Bigger worry: Ignorant Piranha’s or Amazon?
Pivot from Panic to Strategy

Harsh Realities from Sunny San Diego

Ron B

Ron Burgundy: I'm kind of a big deal. People know me.

After returning from Duncan’s Sales Mastery I’m always forced to take a hard look at our industry. The mortgage banking poker game is approaching its last ante up and most are throwing their cards and saying pot’s too rich for their blood or the cards are against them and they are out, period. It frankly is the right answer whether it be a company or loan officer or processor. Mortgage Banking has become gambling; it has become a game of hope or chance if you play it the way you always have. And why wouldn’t you? The strategy has done well by you for nigh on 30 years. The market has always come back to you or the old tricks of the trade have found a way to make you a living to some extent.

But this time it’s different. If you are playing by the assumed rules that the attorneys and accountants tell you to play by you are at a disadvantage. There is no consensus as to what is right, compliant or wise. Which leads to reaction and panic. In this “Escape from New York” market, lenders are more afraid of the Bankruptcy court than the CFPB court. The pure capitalism of aligning revenue and costs to performance and compensation is fighting to rise and rescue this business. There are other ways to ensure good behavior than eviscerating the free market business model.

New entrants without legacy and deeply embracing technology will drive cost down and restructure ALL of the real estate processes, starting with the 6% on the realtor side which will drive significant change in the lending world. Lending, insurance, home warranty, etc. will all follow and value to the consumer will be redefined. Loan officers who can systematize the steps of their relationship building and educational process will be able to find AI models that will serve as virtual assistants for them. These assistants will do exactly what they are told to do on time no matter what. There will be no HR issues or ego battles with these bots—and they won’t steal your book! The LOs will be able to focus on what they are best at, the counseling of a great interview and a personalized analysis of their biggest debt obligation. Then repeat that annually for the next 30 years or more…

Right now we as LOs don’t do what we should every day. We are blessed with ADD and our success is tied to how well we manage it. As I leave another Sales Mastery I hear the ringing of the same words from ghosts of seminars and recordings past. We all know what the Bible says but we still can’t seem to master its contents. We listen to priests and preachers to hear them tell us what we already know. “You are weak and need encouragement and guidance as to how to get back on the Path.” Either way, the speakers were clear the surviving loan officers all will make less on more; so embrace the new efficiencies and realities or vanish.

A minority of Loan Officers achieve true success and only a few are able to maintain it year after year. Especially once they have reached their career goals.  There are no secrets; it is just execution and persistence. Knowing yourself, your true value, and your ability to handle rejection is the core to build upon. Sadly most can’t grasp those skills and therefore where we’re going as an industry 50% of the existing members will have to go and be replaced by 20% new blood and new intuitive technology that will empower the customer and allow for different levels of self-service that will align with savings to the consumer.

Loan officers and companies that adapt to that model will do more business in a different comp structure but will make more per hour IF they are at the top of their profession in efficiency and knowledge. There are still stockbrokers today but they have become wealth managers---there are 80% less of them than 30 years ago but the customer became empowered and the smartest customers who valued service were willing to pay not by trade but by money managed. Many customers who currently grind us down to a commodity will be deflected down the self-service chute to save their .125 and we all will be the better for it.

If you’re not closing 2-3 loans per month and you can’t keep up with technology and find yourself dreaming about the old days every day, find another business while the economy is good. This especially goes for management as well; there won’t be enough loan officers to pay your management override. You have to be all-in on reinvention and adoption of the new view and skill or success (and maybe even survival) will be impossible.

Don’t be Ron Burgundy; deal with your realities now and be in charge of your destiny.

“I’m very important. I have many leather-bound books and my apartment smells of rich mahogany.” — Ron Burgundy

 You stay classy, San Diego.

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When it comes to cost cutting, the mortgage industry will take the largest hit.

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