effects their relationship with the consumer.
On the other side, brokers have to understand that we run a business as well. There has to be a fair balance, where we understand each other’s business, and I think that’s something that is often missing. Ultimately, the consumer is the most important part of the equation. If we can provide good service to the borrower via the broker, the broker closes more loans and they come back to us in the future. Everyone wins.
Grimm: A rep should be able to identify a broker who is a good fit for them and a broker must see the value in establishing a relationship with the lender. For me, a good fit is a broker who appreciates a consistent price, sees the benefits of our technology, and values a true partnership with their lender.
Additionally, a good wholesale rep should be able to educate brokers not only on program guidelines, but also to help them identify which borrowers the programs are designed for and how to effectively sell the programs to their clients. If they can do that, the rep should be able to help the broker develop new business, which can add significantly to the relationship. When a broker is not being communicated with on a regular basis, it puts both parties at a disadvantage and opens the door for problems. Within our constantly changing industry, communication is a major key to a successful relationship.
A rep must also be able to deliver bad news to the broker as soon as they are made aware of the problem. A rep who procrastinates on delivering bad news will leave the broker with limited time to find a solution and potentially cost them the loan.
How do you go beyond the basics of offering the best product and price to add value to your broker relationship?
Rosko: Our top producers all use electronic marketing, not just to the broker, but also to the individual originators. Outside of traditional gifts and presentations, another way of going beyond the basics, when geographically possible, is to have a face-to-face meeting with my and my brokers’ entire teams. Involvement with the staff is one of the most important aspect to forming strong relationships, and being able to put a face with a name is crucial. I organize events where both of our teams can meet—processors to processors, assistants to assistants—and bring lunch in to the office for a casual meeting. I always have lunch brought in because it cuts down on travel time, usually for both sides, and because I want the broker’s team to see and get a better understanding of our work environment and our challenges. It strengthens our relationships across the board—it works like a charm.
Naclerio: One of our best programs is product training on a national level with Web-X, a phone meeting that features a particular product. For example, we started a “Pay Select” program recently; I marketed the phone meeting to all my brokers through e-mail, the Web site, and in person, and invited them to call the 800-number to participate. The host speaker usually kicks off the meeting with some marketing tips, and then educates the brokers about the product. Afterward, the brokers have the opportunity to ask questions and get additional information. For our “cream of the crop” brokers, we also offer a yearly “broker round table.” We bring in the best brokers from each market and they meet with our senior management to discuss their business and goals.
We also offer perks online, such as a training program where brokers can learn about products, and then get quizzed to test their new knowledge. The site also features marketing materials that brokers can customize and use to promote special programs.
Grimm: With the changing market (interest rate environment) I can’t rely on simply providing the basics. Lenders must show our brokers that we are interested in helping them grow their business. Each quarter I offer seminars (through my company) that are designed to help my brokers fine-tune their skills in getting and keeping clients. This kind of service is more important to our brokers than taking the gamble for an extra .25 with another lender.
I also provide “lunch and learn” group presentations with brokers and loan officers, covering a variety of topics such as how to save time by accessing our Web site, automated underwriting systems training, product/program training, first-time homebuyer seminars, and how new loan officers can best add value to their business. I also coordinate “meet the underwriter” sessions, where brokers can bring files in for an underwriter to review in person. Earning business from brokers is a team effort and it helps strengthen the relationship if the brokers are able to spend time with a few of the operations employees who work so hard to create a positive experience for their borrowers.
What is your policy on “converting” a broker’s borrower to eventually become the lender’s client?
Rosko: As a wholesale rep, my customer is the broker. Period. I respect the relationship between a broker and their borrowers, and I don’t market to the customer. I feel that it would be a violation of the covenant I have with my brokers. That said, the bank has a separate retention program (outside of my department) and they do, of course, try to preserve the lending relationship with borrowers. I know that many of the broker’s customers will be long-term borrowers, and I let the brokers know that I appreciate repeat business from them, but I wouldn’t approach a broker’s customer on my own.
Naclerio: No, I don’t try to reach the borrower, and I think the fact that we don’t market to the broker’s customer give us a competitive advantage. The wholesaler’s customer is the broker, and there’s no reason to infringe on that. I know my brokers appreciate our stance on this.
Grimm: I never market to my brokers’ clients. That policy is part of my company’s “broker-for-life” program. I’m aware that not all of our competitors share the same philosophy, however, nearly 65 percent of all loan originations are handled by brokers and the last thing we want to do is disrupt that origination source. I want my brokers to be my customers for life, and if I succeed at that, then the borrower will automatically be my customer for life. My broker is my client and I will do everything in my power to help the broker retain their customer.
What are your biggest concerns or “pet peeves” when it comes to brokers?
Rosko: My biggest pet peeve is when I go into a broker’s office and I find that they are getting approvals from multiple lenders and withdrawing loans for small profit margins, rather than closing the transaction and moving ahead. These brokers are spread too thin, opening their door for every gimmick lender and companies they’ve never worked with, and their funding ratios will usually prove unacceptable for us.
I prefer to work with accounts that have selected five major lenders and concentrate on building business with them. They’re more knowledgeable about the guidelines and processing requirements of those main lenders. Most importantly, their approval and pull-through ratios are much higher.
Naclerio: One of the biggest problems I’ve seen is not respecting the importance of rate locks. If rates go down even after the rate lock, brokers (whether driven by the customer’s needs or not) usually want the lower rate. But if the rates go up, they don’t want to pay the increase. Another concern is with the few brokers who aren’t looking out for the best interests of their client. That includes submitting poorly packaged loans on a regular basis. It wastes my time when I have to wade through the forms, it adds expense, and in the end, the borrower suffers.
Grimm: One pet peeve is when I go above and beyond, meeting and exceeding expectations on a loan, only to find out that the broker has sent the same loan to other lenders. There are often legitimate reasons that a broker has to submit a single loan to more then one lender, but sometimes I run up against a broker who appears to do this for all the wrong reasons. My goal is to offer the highest level of service at the best possible price, and it can be disheartening when a broker works against me.
Another big concern is brokers who don’t deliver on their locks. It’s funny that a lock committment is the only “one-sided” contract in America. The lender is obligated to honor the contract but the broker isn’t.
What are your suggestions for enhancing the relationship between wholesale lender reps and brokers?
Rosko: Wholesale lender reps can’t rest on their laurels—we have to stay in the field and make our presence known. We also have to be good about swift problem resolution, letting our brokers know that we understand their concerns and will do everything in our power to fund their loan and meet their borrowers’ needs.
As far as what brokers can do, I know I’m spoiled with my own customers, but like I said, focusing on five to 10 primary lenders is key. Just maintain the volume with those select companies—that’s the basis of a wholesale/broker relationship.
Naclerio: Form a partnership based on mutual respect. Our job is to please the consumer; when I understand the broker’s business and how I can help them make more money, we get more business, they look good to the borrower, and the customers are happy. That’s the bottom line.
Additionally, I’d recommend that brokers use the tools and technology available to them. For example, they can lock loans online, getting approvals faster and impressing the customer, therefore creating a basis for referrals. Brokers also need to let us know what they need to help their business grow. It helps when they keep us informed about our competition and tell us what we need to be doing to ensure that we’re their preferred lender.
Grimm: Brokers should seek out a lender that is dynamic and consistent at the same time. My brokers have come to rely on my consistency in terms of both price and operational support, while also appreciating our ability to adjust our model based on the feedback they provide us with.
Lenders must listen to what our brokers are saying and understand what their needs are. We need to learn who they are and how they run their business before we can begin the process of helping one another become more successful.
Once the relationship is established, we need feedback. Feedback is a critical component of our mutual success. I can only benefit by listening to what my brokers have to tell me. Brokers should also let their rep know when someone in operations does an outstanding job. There’s nothing better than being able to let the operations staff know how much of a difference they’re making. It also makes them that much more receptive to staying late the next time the broker needs a favor.
At the same time, lender reps must communicate with their brokers, set realistic expectations, and deliver on those expectations. Reps must also deliver honest answers, which may not always be what the broker wants to hear. Honesty is key for the broker as well. It doesn’t do anyone any good if a broker only gives enough information to get the answer they want, only to hit a roadblock down the road.