Evolutionary Change is Coming to the Mortgage Industry
by Bob Williamson
I suspect that 20 or 30 years from now, historians and economists will look back at the years between, say, 2005-2015 as one of great turmoil and danger to the American economy – and the major catalyst for that turmoil has been the housing boom and bust, along with the banking and credit crisis that accompanied it.
Most of the people who work in the mortgage industry have been too busy trying to adapt to rapid and dramatic changes (in both the market and the regulatory climate) to be able to gain much perspective yet on what all of this has meant.
But now that we are beginning to see evidence that a corner may have been turned, I think it would be important for mortgage originators to stop for a moment, take stock, and make some decisions about how they will compete in an industry which will probably never again be the same as it was at the turn-of-the-century.
I've coached hundreds of loan officers over the last 24 years. I always begin by helping new clients evaluate their strengths and weaknesses. I find that they are generally in pretty good shape when it comes to the skills that have traditionally been expected of a mortgage loan originator: understanding the differences between loan programs, familiarity with underwriting guidelines, being up-to-date with regulatory requirements, etc.
At the same time, most LO's feel frustrated in their efforts to increase their production – mostly because they haven't developed their skills in one or more of the following key areas (areas that have not been prioritized or developed by employers):
Why Many Loan Officers Don't Get Better at
These Critical Skills
Most loan officers I've known have had the intellectual capacity, as well as the desire to improve. The problem is that measurable progress in any of these areas takes time, and it is very easy to lose focus on these skills in the face of the very real need to pursue that next loan transaction and the paycheck that comes with it.
LOs who are able to stick with a program of continual improvement in these and other critical skills always show a long-term and permanent growth in their production and their income. But the need to produce income today makes it more difficult for them to work on improving their skills. And the fact that they are in that situation in the first place often means that the loan officer is not going to be able to afford private personal coaching for as long as it will take for the improvement in their skills to show up in their income.
An Experiment: The League of Extraordinary Loan Officers
So while I continue to provide private weekly coaching to originators who are prepared to make the commitment, I began an experiment with a more affordable alternative: Group Training & Coaching. I called this experiment "The League of Extraordinary Loan Officers".
For $200 per month (compared with $600 per month for Private Coaching Clients) each member of the League participated In a monthly one-hour webinar, where I taught the critical skills I listed above, and provided the members of the League with systems and tools I've developed. Each member also received one hour per month of personal, one-on-one coaching.
The result, I have found, was that loan officers were able to make continuous improvement in the critical skill sets (marketing, sales, technology, and productivity/time management). They become more confident, self-assured, and more productive. They generated more leads, closed more loans, and earned higher incomes.
I formed the first group of 12 loan officers in March 2011. I taught them a marketing strategy that would help them better appeal to the Realtors in their marketplace. I also taught them a marketing strategy that would increase their appeal to prospective homebuyers. These two strategies – one aimed at Realtors, and the other aimed at home buyers – were integrated, which is to say that they were designed to work together. I taught these loan officers a content-based e-mail marketing strategy, which was their primary tool for reaching both target markets (that is, Realtors and Homebuyers). I showed them how to implement that strategy. I provided them with e-mail campaigns I had created for Realtors and homebuyers, and I taught them how to write their own e-mails, and each member of the group contributed e-mails regularly, which I then edited to make them more readable and effective.
All of these marketing pieces were made available to the entire group. As a result, within nine months, each of the loan officers in this group now had a Realtor campaign with over 100 unique, well-written, high-value e-mails that they could send regularly to Realtors they wanted to work with. Every member of this group (and the group included LO's whose starting production ranged from 1 to 15 loans per month) increased the number of Realtors they were actively working with by at least 50%, and their production and income reflected that.
Similar results were achieved with a drip campaign for prospective homebuyers.
I also taught these loan officers a system for "closing the deal" with Realtors and Home buyers, respectively. I showed them how to interview their prospects (whether they be Realtors or Homebuyers), in such a way that they could get the prospect to tell them everything they needed to know in order to provide a deeply desired solution that exactly matched the prospect's problem. And I taught them how to present that solution in the most effective way possible.
We used role-playing as a tool to help the loan officers practice and improve their skills at interviewing and presenting to prospects.
I conducted group training and private coaching sessions to teach loan officers how to create and manage automated e-mail marketing campaigns, and overcome some of the resistance that many of them had to using technology in their businesses.
Enhanced Systems & Productivity.
In my experience, loan officers are notoriously bad at managing their time. Many of them pay lip service to the idea that, even though they may work for a mortgage company or bank, they are, in effect, independent entrepreneurs building their own business. Thinking of your business as a business is essential to becoming really successful as an originator. But most loan officers either don't take the time, or don't know how to set up business systems that maximize their productivity.
So I provided training and models for creating more effective systems for originating loans and managing your pipeline, for reducing distractions, and for making plans that people could (and would) actually execute.
The Future of Mortgage Loan Origination
We have already seen significant consolidation in both the real estate and mortgage industries in the last 5 years or so.
We look toward the next year with some hope that home values will continue to stabilize and recover, that the economy – essentially stagnant for the last 4 years – will finally begin to grow and produce jobs, increasing homebuyer demand and stimulating a revival of a housing market that is active at all price levels – not just at the level of first-time homebuyers.
But things are not really going to ever be exactly the same again. For mortgage loan originators, what will be required for success and longevity? I suggest we will see the emergence of a new kind of loan originator – one who retains all of the skills and knowledge that loan officers have had in the past, but who also develops and demonstrates the entrepreneurial characteristics of Marketing, Sales, Technology, and Productivity excellence.
Those who fail to master this transition to a truly 21st Century Loan Originator will either be forced to leave the industry, or accept a diminished role in it.
For More Information about the League of Extraordinary Loan Officers: