QM, ATR and UDAAP! Oh My!
House of Stags, Failure to Launch

Future Success Begins With the Mirror

Like fears of those concerned with the change at the Millennium (“Y2K”) or 12/21/2012 of the Mayan calendar), the meltdown from the end of the bond bull market has weighed heavily on the shoulders of all mortgage bankers. However, while it is true that too many business models are meeting an untimely end, it does not mean the business itself is dead. As the new mortgage industry evolves, mortgage bankers and mortgage sales professionals who share the same vision and attitude will need to find each other to mutually grow. For both groups to create a successful future, the  key is understanding who you are and what you’re about.

As for the mortgage sales professionals, this population seems to fall into three buckets; lifers, who won’t move unless the building is on fire (50%); gypsies, who move anytime their pipeline is empty (25%); and fence sitters, who aren’t particularly looking but, if given the right opportunity or if made angry enough, will make a move (25%). Because some buildings actually are on fire and most pipelines are at all-time lows, over 50% of sales folks are on the market. Considering the fact that the majority of mortgage banking companies are equally as desperate and offering the kitchen sink, you have an active and liquid marketplace.

Meanwhile, the mortgage world is split between those who need a brand and those that are a brand. Knowing where you truly stand, whether you are a company or a loan officer, is essential to making the right decision about the future. There is nothing wrong with either approach, but the skills and personality have to match.

For sales professionals, the most determining factor is whether or not they can conquer call reluctance. Using personality testing or probing interview questions can help companies uncover that core skill that you can’t teach. Merely because a sales person has written lots of loans for a lead-provided business model does not mean that he or she doesn’t suffer from call reluctance. While it is true that training and coaching can create a steely determination and help someone overcome that inherent trait, they would be in the minority. 

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 In Consideration of Brands

If you choose to work for a brand, make sure that brand truly understands its brand and its real value in the market. Some companies believe their brand can do no wrong and any borrower should be honored to work with it. It is rare for a brand to possess a strong, accurate identity, good rates and loan programs, combined with quality fulfillment. When you work for a brand, the customer is the brand’s customer, not yours; so typically, the compensation and supportive marketing won’t be there.

If you’re already working for a brand and are not happy, really look deeply to discover why. If you suffer from call reluctance, not making enough money because of the pay structure should not be the issue. Maybe you need a different brand instead. Or, if you are confident you can build a personal referral base, maybe it’s time to be working for an independent mortgage banker, where you truly only “eat what you kill.”

At the same time, there are some independent mortgage bankers who are moving to work for brands. Many have seen their pipelines dry up as their businesses became dependent solely upon their databases, and they had completely strip-mined everything they could from their customers. However, entering into a relationship with a brand in this way is never healthy. The banker is there because its business approach failed, not because it wants to be there.

Bankers in this situation are always kicking themselves for not building their referral bases and are always unhappy about compensation and operations. You need to believe in the company you work for and know it is the best fit for you and your customers. But the goal of a brand is not to fit all customers; it is to cross-sell its customers and convert new ones. They don’t care about being an advocate for your customer or referral source.

Challenges of the ‘New’ Market

If you are an independent mortgage banker or sales professional whose business has dried up and are wondering where the best opportunity lies, you have to answer some key questions. If you have been buying leads, you are faced with a shift in the market toward a mostly purchase-driven business. The cost of leads, the pull-thru and the gestation times have all changed, and this change could call into question your compensation model, the skills required of your sales folks, and your technology. A new approach will be required to pursue and foster relationships in this environment. The opportunity is there, but can you make the painful decision to shut down the old and fully embrace the new?

On the other hand, if you had a purchase based-business since before 2000, then you likely built it on referrals over time. Over the years, you did enough things right to grow a database of happy customers, who referred their friends. Then you refinanced them when the market shifted, while continuing to make a few purchases. Now is the time to ask yourself whether you can go back and do the basics of building your business all over again. And if you can, do you really want to?

As we get older we become more fearful because we know too much and fear the worst. We can develop call-reluctance unconsciously by rationalizing from our experiences. We say things like, “I won’t call on that referral source today because they were rude to me that one time,” or, “They tend to give their loans all to that guy,” or “Mondays are always busy—maybe next week.”

Finding a Good Manager

Sales professionals who need to get back on track and stick to it often hire a trainer or coach. A good sales manager should serve this purpose for loan officers (even though no one wants to be “managed”—they want to be led, supported, trained or coached).

However, in our world of producing managers, you sometimes only get what you need from a manager if you communicate clearly what that is. Like a marriage, it involves hard work, honest discourse, and a healthy understanding of mutual respect for the relationship to work.

Many times, the company is right but the manager is not—or vice versa. However, it is harder for a company to change than an individual. If you are at a good company but have an imperfect relationship with your manager, working on that relationship is important. How the company handles that manager will also say a lot about your choice of them as your home.

Good managers are true leaders who make their team members better. You can frequently see these teams stay together throughout multiple company changes, sometimes for decades. But still, your individual needs must meet the expertise of that manager, who will be your coach. Today, most recruiting is done through a corporate recruiter or human resources department and not the branch manager, so much of the due diligence falls to the loan officer to be sure that the local manager is as strong as those higher up the management chain.

Those Left Behind

Amazingly, there are still many zombie loan officers and companies “alive” today who are living in denial about the new marketplace. Many of them fall into the “gypsy” camp, moving from firm to firm, casting aspersions and leaving a trail of legal and financial destruction behind them. Sadly, some of them are blessed with zero call reluctance and can make the phone ring. But that same audacity to not care what people think is also a curse without a standard of quality or a moral core.

The mortgage bankers and loan officers who fall into this group will find their businesses continue to erode over time. In today’s world of zero tolerance for misdeeds, the habits of the zombies are huge liabilities as well as a cancer to their company’s culture. Eventually, compliance and production headwinds will push these folks out the business.

Really assessing who you are today and how you got there is essential before you decide where your future lies. Once you have that clear 20/20 vision on yourself, then you can match yourself to the options out there today. There are no great companies—only great “fits” for those who truly know themselves and what they need. Once you find that fit for yourself, the future immediately gets a lot brighter.

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