Having the Right Resources Makes All the Difference
by Jim McMahan

What a great time to be in the mortgage origination business!  Interest rates are steadily rising, there is talk of possible inflation, and experts are debating how many more times the Fed will tighten, along with many other topics that could affect housing and our industry.  Did I say what a great time?  Absolutely!  Right now is the best opportunity I have seen in years for an originator who has the right resources.  Originators who desire to grow and dominate their market can be successful even in the toughest of conditions, as there are so many competitors who just don’t “get it”, and so many consumers who desperately need someone who does to guide them in their decisions! 

Did you know that the mortgage industry has approximately sixty percent of its sales force with five years or less experience?  This means that the vast majority of the originators presently in business came in during a consistently downward interest cycle and refinancing boom that we have all benefited from…but many newer loan originators may have not have had the opportunity to be properly trained or educated during the frenzy of the last few years.  Building a consistently profitable mortgage business does not happen by chance.  It happens by design, with an ongoing plan, and dedicated hard work over time.  

First, it is crucial to have knowledge of many products and strategies to fit the many different scenarios we will encounter, and I worry for the originator that has been just doing fixed rate loans from one or two sources over the past several years during this low interest rate cycle.  To succeed in the transitional market we are experiencing now, we must become experts on the many choices in loan types, rate indices, margins, guidelines…and all the many nuances that each product offers.  We must be prepared to analyze our client’s needs, and communicate a clear recommendation…versus just quoting a rate that will hopefully beat the last guy that quoted a rate.  We must learn the “WHY” behind each product and strategy, and understand how each would benefit our customer.  We must know how to evaluate risk with the facts of history on each product type, and how this risk would impact our client. 

When you can say you are prepared to do what I have described, you are on track to truly be a trusted advisor, and you will attract people to you even in a competitive market.  But to gain this understanding, this takes study time, using the best resources the industry has to offer.  And the key question to ask yourself is this:  “What resources are quickly and efficiently accessible to me, that will allow me to learn and grow my knowledge every day?”  More on this in a moment. 

The second part to a stable, consistent origination system is a very diverse referral base.  Besides my past client database, I only have 12 referral partners…but this group has helped me create a business that has produced six million or more per month for the past 12 years!  The key is that I have the right mix of partners.  Think for a moment.  Can you imagine what would happen to a bridge built over a body of water that had the wrong mix in the concrete?  It would quickly crumble and come apart when the pressure from changing weather comes along.   But if the concrete is mixed correctly, with the proper mix of sand, water, rock and bonding products, the bridge will last much longer than you and I will.  In the same way, it is vitally important to have the right mix of strategic partners who will provide a continual flow of leads that turn to loans in any market setting. 

So let’s talk about your business mix.  I definitely recommend having a few Realtor partners that share a similar business vision and have some sort of essence match with you and your style of doing business.  I presently have six realtor partners that refer me to their buyers.  They expect my full service and consultative advice in return for their loyalty and exclusive relationship.  You must deliver consistently here!  The only problem with the Realtor pillar can be is that for so many, it becomes the only pillar that is worked on or gets any attention in a purchase market, because Realtors are such an obvious target.  The key here is do more with fewer but better realtor sources and you will be rewarded.

The next pillar is affinity partnerships.  In a normal market place such as the Dallas area where I live, there is only about 8% of the public who need my services when rates are not low enough to spur on major refinancing business…versus 80% of the public who may need my services during a refinance cycle.  Now the other 92% of adult homeowners that don’t need our services in a normal market, may in most cases be sophisticated enough to use a CPA or Financial Planner.  And this other 92%, in my opinion, may well have major mortgage needs that they aren’t aware of until they are pointed out by a professional.  These needs may be a job change, divorce situation, marriage, birth of a child…the list goes on and on…but in many cases, the client may not realize the mortgage options available that could help their situation, and may never have even checked on their own without their CPA/CFP pointing it out to them, and referring them to your guidance.  Your affinity pillar will be the one that keeps you in business during slow times.  There are always financial issues going on in life when people are involved!  The way to get these relationships in place is to go to your best borrowers from the past year or two and discuss with the best ones who they use for these type of services, ask for an introduction, and then be ready to present when the opportunity arrives.    

The third pillar is builder relationships.  This could be someone who does remodeling work or teardowns, or building new homes in the suburbs.  The new build market tends to have a separate life versus existing home markets and is therefore a pillar that provides its own unique borrower type.  This client needs a loan professional who can effectively present construction loan alternatives.  There is a huge niche of medium to small players in this market that need the guidance of a great mortgage planner and trusted advisor. 

A fourth pillar is past client relationships, which consistently serve up new purchase leads through quarterly newsletters, e-mail campaigns, and constant past client review calls.  These calls provide us the opportunity to discuss issues we catalogue in our database from initial client interviews or previous calls.  Once a database reaches 300 past borrowers it should yield at least 5 to 10 loan leads per month. 

The last “secret” pillar I have is a “COI” pillar…my Center of Influence customers.   These are those special past borrowers that come rain or shine, have consistently referred my name and services.  These people are a different breed and should be treated differently by you and your staff. This is the customer that has sent you three or more referrals in the past year.  Many originators call it a great relationship when a Realtor sends them 10 leads in a year and they close three.  And here you may have a customer that sends that many as well!  I call the 30 or so people I have identified over the years that fit this category at least once a quarter, thank them for their referrals and ask them questions about my marketing ideas, client challenges, ways they think I could get better, and things they are doing in their own business to be different and do great things. 

Short and simple, the way to a solid business in this market is focusing on the vital few business partners needed with a diverse mix versus focusing on just a one or two track system of leads and referrals.  Using your knowledge to make a difference in the lives of fewer of the right people should be one of the secrets for your success going forward.  And again, ask yourself:  “What resources are quickly and efficiently accessible to me, that will allow me to learn and grow my knowledge every day?”  

So what are your resources?  What are your practices?  How do you implement and create the daily disciplines to grow you personally, deepen your referral partnerships, and increase your ability to better understand markets, all types of products and learn how and when to use them with your clients?  It can very simple.  Invest in the right resources that can be used over and over, and give you the best information at your fingertips everyday. The best resources that have ever been created are readily at hand, and due to technology, are at a lower cost than our industry has ever seen.    

I have been fortunate to be a part of the best training and resource companies in the industry for over ten years now, through my affiliation with The Duncan Group and Mortgage Market GuideSM.  The Certified Scripts for Success is just one terrific resource that was born out of my relationship with Mortgage Market GuideSM, and was created specifically to help you quickly and efficiently gain the knowledge of past market history, and how those trends impact client decisions today, facts on current ARM products, indexes, margins, historical information and graphs that can be used today to help your customer in making informed decisions.  One very special feature, the “ARM Evaluator” makes it so easy…you simply answer three easy questions about your borrower, and the program will then give you product recommendations, an audio and written script, a benefit sheet for your client, a chart of the history on the product…all you need to make a great presentation to your client.  Check out the site at www.certifiedscripts.com. 

For the resources you need for building relationships, growing your referral based business model and growing personally I recommend the Mortgage Mastery Club, which you can check out at www.mortgagemasteryclub.com.  I have been a member for years, and am now proud to also be a monthly contributor to the site, sharing all of my best ideas and strategies for relationship building.  This is the best resource in the industry today for efficient information to grow your relationship based business. 

Even in a challenging marketplace, the combination of the Mortgage Market GuideSM, Certified Scripts for Success, and the Mortgage Mastery Club will give you an advantage that is completely unfair to the competition…the perfect place for you to be!