FRIENDS

“Wishing to be friends is quick work, but friendship is a slow ripening fruit.”

— Aristotle (384-322 BCE)

“Met a man on the roadside crying, without a friend, there’s no denying, you’re incomplete they’ll be no finding looking for what you knew.

So anytime somebody needs you, don’t let them down, although it grieves you, some day you’ll need someone like they do, looking for what you knew.

Mmm, I’m telling you now, the greatest thing you ever can do now, is trade a smile with someone who’s blue now. It’s very east just...”

— Led Zeppelin (1968-1980)

From Aristotle to Zeppelin and for thousands of years, friends are acknowledged as one of the greatest gifts life has to offer. So this weekend give your friends a little extra gratitude and praise and stay tuned for more about the wonderful f-word.

CRASH AND BURN

Another important fact to point out to your customers is that historically interest rates go up considerably faster than they go down. And while we haven't seen any calamitous drops in the market recently, every long time veteran of our business can attest to that fact.

Crashes in 1987 and 1994 and to a lesser extent in 2003 have all claimed millions of dollars in Loan Officer commissions and made tens of thousands of borrowers curse their propensity for bad luck. This is also the reason that when we have intra day price changes that they should lock whenever rates are at a level where they can feel comfortable with their rate and payment because holding out for something better has a very limited upside and huge downside potential. 

Tomorrow we will look at how you can turn odds that are definitively 50/50 into your favor. 

HUMAN NATURE AND THE SLOT MACHINE

It's the million dollar question in our business. And like all investment decisions hindsight is 20/20.

And while the decision is ultimately the customer's to make, you input and expertise on the subject has a tremendous affect upon that choice or at least it should.

There are few key points that you should always cover with your customer when discussing the lock versus float choice. The first is that history has shown that few people are able to successfully time the market to lock at the absolute lowest rate. This is just trying to time the stock market. Reality is that it can't be done on a consistent basis by anyone. 

Another great analogy for your customers is that floating a loan is very similar to playing a slot machine. Most people will start pulling the lever and quite often they will get ahead for a time, but unfortunately most people don't know when to stop playing until they have either hit their self imposed loss limit or they are completely out of money!

Just like the person who floats for a few days and get a 1/8% improvement. Very few of them will be happy with their small gain and human nature tells us that they will "let it ride" until the rate is worse than what they could have locked in the first place.

More on this subject tomorrow...

BABY STEPS

The second reason that we miss our goals and fail on our New Year's resolutions is unrealistic goal setting.

It's easy to say we would like to get in great shape, make millions of dollars and have better relationships. We all do it because we all want it. And even if we are 100% committed, if the goal is unrealistic, it is also by definition unattainable.

The key to achieving your goals is to think and write them out carefully, and pan them by setting smaller attainable goals that can be achieved step by step. Most goals are resolutions are just too large in scope and concept to the point that when the inevitable realization that the task is too massive hits, then procrastination tends to move in.

By setting smaller "baby steps" goals, we are fare more likely to build the necessary momentum that will take us where we ant to go. So, if you want to lose fifty pounds, start by losing ten and if you want five more solid referral partner relationships, start by gaining one.

You don't have to lose sight of the ultimate goal, just set your sighs on the prize-one step at a time. 

NEW YEAR'S FEARS

January 1 is fact approaching and for billions of people, New Year's represents a fresh start with new opportunities and new goals. These goals, known to most as New Year's resolutions, make our pulses go up just thinking about them.

But do our hearts beat faster because we are excited to set those new goals? Or because we know we're heading into another year of unattained resolutions and un-kept promises to ourselves?

Just the though of New Year's resolutions can make a calm person nervous and set fear into the hearts of even the bravest of souls. Naturally, we would all like to lose some weight, save money and spend more quality time with those we love. Not to want such things would be downright inhuman. 

Yet here we are again in the middle of December, we haven't lost a single pound, saved any more money and people we love still complain that they don't see us enough. Sound familiar?

So while we all would like to have the body of an Olympian, the bank account of Bill Gates and relationships that would make Dr. Phil proud, our own realities are likely destined for something less than the world's greatest. And nobody can be the greatest in all facets of life anyway. Bill Gates is certainly no Olympic athlete, and anybody who spends all day working out doesn't have Gates money either. This is all fine because less than the very best still has plenty of room or greatness and all greatness starts with improvement... one small step at a time.

To be continued. 

UNIQUE SKILLS

Almost anyone can become a Loan Officer, and many Processors make excellent Loan Officers because they have the perfect knowledge background, but taking the risk of starting up a new business on commission only is not for everyone.

Take an athlete for example. Some people are shocked when a ballplayer signs a contract paying them millions of dollars a year, but they make that kind of money because they play a game that millions of other people play, but at a level that only a select few individuals can achieve. And most of them have spent the majority of their life playing and training to reach such a level while foregoing other opportunities.

Originating is much the same. And while originating mortgages is easier than hitting 95 MPH fastball over the fence or slam dunking over a seven foot center, originating big numbers on a consistent basis is a kill that only a select few while achieve after years of effort and they will deservedly be well compensated for their skills. 

IGNORANCE IS NOT BLISS

The best Loan Officers anticipate issues in their files so that they don't become issues.

Probably the most effective means of doing this is to write notes in the file about any documentation still needed from the borrower and any red flags or unusual circumstances so that the Processor has a "heads up" on the file and isn't forced into detective work that you should have explained from the start. 

Then follow up with your Processor and/or customer to insure that unusual circumstances are handled early so that they don't become gigantic land mines at the end of the process.

It's kind of like when the little red light goes on in your car. It isn't going away until you take action, so it only makes sense to address it immediately before it becomes a full-on, metal to metal, overheated calamity. 

DOING IT RIGHT FROM THE START

The mortgage loan process begins at the point of origination; therefore the quality of work that begins a loan application will directly impact the quality of the customer experience all the way to the closing.

Some things will never change and the number one way a Loan Officer can please their Processor is still to take a complete loan application that is turned in promptly. Not coincidentally, a complete 1003 is also a must for all top producing Loan Officers because if the application is not complete, issues will arise that will inevitably steal away precious time that could be used to bring more business in the door. Doing a job right the first time is something our parents tried to teach us many years ago and it is still great advice!

The best Loan Officers are knowledgeable about their client's desires and the product that they have selected for them and they have a back up plan for challenging loan applications to avoid scrambling at the last minute for financing options.

Please keep in mind the "garbage in, garbage out theory" and that great originating can still work even with sub par processing, but even the greatest of processing will rarely fully compensate for bad originating. 

THE RIGHT ATTITUDE

Problems.

We all have them and thankful so do our customers. For without them, there would be no need for Loan officers or Processors. Imagine a world where borrowers could just originate and process their own mortgages, the underwriters would trust everything they see and anyone could obtain any loan they wanted for little or no cost.

Such a world is of course beyond imagination, so thankfully we have gainful employment in the mortgage origination business helping our customers and our Processors solve problems.

The key for Loan Officers is not to run away or procrastinate over the problems that will arise in their files. Problems should first be anticipated if possible and when the unanticipated ones happen, they should be dealt with immediately if not sooner.

When there is a problem, the wrong attitude is "who messed up or who is to blame?" The right attitude is "how do we reasonably fix this for the customer and how do we change the process so it doesn't happen again?"

KEY ELEMENTS OF GREAT COMMUNICATION

Unless what you say benefits the other person, don't say it.

If you attack another person's beliefs, you are making an enemy.

Listening without prejudice or distraction shows the greatest respect.

When you speak always try to ask a question.

Operating solely out of self interest will show and you will be tuned out.

And most importantly, remember that honor is a gift you give yourself that will be a magnet for others like nothing else.

OPTIMISM

In his Creed for Optimists, Christian Larsen tells us...

• Be so strong that nothing can disturb your peace of mind.
• Talk health, happiness, and prosperity to everyone you meet.
• Make all your friends feel there is something special in them.
• Look at the sunny side of everything.
• Think of only the best, work only for the best, and expect only the best.
• Be as enthusiastic about the success of others as you are about your own. 
• Forget the mistakes of the past and press on to the greater achievements of the future.
• Give everyone a smile.
• Spend so much time improving yourself that you have no time left to criticize others.
• Be too big for worry and too noble for anger. 

PAST TESNE

“The past is history.”

“It’s in the past so forget about it.”

“Let bygones be bygones.”

Old sayings about the past are never really very comforting when things from the past cause us pain in the present.

Everything in our past is either a learning experience to grow on, a great memory to reflect, or a motivator to act upon.

The great memories are the easy part of the past to embrace. The learning experiences are somewhat tougher to reflect upon but it is the motivators that require the action that will make or break a person and set the course for their future.

So don't lose your past because it holds your incentive for a better future!

THE GREATEST INVESTMENT

investing your precious time into working smart will always lead to a more productive, fulfilled and wealthy you. And better yet, productivity breeds productivity. You will find that the more quality time you invest in mortgage loan origination the more your positive results will multiply exponentially so that your hours invested per closed loan god down with every quality hour you invest in your profession.

We human beings have a remarkable ability to get what we must have, but there is a huge difference between "must" and "want". If you know what you want, and you want it badly enough, you will always find a way to make it happen. That is if and only if you want it badly enough to make it a "must".

AN HONEST DAYS WORK

How many hours of work do you invest in per closed loan?

If you can't answer that question, you are not alone. Some loans take us very little time while others may take us cumulative days worth of work (and hopefully they close.)

We often think of ourselves in terms of how much we earn on an hourly basis because the calculation is so simple. We take what we produce for the month or the year and then divide it by how many hours we worked.

But where we tend to go wrong in that calculation is in the hours worked part.

Just because we showed up at 9:00 and left at 5:00 did we really work an eight hour day? Or did we socialize, read insignificant emails and surf the web while we were supposed to be making loans? In other words did we just squander eight hours at the officer or were they eight quality hours?

The temptation is easy and it exists in all of us. What is important is that you keep the distractions to a minimum and use your previous time wisely because that time you just spent on Yahoo! may have cost you a golden opportunity elsewhere!

AVOIDING THE SHARKS

Everyone makes mistakes and we humans all have a deep seeded need to help others avoid them which you are fully equipped to do. Your expertise and advice in order to help your customers avoid mistakes is extremely valuable.

Your customer's opportunities for mistakes will be multiplied by all of the "special offers" that every homeowner receives en masse as soon as they buy a home and their name and address is captured by the list marketing companies.

A brief explanation of public records to your home buying applicants is never a bad idea anyway. It is a nice forewarning of the onslaught of junk and sales pitches they are about to receive and also it let's your customers know it wasn't you who made their address and sales price known to the entire world.

Which a great segue to your offering to answer any future questions they may have about things like bi-weekly mortgage plans, mortgage life insurance and any number of those other "fabulous opportunities" that lurk to scoop up their dollars.

THE TRIPLE WIN

Being all things to all people is as impossible as is being the everything lender to all borrowers. Doing what you do best and referring the rest is a time tested strategy for success in our business and your team of referral partners should include bankers and other types of niche lenders that can help your customers with the loans that you either can not or should not be doing.

Your team should also include at least one tax, investment, insurance and legal professional which is yet another great service you have to offer your customers. Everyone likes doing business by referral and your customers will love the fact that you have access to several different proven service providers that are all endorsed by you.

Plus those people on your "referral team" can be your finest sources of business as their customers will trust them and their referrals typically far more than they will trust the referral that comes from a Realtor or builder.

So build your team and you will build your business and theirs too whilst taking great care of your customers. A win-win-win situation if ever there was one!

WHO WANTS A $3 HAIRCUT?

We've all known that the foundation for long term success in the mortgage business is having a consultative approach with your customers rather than being transaction oriented. However, some of your past customers and nearly all of your new customers don't view mortgage lending services that way at all.

Their opinion is that they need to call a handful of different lenders and go with the cheapest one as if they were buying a car or a refrigerator.

Do you think these same people would go to a free clinic instead of their family doctor? Would they seek the services of an attorney for the indigent or a public defender if they needed legal help? Of course not. Most of them wouldn't even get a discounted hair cut at the local beauty college!

They all understand the value of quality and expertise but not in the mortgage business because they view a mortgage as a one time transaction that should be awarded to the lowest bidder.

How unfortunate for them because going with the lowest bidder now can cost thousand of dollars in the future or even thousands now if that lowest bid wasn't ethical.

Bait and switch tactics, undisclosed fees and prepayment penalties are just a fraction of what the consumer must be careful to avoid and you must be careful to educate them on those and the benefits of our services which extend far beyond their closing. 

LOSE THE BATTLE BUT WIN THE WAR

We all lose business to price sometimes and often the best plan is to just let it go gracefully, but definitely not silently.

The most difficult of the shoppers will never fully appreciate you and what you can do for them anyway because their mindset is that they are in it for just the one transaction. This is not a long term proposition to them.

Your best bet is to call them and acknowledge their decision. Be kind, be gracious and offer your services and expertise for the next time they are in need.

And what ever you do, DO NOT disparage the competition because that always backfires. After all they just chose them over you, so why would they want to hear you criticize their devision? Do, however, offer to help them if things don't go as planned with the competitor which is a far more tactful approach to saying you made the wrong decision.

Then put them in your data base, market to them regularly and you will be amazed at how many of them will come back to you at a later date because they received sub-par service elsewhere.

BAD SALESMAN

“A bad salesman will automatically drop his price. Bad salesman make me sick.”

— Sam Stone played by Danny DeVito in the movie Ruthless People

Price competition has been with us since... well since competition started hundreds of years ago in the lending business. And ever since some medieval banker accepted only five loaves of bread instead of the six that the other guy wanted, price competition in our business has been alive and well.

Price competition has gotten out of hand lately as come lenders are pricing loans so cheaply right now that they can only be doing them for the practice no the paycheck. But if selling by price alone ruled in our business, those who made all of the loans right now would not be making any profit whatsoever and our industry would be rendered fruitless.

Nothing stinks more than working with a customer for months, giving them all the advice and then having them go elsewhere to save 1/8%. It happens to all of us and it happens more now because we are in a slower market and a new era of mortgage advertising where the only consumers these days who don't have mortgage loan shopping constantly in their face are the ones who don't own a computer, TV, radio or mailbox; and people who live in caves rarely need mortgages!

Tomorrow we will look at what you can do to fight the "price wars" and keep more of the commission for which you have worked.  

BE A TOOL

Just as we all need good service providers like appraisers and title companies, your referral sources need outstanding service providers (like you) as well.

If you ask any seasoned Realtor they will tell you that the most valuable tool in their belt of service providers is a skilled, reliable Loan Officer. We are more important to them than inspectors, title companies and attorneys put together because of the money we lend and the knowledge that accompanies those fundings.

Safe to say that most of us would prefer not be called a "tool". However, Realtors need "tools" like us. Please remember that whenever you speak to them. You have much to offer and every Realtor in the land needs one or more of us "tools" to assist them and help their business succeed!