Creating a Championship Season

The Super Bowl is in a few days and two teams have made it into the final game to determine professional football’s champion. Professional football teams from all over the country have built organizations, drafted and recruited players and coaches; and put together their teams to compete this past season and now we are one game away from finding out who that champion will be.

Many will remember who wins the trophy. A few less will remember the stars and players who were instrumental in getting their team to the “big game”. But the challenge in the mortgage industry is we don’t have a championship. We don’t have set rules for how we “play the game” or determine who is “best”. The champion for the mortgage industry will never be determined by a contest. In fact, no company, bank or organization could lay claim to being the best because the best of what we do happens every day. It happens by winning the game with each customer and referral partner we serve.

While the mortgage industry will never be able to have a true championship, we can have champions. As an industry, we can build teams, organizations, and companies that strive to build that perfect process and deliver exception value to our customers and referral partners on a daily basis.

It starts with knowing the rules. It begins with understanding the core values and philosophies needed to take a customer from contact to closing perfectly. It happens when we set ourselves up to deliver perfection by understanding what perfection is, then doing everything we need to do so it happens every day. Think about it, have you ever written down what the perfect process looks like? Have you ever asked yourself the question, if everything went perfectly, what would have just occurred? You can’t deliver on perfection if you don’t know what it looks like!

How do we build it? What does it look like? Who do I need? What tools will I use? All good questions you will need to answer. The beauty is, this is an open book test! You know the questions in advance; all you have to do is find the answers!

In 2014, just like we have done in the past, we will challenge you to keep asking the questions and striving to find the answers. We will share with you what we find out, and look forward to you sharing with us what you discover. As you prepare for Super Bowl weekend, think about the two teams playing. Their journey did not just start back in August. These individuals have spent most of their lives preparing for the opportunity to play in this game. One team will win. The mortgage industry does not work that way. There is no schedule of events that leads to a final determination. There is only our own schedule of events that leads to our own final determination.

Before you sit down Sunday night to watch the game, why not take some time and create your own “playbook” on how the perfect process would be. Just like they draw it on the blackboard, what do your “plays” look like? Do you run the ball or pass the ball? Do you focus on a high scoring offense, or did you develop a bone crushing defense?

Have you studied the rules? Do you know how to connect people with perfection? Have you thought about all the ways you generate value by providing endless opportunities for your clients and referral partners? Is it on paper? Have you shared your playbook with the people on your team to be sure you are all working for the same goal? Will you practice each play and perfect each skill so that every movement is smooth and graceful? Will you scout the best talent to work with? Will you coach them to victory? Will your clients and referral partners become advocates for what you do because it was so much better than what they ever expected that they can’t help but refer you over and over again?

For many, being a mortgage professional is enough. Some are happy to make a living doing loans. But for others just making a living is not enough. Some people strive to be the best. To build an experience that is truly exceptional. We get to raise the bar in 2014. What worked in the past may not work any longer. We will all need to get better. To some, they will build the perfect process and share it with those in their markets and become champions!

Are you just playing the game, or are you creating a championship season?
Remember that the first “Mortgage Success Made Simple” event is being held in Scottsdale Arizona on February 7th!  The event is FREE and all the details are on the website and register for the “Scottsdale Event”.  If you are interested in having us make a stop in your town or city, please let us know and we will do what we can to set up an event as close to you as possible!

Who do you think will win the Superbowl?
Denver Broncos or Seattle Seahawks


Is Waiting Worth it?

Its the winter, it’s cold outside, it’s whatever it is that keeps people from getting out and taking advantage of an opportunity. What opportunity you ask? Well, how about houses are on sale? How about the cost of borrowing money to buy a house is on sale? How is this you ask? Pretty simple I think? Most, if not all experts expect both housing prices AND interest rates to rise in 2014. If they are correct, then this time next year the cost to purchase and finance the same home could be higher. How much higher? Well, why don’t we look at the numbers?

First we can look at a $250,000 loan, 30 year fixed, both payment and total paid.

Interest rate                  Monthly                  Total Paid
4.5%                                 $1,260                     $453,794
4.75%                              $1,297                      $466,972
5%                                     $1,334                      $480,321

At first look, it doesn’t seem to make too much difference as payments go from 4.5% toward 5%. $74 a month doesn’t seem to be that big a deal, but over the life of the loan, it’s $26,527! As interest rates rise, so do the costs of the same loan!

As people “wait” to buy a home in an inclining rate market, waiting can get very expensive. Now this example also will help demonstrate the “value” of money. What if you have a borrower who is just $5,000 apart from the seller in agreeing to a purchase? Some people get caught up on the $5,000 difference. Now I am not saying that $5,000 isn’t a lot of money, but let’s just chose to concede the difference and finance that $5,000? Here is what $255,000 looks like.

Interest rate                      Monthly                   Total Paid
4.5%                                     $1,285                       $462,869
4.75%                                  $1,323                       $476,311
5%                                         $1,361                       $489,928

Again, what starts out being only a $25 a month difference, adds up to a much higher amount by $27,059 as rates climb. Notice the total is only $9,607 different. The extra $5,000 financed increased the total by $9,607; the HIGHER RATE increased it by $17,452! It was waiting, not the price, that cost the most money!
Now we have to also look into what happens when the properties appreciate in value over time. Again, using $250,000 as a model, at 3% appreciation, that home now has a value of $257,500. At 5%, we are looking at $262,500; and at 8% you see that $250,000 home now has a value of $270,000! That original $5,000 price differential doesn’t appear to be such as big a deal as it once did!

Now the final series of numbers will begin to price in both higher rates and higher values. For the purpose of keeping it simple, we will just use these numbers as loan sizes. You can obviously generate specific numbers on specific transactions.

Here is $257,500 as a 30 year fixed loan as we did before. But now we add time to the equation and stretch rates out to as much as 5.5%. This would represent a smaller rate increase than we experienced 2013.

Interest rate           Monthly                      Total Paid
4.75%                        $1,343                         $483,567
5%                               $1,382                         $497,633
5.5%                           $1,462                         $526,340

At a 5% increase or $262,500:

Interest rate            Monthly                      Total Paid
4.75                             $1,369                         $492,957
5%                                $1,409                        $507,296
5.5%                            $1,490                        $536,560

At an 8% increase or $270,000:

Interest rate             Monthly                     Total Paid
4.75                              $1,408                        $507,041
5%                                 $1,449                        $521,790
5.5%                             $1,533                         $551,890

So is waiting a good idea? If we see rates go up to 5.5% and property values rise year over year by 8%. The monthly payment goes up by $273 a month and total payments rise by $98,096! Did you really want to pay $98,096 more for a $250,000 loan? So look at the VALUE of your money. Not just today, but what it might very well be.

Rates and prices are rising. Keep that in mind as you talk to both your clients and referral partners. Don’t let a deal fall apart for a relatively small amount of money. Both the seller and the buyer are moving against a rising market. The seller faces the same challenge should they be buying another home as well.

Mortgage professionals need to be experts at looking at the big picture. When is $5,000 not worth fighting over? When it could cost you $98,096 extra down the road!

The first stop in the 2014 “Success Made Simple Tour” by Michael F White and Friends will be in Scottsdale Arizona, Friday, February 7th from 9am to noon. This free event is for all levels of mortgage professionals. If you are in the area, or have the ability to be in Scottsdale on February 7th and would like to attend, please go to the website: and register by hitting the tab “Scottsdale Event”

Join me and Terri Murphy – Realtor®, Author, Trainer, and Coach; Dave Savage of Mortgage Coach®; Tom Ward of Path2Buy®, and Ski Swiatkowski of Turning Point® for three hours of training, insight, and information that you can use right away to make 2014 your best year ever!

Survey Questions

Poll result will be in next week’s blog post. For information contact or visit us online at


“Better than you think!”

We start 2014 and it is amazing to hear the stories from loan originators who are all telling me how bad things are and how worried they are by reports that their business will be off by more than 40% this year. The more I travel and listen to the chatter, the more I begin to think about the alternate reality; the one where people are actually doing well. Imagine that, loan originators who have started the year off well? Really, how is that possible? Well, to me it is much like the tale of two originators. The first originator shut down prospecting activities after Thanksgiving, attended a few holiday parties, and now comes back to an empty pipeline and QM questions. No surprise there that business seems to be “off” for that originator.

The second originator is a different story. This originator kept making sales calls. This originator worked a plan each day that included getting out of the office and WORKING! The second originator kept engaged and active with those people who also needed to work and put together transactions. The result, pipelines with loans in them closing in January and February. They also benefit from new relationships made and forged in those days where everyone else was gone, and they became the only people in town to show up and ask for the opportunity to SERVE!

I don’t feel sorry for those who did not work the fourth quarter. I am proud of those that did! You may not have noticed, but purchase loan applications are actually RISING and the small number of those originators who worked, saw a vast majority of that business. I can go on and on with success stories about those who made that commitment. Brian and Kevin in Indiana who received ten referrals combined the week between Christmas and New Year. Mike in Virginia who will set personal best closing months in both January and February with transactions coming from NEW referral partners he met AFTER Thanksgiving!

There are many in the mortgage industry convinced that they will have a bad year; and those people are absolutely correct, they will. But the issue is not with the industry, the issue is with the Attitude and Activities taken by those who originate business. If you have been working and getting in front of people, you will be getting business. Unless of course you are not providing enough value or asking for each loan opportunity!
Loan volume will be lower than it had been in the past. However, purchase loan business will be significantly higher. In my opinion, the first quarter of 2014 will be much better than 2013 in both dollars and units. A strong first quarter bodes well for a really solid and significant real estate buying season as momentum takes control. Couple this with rising interest rates, and you will see a great deal of interest by people to buy into the market or trade up in the market before prices and rates go higher.

We also need to be honest about rising interest rates. It is just a matter of time before rates are significantly higher from where they are now. While many think we will move to the high fours and low five percent rates on a 30 year fixed, I believe we could see the mid to high five percent range by the end of the year. That said, rising rates are not the enemy. In many ways rising rates actually helps move people to action more quickly. They want to buy and get in before the cost of financing goes higher. It also reduces the amount of “rate shopping” that goes on because the longer they take to make a choice, the higher the rate they actually get.

This year will be better than you think for those that are prepared and are ready to do the right things every day to grow opportunities and provide value to their customers and referral partners. It will be better because if you have been reading this blog post on a regular basis and taking action on the subjects we have talked about, you have been rewarded with a solid pipeline, a large number of approved borrowers looking at homes, and a full complement of referral partners that trust you to do the job and are prepared to work with you on doing more purchase transactions.

For some 2014 will signal the end of the road and time to move on to something else. For others, it will be a time of growth and improvement as they gain market share and improve the quality of the mortgage experience in their community.

2014 will be better than you think if you do the work and take action to make it so!

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QM Strategy

Welcome to the first full week of the New Year! I am sure you have all become aware that it looks like there are many more loan originators out on the streets looking for Realtor® business than we have seen in quite some time. The push to locate purchase business is real. With refinances going back to more historically correct levels as interest rates rise, those who lived on large numbers of refinances are now compelled to find purchase opportunities and that often means engaging Realtors® looking for referrals.

We have talked in the past about Realtor® business and we won’t go into great detail here today, but as Realtors® find themselves fending off visits, phone calls, emails, texts, cards, and letters trying to tell them why they should select this loan originator or that loan originator, you need to get into the fundamentals and deal with creating real value by providing real solutions. We are not talking about who has what rate, or how great someone’s service may be. We are talking about providing your Realtor® referral partners with solutions to current issues that are causing them problems, or may soon cause them significant challenges.

The first strategy for 2014 was implemented by those of you who worked in December was to prepare our Realtor® referral partners for the wave of expired listings that occur in January. For those of you that prepared and engaged in this strategy with your Realtor® referral partners, you are already executing your plan and hopefully your Realtors® are setting appointments and you are working with a few clients that are in need of selling their home and buying a new one.

Now we have to take a look at a very real opportunity to provide information to the market and help develop a strategy to deal with the reality of Qualified Mortgages. QM is going to be here and will have an effect on many people. Some people have already begun talking about it, but the reality is, far too many people are unaware of what QM will mean to them or the market. There are a large number of articles and information about the details of QM, but it is important to share what people really need to know, and what they need to do about it.

As I see it, the main issue is the reduction of total debt ratio down to 43%. This reduction may surprise people a great deal because they are unaware of exactly how much it can really impact the market. It may not sound like much, but what if you were pre-approved for a mortgage using a 45% total debt ratio back in October or November? Have you sat down and done the math? 2% may not sound like much, but it could easily mean $20K, $30K, $40K, or more in purchasing power for our buyers! Combine the 2% lower total debt ratio with higher interest rates and you are seeing a pretty good hit to purchasing power in just a few months!

So here is what we need to talk about. We need to share the facts about QM and rising interest rates. Be careful not to create fear or panic, you want to inform and educate. Remember, it wasn’t all that long ago we were closing loans at much higher interest rates and with total debt ratios at or below 41% in fact, a few of us remember front ratios in the 26% to 28% and total debt ratios of 33% to 36%! Add that to rates in the teens and you would think nobody bought or sold a house, but they did!

Buyers, sellers, and referral partners all need to know that these changes are happening and what they can do about it. You need to look at the market and prepare people for the new reality. Total debt ratios are going to be lower for most people. Interest rates are slowly climbing. Housing prices are moving higher. So that must mean that NOW is a GREAT time to BUY that FOREVER HOME!

It’s not about if rates are going up, it’s a matter of how quickly they go and how high they reach. Home prices are off the all-time lows and climbing slowly but surely. So now is a great time to buy and sell a home while home prices are still low and before rates go much higher! So here is your action plan:

1) Find a good informative article about QM or write one yourself.

2) Print it out and hand-deliver it, NO EMAIL, to referral partners.

3) Be prepared to offer LOCAL EXAMPLES of impact. (your local price ranges are important to use as to specific impact)

4) Make sure you ask to recertify all preapprovals to be sure everyone is qualified under the new QM standard.

5) Work with your Realtor® referral partners to inform current Listings, and to find those who would like to sell and buy and benefit before rates go much higher.

6) Clearly define purchasing power by ratio & interest rate!

Timely and accurate information can set you apart. An action plan and performance strategy are critical because experts don’t insight fear, they provide information and solutions!

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Actions Create Outcomes!

Welcome to 2014! A new year starts and with it a whole new series of hopes and dreams. Goals get set, people plan, and with a new sense of purpose, people engage the world. Unfortunately, for most people the only thing that has changed will be the year. It seems so simple yet so complicated to connect the fact that for results we are not content with to change, they will require a new and different set of actions! All of the planning in the world will mean nothing if those plans are not implemented and acted upon. Things won’t change if you remain attached to how you currently acting. If you are more than happy with your current results, no need to read any further, you already have everything you need. But if your results are lacking, maybe there is something in the next few hundred words that might make a difference?

“If it’s not written down, it does not exist!” Your goals must be in writing and each associated activity described in detail and scheduled into your workweek.

“If it’s not scheduled, it won’t get done!” The number one reason loan originators fail to produce the volume they desire is the lack of consistent and daily prospecting. If you are not prospecting a minimum of two hours every day between the hours of 10am and 3pm, you are not serious about your job and you are certainly not ever going to develop the discipline needed to sustain quality production numbers.

“If you don’t quantify a result, there is no reason to have gone to work that day!” Far too many originators and their managers don’t hold production people accountable to the very daily activities that generate new loan opportunities. Tracking closed loans will never get you where you need to go. Tracking your results and keeping score every day makes it easier to make adjustments and do more of what is generating opportunity, and to make corrections to the things that aren’t!

“My referral partners love me they just are not busy right now. They promised to refer me as soon as they get something!” If you allow your referral partners to send you opportunities when they find them, you are allowing them to control your outcome. If your referral partners are not sending you the quality and quantity of opportunities you need to reach your goals, you need to take control and work with them to be sure the number of opportunities you need are happening each day! Get engaged with your referral partners and generate opportunities together! If your Realtor® referral partner does not have any buyers, work with them to generate buyers. If they have buyers but can’t find the proper listing, work with your Realtor® to generate the listing so that house can be sold!

“I don’t have any good referral partners, all the good people already have relationships with people they like!” Nonsense! While some people may have excellent mortgage professionals in their lives, most don’t! Ask questions, provide information and options, generate value and opportunities that are not common in your market and see how quickly people want to find out what you are doing. When you can generate more opportunities for your referral partners than they can generate for you, or you can provide exceptional value to them and their clients, when you set proper expectations and exceed them every time, you will find that those very referral partners come and seek you out!

If the second half of 2013 was everything you ever wanted in the way of your purchase loan production, then please, just keep doing what you are doing. If it was not; then you need to be sure you change what it is you are doing. The only way to change your outcome is to change the actions and activities you are using to generate them. We have spent the entire fourth quarter of 2013 in this blog post preparing you for this very moment. If you have done the planning and created the schedule, all you have left to do is get out there and execute the plan, and track the results!

For some, 2014 will be the best production year ever. For others, it will be the year they left the business. For most, 2014 will look exactly like the last half of 2013 unless you have done something to make real change to your daily actions and activities. Write it down. Schedule the work. Track the results. Make adjustments.

Happy New Year!
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