I spent last week in Palm Desert California at Sales Mastery. This annual event gets a large number of originators and managers together to discuss the industry, share ideas, and talk with each other about direction. I go almost every year to connect with friends from around the country and get a feel for what people are thinking. Often more happens outside the event at breaks and after the sessions than what you will see from the platform. This year was not an exception.
As always I am one of the first down at breakfast which opens at 7am pacific time largely because my internal clock remains fixed on east coast time so I have been awake for a few hours by then. I also do it because people know my habit of taking a table in the corner to watch the people file in and see who wants to join me in conversation. As many of the people I know are aware of this, I usually find myself in good conversation. This year was no exception.
One of the many surprises I found was the common thread of recruiting. It seems so many were convinced that the only way to survive was to begin recruiting heavily to fill the void in production resulting from the lack of refinances. In some cases, people were lowering their standards and looking to hire people they never would have hired just a year ago. In one case, there was a company looking to hire every originator that had been let go from the industry, even those who were fired.
I try to understand this logic and it escapes me. Does anyone take the time to look at the costs of on-boarding new people? Does anyone give any thought as to the type of disruption caused by bringing in people who are not likely to fit the culture of the current organization? Has not anyone thought this through? Instead of trying to find new people to bring to the table, why can’t we improve the people we have?
In many cases growing your own people by just one loan a week can fill the void by declining refinances. One more sales call a day by every producing member of the organization can often make all the difference. Just one more sales call a day can often double the opportunities of the average originator. Taking your average originator up just one production level and often they we grow beyond that. It is pretty simple; change the expectation of your average originator from three loans a month and grow them to five loans a month. It is often a minor investment in a “known” individual instead of taking a gamble on an outside person. I am not saying recruiting is bad. I am saying it is often overlooked to set new expectations, invest in training your current people, and improve what you have. I believe you need to do both.
I understand that in some parts of the country applications are down as much as 50% from just six months ago. I get the fact that refinances were a large part of the volume and much of that has gone away. But the fact remains, purchase business has been improving steadily and refinances while down, still represent more than 60% of all loan applications. While purchase business will not replace all the refinance volume, the growth in purchase business has those focused on purchase business setting personal production records. You see, for those that had remained consistent in working the purchase market, they have seen significant growth in their business, even as we approach the winter months. If you are not prepared to make it in a 70% or higher purchase market, you may be in some real trouble!
Some of the thoughts shared were about compensation, margins, compliance, technology, systems, staffing, and what the fields of responsibility for an originator are or should be. I have decided that over the next few weeks to share some of these conversations and hope you all will share your thoughts about each of these areas. It is always good to know what others are thinking. Even if you think they are wrong, it never hurts to listen to a point of view.
So I ask all of you to share your thoughts about what you are thinking. What are your issues or concerns? Please let us know.