Proactive Filters

Every loan originator that has closed more than one loan understands how quickly they can become trapped in a world of reactive activity! I believe the main reason most originators don’t close more business is because they often are too busy to do more business! Being busy isn’t a sign of success, it’s a sign your systems don’t work so well and you are spending too much time being reactive to others because your system isn’t proactive enough to filter out much of the drama and reactive nonsense we often see.

Learning from your own business experience will help you get most of the way; wanting to do better and close more units in less time will get you the rest of the way! First thing you need to look at is where your time goes? Again, being busy working on files isn’t an answer; it’s a vague statement of your self-imposed reality! The question is, “What has you so busy?”

So many originators have no idea how long it takes to take a client from first contact to closing. They never think about how their own system causes or eliminates issues. More importantly, they never create a perfect process for themselves, their clients, and their referral partners, that limit the drama and creates a great experience!

Just think about this the next time you feel overwhelmed, what am I doing, why am I doing this, and how could I have avoided this? Why are we chasing documents? Why are we answering the same questions over and over again for the same people? Why are we scrambling around the week before closing trying to put it all together when we KNEW what needed to be done when we first spoke to the client?

The reason is that your system to take that client from contact to closing didn’t contain a series of “Proactive Filters” to prevent much, if not all of the drama many originators spend their time trying to resolve! Many originators will state that they just need an assistant! I say, you need a better SYSTEM!


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Part Two of the 6 Efficiencies

In the March 28thpost I set the stage for the things I see that help originators optimize performance and enhance the customer experience. This week we will touch on the key points of items 1 through 3 on that list. Keep in mind, that all of these are gone into in great detail on the website:

The first item to conquer is the plan! The biggest failure amongst those who don’t achieve what they want is because they have failed to take the time to create the business plan they intend to follow that takes them to that specific destination. And let’s not ever call it “goal setting”. Goal setting is like a New Year’s resolution, everyone talks a good game and less than 1% really stick to the plan and get the job done!

The creation of a written plan is essential to map your way to your destination; and success is a journey to a specific destination! Your business plan should be done in OCTOBER so you can take the time to incorporate all the tools, technology, and training you need to implement the systems you plan on bringing to the table in the coming year. The business plan is also the accountability partner and the adjustment tool you refer to on a monthly basis to track your results and make needed adjustments.

Step two of the six requires that you commit to paper ALL the details involved in your business. What specific tasks is part of your prospecting plan to attract opportunities? What do you do? When do you do it? What is the cost in time, effort, and dollars?

Once you have your prospecting efforts all mapped out, you have to clearly lay out the loan process experience from the time the customer makes first contact, to the specific details of your post-closing strategy. Every call, card, email, text, communication, alert, follow-up, warning, and contact needs to be identified, scheduled, implemented, and checked against your time line to be sure the quality of the experience remains in place over the test of time. The quality of that customer experience is the life blood of your future business and becomes your force of attraction for repeat business and future referrals! It is the very VALUE of your relationship with that client that keeps them connected to you!

Step three is critical if you are ever going to consistently perform at a high level without running the risk of becoming consumed by your business and risking “melting down” or as some would call it, “burn out”. This key step is the very success structure most people envy, but few achieve. The reason is, it’s too easy to ditch the structure and not see an instant penalty for aborting the process.

More and more we live in a less defined world. Everything is becoming 24/7/365 and people just except it as a fact. That’s too bad! For people to think they must be a slave to their business is just flat out wrong! You are a loan originator, not a trauma surgeon! Although, even trauma surgeons have days off and go on vacation and disconnect from their business! There are no mortgage emergencies! Nobody dies in our business! While some people may think they do, it’s not true!

By focusing yourself to your time, tasks, and schedule, you can use the tools you have already learned to become a great success in the mortgage industry. Face it, if you managed your class schedule in high school, you can become a great originator. Once you see the magic of your life when you schedule your own success, you will never go back to being reactive. It’s about your system working all the time, not you! Frequent and scheduled vacations help relieve stress, provide an opportunity to enjoy the rewards of your efforts, and keep you connected to the real reason you go to work!

Next week, items four through six! As always, questions or comments:


Are You Worth More Than $11.35 an Hour?

When you are involved with as many loan originators as I am, you hear all kinds of stories and concepts about how to generate loan opportunities. I think over the last few years, so many people have focused on lead generation that they haven’t spent too much time looking at conversion rates and profitability. A big issue was the issue of paying for leads. So I asked a number of originators to share some insights as to how they track their investment in buying leads and what the total return on that investment was, and how profitable it may or may not have been. The answers were pretty interesting.

  • The number one most interesting item was that mostof the originators don’t track their cost/hour investments in purchasing leads.
  • As a total percentage of their marketing budget in time and money, they don’t draw a comparison between purchasing leads and other opportunity generating investments.
  • Last but not least, they don’t work the math to show their effective income rate per hour of the work needed to generate each application that closes.

I believe that the mortgage business doesn’t do a very good job at working through the numbers. In one specific case, a loan originator with a significant investment in time, money, and effort; the math was very interesting to work through. It also opened the door to another whole area of discussion that we will follow-up in the future, what “power” do you give up when you are in pursuit of those leads?

After working through the math, this loan originator saw that the net income after expenses on all the other areas used to generate opportunities, her net hourly rate for just generating the lead that closes was almost four times the hourly rate that was found on the leads that were purchased. In fact, the net income per hour prospecting and working the purchased leads netted $11.35 per hour invested!

Now this is just one set of numbers, but I believe that they do share a story. The story is that the work needed to obtain the opportunity can vary widely across the board. The time it takes to work each lead and convert it into a transaction is something that becomes really important to measure.

As we all know, the math used to calculate how “well” someone is doing in our industry can vary widely. Units closed and dollar volumes can be just the tip of the real story if you don’t dig down to see the entire story. We all know people that have greatly inflated numbers or have huge teams of people funneling up that volume, or at what cost?

Purchasing leads isn’t a bad thing by itself. Large production teams are not a bad thing by itself. Marketing agreements, desk rentals, joint advertising, and other opportunity generating techniques are not bad things by themselves; it’s just vitally important that you know the true cost in time, effort, and assets and compare!

This loan originator discovered that making $11.35 an hour to work the leads to the point of a genuine loan opportunity wasn’t worth the effort. Others may feel differently, but you really need to drill down and know the math to be sure you are happy with the money you are netting for the work you are doing!

Questions or comments:

Common Misconceptions

When you coach a wide variety of people you can hear a great deal of perspectives. People believe what they believe because that is what they know, not always what is true. The world is full of people who have always believed what they believe and have never had cause or reason to challenge those beliefs. However, many people have never reasoned out their positions one way or the other and are often spending time questioning them or abandoning their beliefs for something that appears more popular.

In our profession we are subject to constant pressure of outside influences. Market conditions change so we must adjust to them, but often we never question the adjustments we are making. Are the adjustments we are making really the correct ones to make? In many cases what has worked before will work again. In other situations, we must explore new solutions to old problems. However, we often don’t think about old solutions to new problems!

With the world full now of algorithms to solve every problem, the quality of the customer experience is now left to an artificial and programed response instead of a person communicating with a person. Just like the incredibly frustrating phone trees when you call many companies that try to electronically answer your question in a number of ways until you either hang up, or have to wait for a live person to answer and they have to ask all the same questions all over again to figure out that THEY now have to transfer you to yet another person to help you and you have to answer all these questions all over again!

Technology and speed are not bad for customer service, but its the failed integration of technology and personal attention that causes a great deal of modern frustration. So let’s have a look at a few things that can help mitigate some of the customer service nightmares and provide guidance to our customers and referral partners on how to have a great customer service experience by integrating our technology and our personal connection to our customers.

The number one misconception in our industry is that we must be available 24/7/365. Since that isn’t even remotely possible, why do we even try? Clients and referral partners will understand and appreciate knowing exactly how you handle calls and messages; and when they can expect a response. When you use a combination of voicemail, email, text, video and old fashion phone calls, you can provide a great experience for most everyone in your market and have a life at the same time.

The next biggest challenge seems to be lead generation. Everyone seems fixated about generating or gathering leads. I actually have to laugh at this because there is an entire multibillion dollar industry thats sole purpose is to sell leads to people that won’t spend a few minutes a day to generate them themselves! The belief is that the more leads you generate, the more money you make. Um,NO! The more deals you CLOSE the more money you make! So why is it that so few people in our industry have even the slightest idea of what their actual conversion rates are, and how to improve them?

The last misconception of the day is the actual VALUE of each referral partner and the COST in time, money, and effort that each referral partner takes. So much of the time I see people investing 30%, 40%, 50%, or more of their time, money, and effort into a referral source or area of business that produces less closed revenue than the percentage of the revenue invested in it.WHY? There needs to be a direct connection between effort and outcome!

So what are your challenges? What do you want to talk about? What are the areas of business that you want to discuss? Please let us know!

Questions or comments:

Why a “SHIFT” Can Be Scary!

So many stories, so much data, so much information; how do you dig through it all and know how it impacts you and your market? Well, some things are national in scope, like interest rates, some loan guidelines, some products and programs, and a large number of regulations. The key part remains, what does national news mean to you? In some cases it can really impact your business, while in others it may have no bearing at all. You have to know what to look for and how each of these things impacts your specific market.

More likely than not, national numbers have far less direct pressure on your local markets than you think. In a large part of the country, FNMA loan limits rising have zero to do with the market because most home sales are far below that limit. The change in a state or local bond program could be much more of local interest to these buyers. The results need to be weighed out against your specific location. Knowing the specific local numbers can really help your business, especially when your market runs contrary to the national average or isn’t connected to the information at all.

A good example is a tale of two originators. One in Georgia spent a great deal of time keeping deals together in January that were scheduled to close but couldn’t because they were USDA loans and the government shutdown put a halt on that process. While another in Arizona kept closing loans as if nothing was wrong at all. To some markets the shutdown really hurt business, while in others they really didn’t notice a thing.

The important piece here is to understand that your clients and referral partners often don’t see anything but national numbers. They see information on the internet and a story that is bias toward a specific group or opinion while the local reality is far different. I see this frequently when speaking to groups of real estate and mortgage professionals who believe that the housing market is shifting toward a collapse. That home prices are falling. That we are heading toward another housing bubble. The actual facts don’t support that interpretation. The reality is right now that mortgage purchase applications are UP more than 3% year over year. Housing going into contract in January actually increased and that interest rates are LOWER than they were six months ago and property appreciation is still projected to GROW by 4% or more this year!There are also more listings on the market, homes in default are declining, and foreclosures are still going down. Yes, these are also national numbers, but you can look locally at your own MSA and see how you compare.

For those professionals who are worried about the shift to online lenders and discount brokers, that shift only applies to those who can’t make a case for the VALUE they provide and the quality of the client experience. If you can’t justify your own value, then you have a problem. If you provide a quality client experience, exceptional value, and do it at a fair price, you could actually see your market share GROW as those cut rate providers go broke, get out of the market, or people discover that the “best rate” online came from the best “LIAR” on the internet!

Yes, the industry is changing and there certainly is a “SHIFT” in how and where people get their information. You as a professional are obligated to know the numbers and provide the information on how these things relate to your market. Are more people looking at our business as a transactional based business, yes they are, but it has become that way because professionals in the mortgage and real estate community have forgotten about the quality of the customer experience and the real value that local professionals can bring to the table.

As I have always stated, “The rate isn’t great if the closing is late” and “it’s not a great deal if the deal doesn’t close!”

Understand the fear, address the concerns, provide the local and specific information, and provide value and a great customer experience and you will find that there are always going to people who value an expert and want a professional relationship than want the best rate on the wrong product or a loan that doesn’t close!

Questions or comments:

So Why Can’t We Just Do Our Jobs?

Anyone remember loan origination before the internet?

Anyone remember originators that would work the entire file from contact to closing?

Anyone remember originators that would turn over nice clean, complete files into processing?

Anyone remember originators that closed eight, ten, twelve, or more units a month handling paper files without an assistant?

How is it now that many originators think that they are doing five or less units a month, with automated LOS systems and needs an assistant?

Why is it that companies and managers spend money on these assistants in additionto the basic originator compensation?

Why are there so many “teams” of originators and assistants working together who jointly close less collectively than they did when they worked alone?

Technology has made the originator job far easier that it has ever been, so why does everyone need so much help? I’m not quite sure.

As I have stated before, an experienced originator should be able to generate opportunities, process those opportunities, convert those opportunities into clean and clear file submissions, work the files through the process, close the loan, and manage that client into the future, 8 to 10 times a month.

Adding an assistant should be at the expense of that originator, simply speaking, why would or should a company pay for the originator to do more loans? Aren’t they already getting paid? And if you do take on an assistant, shouldn’t production improveby five or more units a month for each assistant you have added to the team? Why wouldn’t it?

When you look at some of the “top producers” in the industry, they really post some big numbers. But what you often don’t see is the team of people and the overhead required to make that happen. Any team or group that can’t sustain a per person closing per month average of at least five to eight units per month has a problem with their systemand not a need for assistants!

So before you think it’s time to grow your business by adding an assistant, here are a few questions you need to ask yourself:

  • Have I closed an average of 8 loans a month or more for the last six months?
  • What am I going to give off to my assistant, or have my assistant and myself do to increase my monthly production by five or more units each month?
  • If I had to pay for this assistant out of my own pocket, would I still be looking to get one?
  • If I have an assistant or assistants already, are we averaging five to eight closed transactions per month for each member of the origination team?

If you have answered no to any of these questions, wouldn’t be better to improve your systembefore committing to an assistant?

Questions or comments:



Here Is What Is Working

As we are wrapping up 2018 and looking at what is working for those committed to improving their business, here are the three things I am finding that are working best for those who have improved the most.

  • Use of video. For 7 years I have been pushing for mortgage professionals to incorporate video in their business to better connect and communicate. Video works for you 24/7/365. Putting together your video business cards, FAQs, short tutorials, and especially the use of video coupons.
  • Birthday calls. The simple act of calling your clients and referral partners on their birthday has been a huge boost in opportunities for those making the call. This one simple act that takes less than 10 minutes a day can help grow your business by more than 30%!
  • File replacement. Mining your files for potential new opportunities to do loans or find new referral partners has proven to do just that, create new opportunities while working on current ones.

There are many other tools and techniques out there you can use and many things that will work well or better than others. The important thing is to take a good look at your business and see the one or two things that take less than ten or fifteen minutes a day to do that will substantially change your business!

One other point I wanted to bring to your attention this week is the value of the note. A simple hand written note can really change the perception and the level of connection between a person and a product or service provider. A simple case in point is my recent trip to Ohio last week. I left Florida where it was 82 degrees and arrived in Columbus to find in to be 21! On the drive to my hotel, it was windy and then it began to snow. When I got to the hotel and got by bags out of the car, the cold, wind, and snow was really putting a damper on my mood for sure!

I checked in and got to my room just wanting to get my clothes put away and warm up when I spotted a note on the desk. It read:

“Mr. White,

Welcome to our hotel! Thank you so much for choosing us for your stay! We are so excited to host you, especially as a valued Gold Hilton Honors member! If there is anything we can do for you while you are here, please let us know!

-yours in hospitality,

Front Desk Team

Needless to say, this really helped change my mood and reset my focus for this trip. It also confirmed to me the power of the handwritten note! I have this note and will keep it as a reminder that personal attention to detail in the form of a simple note is still a very powerful tool in providing an exceptional customer experience!

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