In the movie "Jerry Maguire", there's a famous scene at the end, where Jerry expresses his love in a long-winded speech to the Renée Zellweger character.

At some point, she interrupts him and says, "You had me at hello."
Unfortunately, when it comes to "courting" Realtors, you hardly ever have them at "hello". And if you don't establish enough productive, mutually beneficial relationships with Realtors in your market area, you're entering the purchase market race with one leg and both arms tied behind your back.

Loan officers tell me that one or more of the following things prevent them from getting enough purchase leads and referrals from Realtors:

• "I don't know enough Realtors."
• "I can't get Realtors to talk to me."
• "Realtors tell me they will send me business, but they don't follow through."
• "Most of the Realtors I know are too high-maintenance."

In addition to these obstacles, here are some of the things you have probably heard Realtors say -- mostly as a way of getting rid of you:

• "I already have a lender (I'm happy with)."
• "My office has an in-house lender that we have to use."
• "Most of my buyers already have a lender."
• "I'm a listing agent; I don't really work with buyers."
• "Sure, I'd be glad to talk with you, but I'm busy right now; can you call me sometime next week?"

If you've heard these kinds of responses from Realtors (and let's face it, you almost certainly have), you know how discouraging it can be.

So we need to figure out why you keep running into these obstacles when you try to get leads and referrals from real estate agents.

If you want better results with your Realtor outreach, there are a few things you will want to understand about them. Read the full article here.

A couple of weeks ago, one of my LO clients told me about a situation where her underwriter was telling her that one of her loans didn't fit Fannie Mae guidelines.

My client was sure the loan was within guidelines, and she called the Help Desk at Mortgage Currentcy. They sent her the specific documentation confirming she was right; she forwarded it to her underwriter and got an approval.

Mortgage Currentcy keeps you updated on changing guidelines and compliance issues. More to the point, it helps you save transactions. I recommend it.

Karen Deis, the publisher of Mortgage Currentcy, (and an old friend of mine) has announced that the price of an annual subscription will change from $327 to $397 after midnight on Wednesday, June 19. If you are not already a subscriber, you can still subscribe for $327 per year ($97 quarterly), and lock in the lower rate for as long as you are a subscriber.

Click here to subscribe to Mortgage Currentcy.

With interest rates up above 4% for the first time in a while (since August 2011, I think), a lot of mortgage loan officers are starting to think about rediscovering the existence of a purchase market.

Better late than never, as they say.

One of my clients (who has not been neglecting the purchase market) recently asked me for suggestions on topics and subject areas that would make good, relevant content to help him further build his visibility and credibility among the Realtors in his marketplace.

See my recommendations here.

A few months ago, I began working with a client whose biggest problem, he told me, was that he was overwhelmed with everything he had to do. His company had provided him with an assistant, but even with that help, he was still overwhelmed, he was not closing enough loans to justify the assistant, and he was unable to find time to go out and get more business.

What finally motivated him to contact me was that he had recently had a series of purchase transactions go south on him, and they either closed late, or didn't close it all. Two of his best Realtors were upset with him, and he was afraid he was going to lose their business.

Together, we took a close look at his systems and procedures, starting with lead generation and going all the way through to post-closing. What we discovered is that he really didn't have any systems and procedures to speak of. He and his assistant were treating every loan as if it were a completely new experience. They were reinventing the wheel every day on every transaction.

So we created a detailed checklist system that factored in the complexity of the mortgage origination business, as well as the unique individuality of his clients and their situations. And we included a process for revising the system to resolve new problems as they arose, so that the system got better with time and experience.

The checklist system did two important things for him: it removed much of the necessity of spending time trying to figure out what to do next on a file, or which file to focus attention on next. And it completely eliminated mistakes that he and his assistant had been making because they were trying to rely on their memory to determine what should be done next, or to remember whether something had been done.

As soon as his checklist system was complete, he went around and talked to his Realtor partners. He acknowledged that he had not been bringing his "A" game lately, but that he had figured out what he had been doing wrong, and he proceeded to show them his checklist systems. Some of you may have noticed that Realtors are not always the most organized people in the world, and as it happened, my client's Realtors were very impressed with his new system. Not only did he keep their business, but over the next couple of months, his Realtors referred several of their colleagues to him (colleagues who were becoming frustrated with the disorganization of their own loan officers).

This is just one example of the ways in which we either waste time, or fail to accomplish as much as we could in the time we have.

I'll be presenting a free online seminar on Thursday, June 6: "Who's Got Time for That? How to Get the Originations You Want - with the Time & Resources You Actually Have". For full details and to register, click here.

If you were a fan of the 90's show The X-Files, you might remember that Agent Mulder kept a poster hanging in his work cubicle that said, "I want to believe".

And while we might not all want to believe in little green men, all of us in the real estate and mortgage industries want to believe that the housing market is on a strong path to recovery.

There are plenty of encouraging signs, too. But one claim that is being trumpeted is a bit premature: that we have entered a Seller's Market.

While home prices have been rising consistently lately, and inventory is declining, there is one necessary ingredient for a seller's market that we don't have yet: a strong and growing pool of buyers ready, willing, and eager to buy a home.

The fact is, we're running about 1.3 million units a year behind the average number of homes sold between 2001-2009 (which includes pre-boom, boom, and bust years).

And there are some fairly significant headwinds in our economy and real estate market that are pushing against the creation of enough buyers to raise those sales figures.

As just one loan officer, you may not be in a position to impact the national real estate market, but you can certainly have an impact on your local market, and in the process, you can build a reputation with both Realtors and Consumers as the go-to lender for the home purchase market -- which will put you in a very good position when we finally do fully recover from the disaster that struck in 2007-2008.

For a full analysis, and my recommendations for productive action, see my latest white paper, The Phantom Seller's Market -- which you can read on this site or download as a PDF.

One of my coaching clients sent me a link to a post on Linked in by David Edelman of McKinsey and Company:

The funnel is dead. The new consumer decision journey.

Mr. Edelman explains that the funnel (referring to the traditional image of a sales funnel, where leads go in at the top of the funnel and come out at the bottom as closed sales) is an outdated concept because today's consumers take a more complex path toward, and beyond a purchase decision. Instead, he uses a model that includes the following steps in a buying decision:

1. Consider: What brands/products do consumers have in mind as they contemplate a purchase?
2. Evaluate: Consumers gather information to narrow their choices.
3. Buy: Consumers decide on a brand and buy it.
4. Post-purchase: Consumers reflect on the buying experience, creating expectations/considerations that will inform a subsequent purchase
5. Advocate: Consumers tell others about the product or service they bought.

My client shared the following thoughts, based on his interpretation of Mr. Edelman's article:

Here, in part, is how I responded to my client:

As you know, I have been saying for years that it isn’t a funnel, it’s a sieve (because Realtors and loan officers capture and close such a small percentage of their opportunities).

As for getting people (clients) to advocate for you, I had a conversation with a client about that a couple of days ago. These days, people rarely go out of their way to recommend a vendor (and to your loan customers, you are a vendor).

Why?

Because they are so rarely truly impressed in a business transaction. They’ll talk about you if you really screw up (read Joe Girard’s How to Sell Anything to Anybody). But most loan officers – most businesspeople – have no clue as to what it takes to rise to the level of performance where people can’t resist talking good about you (advocating for you) to their friends.

Here’s an example: if you know anybody who has recently bought an iPhone or an iPad, chances are they will brag about it, show it to you, etc. Why? Because the darn things are so different from everything else out there, and because buying one makes you feel cool.

You can send your canned loan status updates out every week (a 1990’s idea at best), but these days it’s more likely to result in people blocking your emails than it is to result in a referral.

Yes, you do have to take great care of your clients, but very often your idea of taking great care of a client is the client’s idea of “good” service – and they expect good service. It doesn’t mean they’re going to recommend you to their friends (unless maybe somebody specifically asks them for a recommendation). It does mean that if you don’t give them good service, they will complain about you for as long as it takes them to stop being ticked off at you.

It takes so much more than good (or even great) service to really impress people these days – and that is why it is so important to really stand out from your competition by doing something extraordinary – like being a great homebuyer coach in addition to being a great loan officer. For a description of what I mean by this, see my training video, "How to Succeed in This Terrible, Awful, No-Good, Lousy Market" -- especially Parts 2 and 3.

There is absolutely nothing wrong with doing the things you suggest. None of those things is going to hurt you, and if you don’t do most of them, it probably would hurt you. But it takes far more than that to really surprise and impress people today – and people only become advocates for you if you impress them -- really impress them.

According to today's Wall St. Journal, The Fed plans to continue buying long-term mortgage-backed and Treasury bonds well into 2013.

But the folks currently running the Fed -- who have never been what you would call students of the Law of Unintended Consequences -- are disappointed that mortgage lenders -- especially the big banks -- aren't using the lower borrowing rates (created by Fed policy) to lower rates for consumers, or even to make more mortgage loans.

From Inside Mortgage Finance:

I'm sure you all see the problem here. With one hand (the Fed), the government is reducing the cost of money to lenders. With the other hand (the former GSEs and the CFPB -- and soon, FHA too), the government is raising the risk level for doing any mortgage lending at all -- unless those loans are cookie-cutter deals that are documented to the hilt, and buyback-proof.

I've written before about who caused the housing bust and the financial crisis, so I don't need to go into all that again. It really shouldn't take a genius to figure out that if you make money cheaper for the lending industry, and make it simultaneously  dangerous to lend to any but the absolutely safest borrowers, you create the conditions for exactly what is happening -- fewer loans being made, little competition or incentive to make more loans, and bigger margins for lenders on smaller volume of loans.

Here's the silver lining for originators: these are the kind of market conditions that will put a premium on the services of highly professional and extraordinarily competent loan officers who build their reputation on the fact that they don't take on bad loans, and they close every loan they submit -- because they know what they're doing and they don't take "no" for an answer.

Have you been tracking your success rate at closing the loans you turn in? If not, you might want to start, and I would take the opportunity presented by the time of year to go back through at least all the loans you submitted this year. Below, you can download a free spreadsheet/form you can use to track your proficiency in this important metric. And the next time a Realtor or prospective client asks you what makes you better than the next LO, you'll have something to show them that I'm willing to bet 95% of your competition won't.

Simon Sinek is an adjunct staff member at the RAND Corporation, one of the most highly respected think tanks in the world. He has been described as a visionary thinker with a rare intellect, and his work involves teaching leaders and organizations how to inspire people.

He has written a book: Start With Why: How Great Leaders Inspire Everyone to Take Action, and his talk on TED.com on this subject has gone viral.
It is not enough, in business today, to persuade people that the features and benefits of your product or service are better than those of your competition. That's because people do not generally make buying decisions rationally – instead, the initial decision is an emotional one, and it is followed by a logical, rational explanation that justifies the emotional decision.

Watch his 15 minute talk on TED.com, and then watch my short video, How to Inspire Realtors and Clients to Work with You. (This video is for Subscribers only, so you will need a password to access it. Member subscriptions to this website are free, and you can register here: http://visitor.r20.constantcontact.com/d.jsp?llr=hmpggocab&p=oi&m=1102135377287

As soon as you register, you will receive an e-mail with the password.

According to the Mortgage Bankers Association, the average rate on a 30 year fixed rate mortgage hit 3.53% last week, the lowest rate since at least the 1950s. But thousands of people who want to buy a home are unable to get financing due to credit overlays and burdensome documentation standards for new mortgages. Home purchase activity, as measured by the MBA index, has fallen by 50 to 60% since 2008.  

"Qualified" Mortgages

The Dodd-Frank Act includes a provision known as the "qualified mortgage", and it imposes stiff penalties on lenders who make loans without enough evidence that the borrower can afford the loan. In principle, the concept of a "qualified mortgage" can easily be defended. The problem is that, so far, what constitutes a "qualified mortgage" has not yet been defined.

The job of making that definition has been delegated to the Consumer Financial Protection Bureau, one of a number of new regulatory agencies created by the Dodd-Frank Act. The CFPB has missed the deadline imposed by the legislation for completing this assignment, but not to worry – they have also missed deadlines for other important assignments, like new rules for loan officer compensation and new bank capital rules. In their wisdom, the eminent crafters of the Dodd Frank legislation have made provisions for all kinds of penalties for mortgage professionals who violate the law (whatever the law turns out to be, as defined by the unelected bureaucrats serving on the CFPB and its sister agencies) – but there will be no penalties of any kind imposed on the various boards and bureaus for missing their deadlines. Because, after all, those folks are all public servants.

It's hard to measure the impact that this particular obstacle has had on the willingness of lenders to lend, because there are also a number of other constraints on that willingness.

Multiple Layers of Regulation
The Wall Street Journal reports that on Friday, Federal Reserve Governor Elizabeth Duke said she was "really, really worried" about the cumulative effect of having one mortgage lending regulation on top of another: "I'm worried that you'll get to the point where the only loans that get made are the loans that fit in every single angle of the box, and that's going to be a very small number of loans." She added that policymakers should "find ways to make sure that you can still make the irregular loan, the one that doesn't fit exactly in the box."

Want to know an interesting fact about Federal Reserve Governor Elizabeth Duke? She is the only member of the Federal Reserve Board of Governors who has actually worked in private sector banking. There are 7 members of the Board; three of them are academics (economists) who have also worked in government, and the other three are lawyers.

Buy-Backs/Put-Backs
The Wall Street Journal also reported in the same article (Tuesday, October 9) that, in a survey  conducted by the Federal Reserve, senior loan officers said "the biggest concern keeping lending standards tight right now has more to do with banks' fear that they'll have to buy back delinquent mortgages from Fannie, Freddie, and other investors." 25% of respondents cited "put-back" risk as the most important factor in keeping lending standards tight. An additional 33% said it was a "very important" factor.

At a Senate hearing in July, Treasury Secretary Timothy Geithner admitted, "Mortgage credit is tighter than it should be, and the main reason for that is because banks… feel much more vulnerable now to what people call 'put-back'."

According to Inside Mortgage Finance, Fannie and Freddie have already asked banks to repurchase $66 billion in mortgages made between 2006 and 2008, and the balance of outstanding demands from both of the former GSE's at the end of July was up 37% from a year earlier.

It used to be a loan officer's job to determine that a borrower could reasonably repay a loan. Today, our job is to protect ourselves and our employers from put-backs, and we do this by requiring borrowers to produce reams of documentation so that we can deliver loans that cannot be questioned by regulators who, it could be argued, don't know enough about mortgage lending to qualify for a job as a loan officer.

Remember this the next time you get frustrated with your underwriter or your company. Prepare your clients and Realtors for the experience -- don't sugar-coat it. Let them know you will have their backs all the way, and that you will fight for their loan. And try to help them understand who the real culprits are in all of this.

People (including loan officers) have a tendency to expect things to remain more or less the same. It's understandable; you're busy going about your day-to-day business and you don't have a lot of time to be thinking about where the major trends may be leading us. Call it the Black Swan effect, or the triumph of hope over experience, but when seismic shifts happen, they tend to take most people by surprise.

In my Sept 13th webinar, I said the following about the future of the mortgage business as it affects originators:

The other day, I came across this website, created by a new division of Peoples Bank, out of Kansas City. Check it out:

http://www.closeyourownloan.com/

It's aimed at people looking for a mortgage loan, and the headline says, "Skip the salesman, Keep the Commission!"

I was talking to a client yesterday who works for a well-established lender in a major city. He told me that his company, in anticipation of the CFPB's proposed rule changes on compensation (all 369 pages of it), "is preparing for a radically different business model for the coming years. They are gearing up for a massive internet presence, with salaried type originators (The new compensation expectation). They don’t feel that they will be able to keep their current producers based on what they have heard will be the coming comp plans. Their plans call for lots of small offices that will feed a very cost advantaged internet processing and delivery system."

If you'd like to be out in front of the next big wave of change in your career, you might want to consider pre-registering for the next group of The League of Extraordinary Loan Officers.