Is a Mortgage Revolution Ahead?

There is little doubt that the mortgage and real estate industries were left behind in the technology revolution of the 21st century. Our lives have improved with smart phones, smart cars, easy to book travel, and quick digital personal lending solutions, but mortgages have become harder to obtain. Disclosures are more difficult to understand and the average number of days to obtain a mortgage is still too long. The mortgage industry has not adopted technology as fast as other  industries bringing on regulatory scrutiny and an abundance of errors. With rates rising and the market shrinking this will undoubtedly force us to change; whether we are prepared to or not. Companies and loan originators must embrace technology to build more relationships and minimize avoidable mistakes.

2018 is also bringing about a lot of other challenges for loan officers. Digital mortgage companies have disrupted our daily lives by offering below market interest rates with which a self-generating loan officer may not be able to compete. New Home Builders are also offering incentives to use their preferred lender, again making it difficult to compete. When there is an abundance of business you can accept losing a few deals but when the market tightens losing a deal is painful. This has forced the question a lot more recently; are mortgages a commodity? Will borrowers pay more for better or faster service? Will they pay more to meet with someone locally that can guide them through the process?

The MBA predicts a shrinking mortgage market with a larger percentage of purchase transactions. For most companies and loan officers then, if you want to maintain or grow your business you must pick up market share. The only way to do this is to change the type of borrower or increase the quantity of borrowers you
are talking to. Even with a drastic uptick in the number of borrowers you reach you should still expect your conversions rates to go down. You must be prepared to lose business to discount lenders or brokers and not be affected emotionally every time it happens. You must become more resilient and able to move on quickly. Believing you can help 100% of the clients referred to you will only bring you disappointment. You must invest in technology that makes the process seamless for your borrowers regardless of what your company offers. Many clients expect technology that makes the process easier for them to complete online loan applications or upload documentation through a portal. They also want to know that you offer a competitive rate so be understand that even clients you have helped multiple times in the past will shop you. Consumers have been shown the value of doing this with every other industry so don’t take it personally. You must also have a long incubation and communication plan in place as many buyers won’t need you until they find the right house.

We have generally speaking been a lazy industry for the last 10 years. So many loan officers got used to business being easy because rates were low and there was
an abundance of opportunity. Other lenders also had enough so they didn’t fight as hard to be competitive. Many top producers churned their databases and rarely
went out in the field to try and obtain new business or relationships. Times are changing. Rates are not likely going to come down and inventory will remain tight. This new reality will make sitting back and waiting for business to come to you or relying solely on your database an impossible strategy for success. Some lenders
are preparing for this by going the broker route where they feel they can do less and try to make more. This may be a good way to go for those loan officers who
don’t love prospecting or developing new relationships. For those of you who still want to grow your business and work hard, what can help you do that immediately?

Most importantly, you must create a business plan that includes who you are being, what you are doing, and how you are doing it. You must also be willing to change direction quickly if the market changes or you encounter challenges. We all know the basic principles of what makes a loan officer successful but just knowing what to do doesn’t mean you will do it. I have watched far too many loan officers become passive about generating business and burning out because they stopped pushing themselves and became bored.

Who You Are Being?

Who are you being is all about your mindset. Do you have a mindset of abundance, there is more than enough business for all of us, or is your mindset around scarcity i.e. there’s too much competition and not enough business I’ll never be able to survive? I define mindset as the core beliefs an individual has about life and business. These core beliefs may have started in childhood but no longer serve you as an adult. They are the beliefs that sabotage your success and keep you from getting what you want. Fortunately we can shift our beliefs. We can challenge our thinking and replace it with more balanced thoughts – thoughts that serve our greater good.

A successful mindset is made up of many things but for business these six are key:

  1. Growth minded – nothing is fixed, nothing is hard-wired. You can grow through any problem or roadblock and know when it is time to avoid certain things or set new boundaries.
  2. Purpose driven – you know your “why?” Why, out of all the occupations you could have chosen, did you decide to be a loan originator?
  3. Business minded – You must have goals, a business plan, and the discipline to work the plan.
  4. Value driven – you know what your values are and they are unshakable.
  5. Priorities are straight – you know what is most important.
  6. Focus is on abundance not scarcity – an abundant mindset says the pie is just going to keep getting bigger for me. I’m always going to have everything I need.

What Are You Doing?

What you are doing is about your plan. It’s ironic how many of us in this industry feel we can run our businesses successfully without a plan. We can’t and none of the top producers do. Your plan accomplishes three things: first, it allows you to share your strategy, priorities, and specific action steps with others you want to support you so they can align their actions with yours. Second, it helps you to deal with displacement. When you consciously decide to spend your resources doing one thing to move your business plan forward, you’ve also consciously decided not to do something else. And third, it is the primary vehicle by which you grow your business and develop new business alliances and referral partners. It provides the metrics that keep you on track.

A good business plan contains your vision, production and activity goals, levers (how you will increase business from the sources that provide it to you), a nonnegotiable activity plan, and a marketing plan.

How You Are Doing It: Executing

If you’ve dreamt big enough, your vision, your goals, your activity and marketing plans are going to catapult you out of your comfort zone but… only if you act. You must execute on the plans you’ve put in place. The importance of execution cannot be overstated. You can’t simply “think” your way into success. If you’re not an action-oriented person by nature then this could be a bit scary. But trust me once you begin with the small steps, the larger ones get easier.

Execution is about discipline. It’s about commitment. Execution is not giving up the first time something doesn’t work right but keeping at it, constantly tweaking until it does. Execution is about sticking to your activity plan even when you don’t feel like doing it. Execution takes discipline and lots of it. Remember those items on your non-negotiable activity plan – they’re exactly that – non-negotiable. You must act on them every day.

Just as important as executing on your plan is making sure you have the right metrics in place to track your progress. As the old saying goes, you must inspect what you expect. Referrals are the lifeblood of this industry so at a minimum you must track your Referral Efficiency and Realtor® Efficiency targets. How many referrals per year do you get from every customer you close a loan for and how many referrals do you get each month from the agents you work with? Determine what feels right for you and track it so you know you are spending your precious time with the right people. Be specific on what you want and tell everyone what your goals are.

Set your goals and work your plan. This market will devastate many companies and loan officers unwilling to grow. Success is waiting for you if you are willing to be relentless, work hard and create new disciplines. If a mortgage revolution does happen, you will be prepared for it with the right mindset and ability to make adjustments quickly.

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