Posts

Learning Across Borders (LAB): Building Bridges To Unite And Serve

Early in my career as a loan officer, I had a very important realization regarding business processes that led me to understand not just my job better, but also the tasks and requirements of my colleagues. I was lucky enough to work with outstanding team players who, unbeknownst to me, were completing my work. They were doing things I could have easily done but I simply was not aware that I needed to at the time. Not only was my lack of knowledge inconveniencing those working around me, it ultimately created a less than optimal customer experience as well. My loan processor would have to contact the customer for additional information, which inconvenienced the borrower and extended the loan closing cycle time. The result was decreased efficiency across the board. Despite the fact I was a high producer, I had yet to detangle myself from siloed work habits. Once I better understood the nature of the broader loan process and could see the effects of decisions on the people around me, it enabled me to become a much better and stronger employee who was a better colleague and could now provide better service to customers.

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Understanding the Ripple Effect

What got me to that point of understanding in my career was a simple conversation with my processor. She explained what she had been doing “behind the scenes” for me. In essence, what we were doing was breaking down the barriers of communication and expectation. This level of communications between sales and operations, for example, gives employees more context which in turn translates to a better understanding of how important it is for them to do their job well and how it affects the rest of the process.

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The mortgage industry has traditionally had an uninspiring reputation for proper training. However, with intentionality and focus this can change. There are some companies making great strides toward implementing job training programs combined with a strong focus on creating a collaborative culture within their organizations. It is this training and collaboration component that is going to remove obstacles between internal business efficiency and customer-facing experiences. What has been missing is training across job specialties.

Training across job “borders” will open the opportunity for everyone in a company to learn how their role fits into the process as well as the role of their colleagues. This does not mean that everyone will be trained to do everyone else’s job. Instead, they will gain a deeper level of appreciation and a better understanding of the total process, which we believe creates empathy.

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This level of training goes beyond having a better quality process and better quality loans; it actually improves the culture of the organization. With it, companies can remove the wedge between people in different roles and departments and create an environment where employees understand the ripple effect of decisions throughout the organization to ultimately work better together.

So, consider mortgage LAB training where it is not an experiment, but is a culture of collaboration where everyone learns across borders. This additional training gives us as an industry the opportunity to learn from different perspectives. Generally, people want to do a great job but simply don’t know what they don’t know. This level of collaborative learning across boarders creates a deeper understanding of the process and empathy between roles, which ultimately results in not only a great consumer experience, but a great corporate culture of collaboration that breeds high performance and long-term employee loyalty. This will not happen by accident, though. It takes an organized effort from the top down to ensure the mortgage LAB is a priority and specific initiative.

About The Author

Daniel Jacobs
Daniel Jacobs is the EVP and managing director of national retail lending for MiMutual Mortgage. With nearly 20 years of experience in the mortgage industry, he has previously had senior positions at American Financial Network, Residential Finance Corporation and Freedom Mortgage Corporation. Jacobs can be reached at djacobs@mimutual.com.

Building Bridges

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Early in my career as a loan officer, I had a very important realization regarding business processes that led me to understand not just my job better, but also the tasks and requirements of my colleagues. I was lucky enough to work with outstanding team players who, unbeknownst to me, were completing my work. They were doing things I could have easily done but I simply was not aware that I needed to at the time. Not only was my lack of knowledge inconveniencing those working around me, it ultimately created a less than optimal customer experience as well. My loan processor would have to contact the customer for additional information, which inconvenienced the borrower and extended the loan closing cycle time. The result was decreased efficiency across the board. Despite the fact I was a high producer, I had yet to detangle myself from siloed work habits. Once I better understood the nature of the broader loan process and could see the effects of decisions on the people around me, it enabled me to become a much better and stronger employee who was a better colleague and could now provide better service to customers.

Featured Sponsors:

 

Understanding the Ripple Effect

What got me to that point of understanding in my career was a simple conversation with my processor. She explained what she had been doing “behind the scenes” for me. In essence, what we were doing was breaking down the barriers of communication and expectation. This level of communications between sales and operations, for example, gives employees more context which in turn translates to a better understanding of how important it is for them to do their job well and how it affects the rest of the process.

Featured Sponsors:

The mortgage industry has traditionally had an uninspiring reputation for proper training. However, with intentionality and focus this can change. There are some companies making great strides toward implementing job training programs combined with a strong focus on creating a collaborative culture within their organizations. It is this training and collaboration component that is going to remove obstacles between internal business efficiency and customer-facing experiences. What has been missing is training across job specialties.

Training across job “borders” will open the opportunity for everyone in a company to learn how their role fits into the process as well as the role of their colleagues. This does not mean that everyone will be trained to do everyone else’s job. Instead, they will gain a deeper level of appreciation and a better understanding of the total process, which we believe creates empathy.

Featured Sponsors:

This level of training goes beyond having a better quality process and better quality loans; it actually improves the culture of the organization. With it, companies can remove the wedge between people in different roles and departments and create an environment where employees understand the ripple effect of decisions throughout the organization to ultimately work better together.

So, consider mortgage LAB training where it is not an experiment, but is a culture of collaboration where everyone learns across borders. This additional training gives us as an industry the opportunity to learn from different perspectives. Generally, people want to do a great job but simply don’t know what they don’t know. This level of collaborative learning across boarders creates a deeper understanding of the process and empathy between roles, which ultimately results in not only a great consumer experience, but a great corporate culture of collaboration that breeds high performance and long-term employee loyalty. This will not happen by accident, though. It takes an organized effort from the top down to ensure the mortgage LAB is a priority and specific initiative.

About The Author

Daniel Jacobs
Daniel Jacobs is the EVP and managing director of national retail lending for MiMutual Mortgage. With nearly 20 years of experience in the mortgage industry, he has previously had senior positions at American Financial Network, Residential Finance Corporation and Freedom Mortgage Corporation. Jacobs can be reached at djacobs@mimutual.com.

Lenders Speak Out

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The mortgage industry is changing. Purchases increased to 65 percent of all closed loans in June, up from 62 percent in May according to the latest Origination Insight Report released by Ellie Mae. This is the highest closed loan purchase percentage since August of 2014. Refinances represented 34 percent of closed loans in June, down from 37 percent in May. Additionally, the 30-year note rate dropped to 4.04 from 4.06 in May, the lowest point in over a year.

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The average time to close all loans increased to 46 days in June, up from 45 days in May. The time to close a purchase rose to 46 days in June, up from 45 days in May, and the time to close a refinance rose to 47 days in June, up from 44 days in May. Similarly, the average time to close FHA loans rose to 47 days in June, up from 45 days in May. Time to close VA loans increased to 50 days in June, up from 49 days in May.

To reflect on the changes going on in mortgage lending we assembled a panel of well-respecting lenders. (Left to right) Daniel Jacobs, the EVP and managing director of national retail lending for MiMutual Mortgage, Joe Detmer, branch manager for Churchill Mortgage Corp.’s San Diego branch, and Jeff McGuiness, chief sales officer for Embrace Home Loans, shared their views on the state of mortgage lending.

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Q: How has mortgage lending changed since you first entered the space?

JOE DETMER: I entered the space in 1994. One thing that has changed dramatically is the rates. It is more affordable to buy vs. renting. People are finding safe haven in real estate. Guidelines have also changed that makes it tougher to get a loan and home prices haven’t gone up much, but housing is very affordable. I also think TRID was a good thing because it pushed out the people that were just in the industry to make money vs. those that are interested in taking care of their clients.

JEFF MCGUINESS: First, the most obvious change is that consumers are more educated. There is more accessibility to education around product types and what the implications are.

DANIEL JACOBS: When I got into the business it was very structured and dominated by sophisticated mortgage bankers and then it went wild. Now I think it has returned to the mid 90s. I feel like I’m back in the beginning of my career whereby everyone is older and more educated.

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Q: In your opinion, what does a lenders have to do in order to be successful these days?

JOE DETMER: You have to be competitive with rates and products, but there are so many new things available to borrowers. We have to offer world-class customer service. During your lifetime you are likely to have six mortgages, so you want to be their lifelong advisor. You have to have the heart of a teacher because most people don’t know what we know.

JEFF MCGUINESS: It comes down to one word: efficiency. Regulatory compliance is very complex and those that can absorb that efficiently into their process will win the day. We are all selling the same products so you have to be more efficient overall in how you get those products to market.

DANIEL JACOBS: If we go back to talking about how consumers are more educated, everyone is more sensitive to the experience. To be successful you have to focus on the feeling about the experience among both your borrowers and employees. You have to be focused on the end user experience.

Q: How can lenders do a better job reaching out to Millennials and new borrowers?

JOE DETMER: You have to understand their preference of communication. Kids are growing up in a digital world and you have to be respectful. I’m 54 years old so that was hard for me to adapt to at first. I thought that I had to talk to everyone, but they are okay getting texts. Also, there is so much information out there so you have to distinguish yourself.

DANIEL JACOBS: We talk about that every month in our marketing meetings. The habits of the Millennials are different as compared to our traditional borrowers and they always change. You need to use social media and alternate forms of communication. I think my kids communicate one way only to find that method is now out of style and they’ve moved on to another form of communication. These days we have to provide various options for communication.

JEFF MCGUINESS: You also have to address the complexion of our sales force to make sure that they are serving the borrower. We have an aging employee base. So, you have to have people at the front of the process to relate to new borrowers. Our employees don’t necessarily have to be young, but they do have to know how to reach out and engage younger people.

Q: What’s your take on TRID 2.0 and the overall regulatory burden?

JOE DETMER: I love it. For a long time we created the perfect loan process. TRID has created a flight plan for the clients to know what’s going to happen next if it is communicated correctly by the loan officer. TRID has clarified the process. Second, it got the fraud out of the industry. I don’t see the fraudulent actors anymore. The rules have made lending a more professional industry.

JEFF MCGUINESS: The way we choose to handle compliance is to participate in the industry through the MBA and other outlets so we understand what’s going to happen and how we will be impacted. We don’t argue the point, we spend our time getting ready. You can’t wait until the eleventh hour. The other key is understanding the impact on your people. We have very standard roles in our industry and we have to analyze how these new regulations impact their job. These regulations as administered can be burdensome on our people and we’re concerned about potential burnout. We want to be sensitive to the overall process changes around compliance and how our people are impacted.

DANIEL JACOBS: That’s right. We want to be different without being the pioneer that changes roles completely so everyone feels satisfied in their roles. There are timing differences that arise around when something has to be done and checked. So, what does that mean to our employees? This is a question that we’re always asking because we have to have that balance. A lot of what used to done pre-closing is now getting done at the front of the process, which is changing traditional roles.

Q: What new technologies should every lender be embracing?

JOE DETMER: If lenders are not using Mortgage Coach, I think they are missing the boat. The technology has been around, but it gives the borrower the total cost of the mortgage. It allows you to generate a full wealth presentation. I use it with all of our borrowers. I can give every borrower a total cost analysis of the loan now and over the next few years. Also, you need an active database technology to make it easy for you to keep in touch with your clients. There are only so many clients out there, so you want to keep them so they keep coming back to you. These are not new technologies, but not enough lenders use these tools.

DANIEL JACOBS: Lenders need to spend some time deciding how they are going to monitor and control the use of social media by their employees. That is the biggest compliance risk because there isn’t much oversight and regulators are going to start looking closely at this. So, what is the balance between employee privacy and compliance? Every mortgage company needs to focus on this area. Ignoring social media is a dangerous strategy.

JEFF MCGUINESS: Our LOS systems are challenged to do much more as compared to what they’ve ever done prior. We expect so much of them. It used to be that you could use a subpar LOS and work around it, but you can’t do that anymore. The reliance on the LOS is becoming greater and greater.

Q: Looking to the future, how do you think lending will change over the next few years?

JOE DETMER: You will see a consolidation among smaller mortgage banks. The consolidation won’t be of companies, but rather of mindset. People that don’t wrap their minds around the fact that we’re here to serve the clients will be pushed out. You have to truly serve the homebuying and home owning public.

JEFF MCGUINESS: We have been operating at artificially low rates for some time and that will change. There is also a lot of demand for homeownership. So, how do we meet that need without low interest rate? Are we going to see ARMs come back as a result? Coming off an over-dependence on the agencies, I think we’ll see more private capitol coming back into our space over the next few years.

DANIEL JACOBS: In the short term the mortgage industry will be boring and steady, especially as compared to the Presidential Election. But in the future mortgage lenders will have to learn how to compete with each other just like restaurants do. The wave of the future is how to capture market share.

Insider Profile

Daniel Jacobs is the EVP and managing director of national retail lending for MiMutual Mortgage. With nearly 20 years of experience in the mortgage industry, he has previously had senior positions at American Financial Network, Residential Finance Corporation and Freedom Mortgage Corporation. Jacobs can be reached at djacobs@mimutual.com.

Insider Profile

Joe Detmer is branch manager for Brentwood, Tenn.-based Churchill Mortgage Corporation’s San Diego branch. Detmer brings more than 26 years of experience in the financial services industry. Prior to joining Churchill, he worked as a consultant for Land Home Financial and Skyline Homes (previously Rancho Financial), where he established partnerships with local industry affiliates. He has served as regional sales manager for U.S. Bank Home Mortgage and was instrumental in increasing the bank’s production volume by 600 percent in the San Diego region and surrounding counties.

Insider Profile

Jeff McGuiness is Chief Sales Officer for Embrace Home Loans, an approved lender for FHA, VA and an approved seller servicer for FNMA, FHLMC and GNMA. Embrace Home Loans has remained a prominent leader in the industry, having provided hundreds of thousands of individuals and their families with mortgage loans, and now helping banks to provide home financing through its Affinity and Assisted outsourced mortgage solutions.

Progress In Lending
The Place For Thought Leaders And Visionaries

Why Tear Down That Wall?

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Ronald Reagan knew that tearing down walls Trumped building them. Presidents Ronald Reagan and Bill Clinton were both widely known as master communicators. Their extraordinary communication skills were a key element that made them wildly popular and successful as presidents. During this highly partisan, crazy political season, much can be learned about how to improve the way we do business in the mortgage industry by studying either of these former presidents.

Regan was dubbed The Great Communicator. “What made him the Great Communicator was Ronald Reagan’s determination and ability to educate his audience, to bring his ideas to life by using illustrations and word pictures to make his arguments vivid to the mind’s eye,” opined Ken Khachigian, former Reagan speechwriter.

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Clinton was known as the Explainer in Chief. Media analyst and syndicated columnist Steve Adubato, Ph.D., makes the case that Clinton used two key techniques that contributed to his success as Explainer in Chief. Clinton used the terms “we” and “us” more than “I” when explaining even the most complex geopolitical or economic issues to the electorate. And he employed liberal use of the Q&A approach. Adubato points out, “The former president consistently asked ‘why?’ something was the case and then quickly and confidently answered that question. For example, Clinton asked; ‘Now why is this true? Why does cooperation work better than constant conflict? Because nobody’s right all the time, and a broken clock is right twice a day.’”

What Builds Walls

It’s not a question, and it’s not “who” builds walls, but “what” builds walls. In the mortgage industry, we tend to undertrain and under-explain. We tend to state the “whats” without the “whys” and inadvertently build walls. Let’s use a simple loan origination example to understand this point. When an underwriter provides an approval condition on a loan, he or she typically states what is needed. The processor and the loan originator scurry about to meet the underwriter’s demand and often become extraordinarily frustrated when the underwriter then asks for more information or rejects what is provided as inadequate. The reason often lies in an underlying lack of understanding of why the item was needed by the underwriter. This lack of full communication and understanding the why behind the request leads to additional cycle time for the loan file, additional labor expense for unnecessary back and forth and general inefficiencies. Perhaps more important, simply stating “what” without “why” is an insidious separator that builds walls between colleagues and erodes the culture of companies and our industry overall.

Featured Sponsors:

 
Why Educates and Motivates

It has been my long-held belief that we should train everyone to have (and everyone should have a keen interest in having) a working knowledge of performing the role at least two steps beyond theirs in order to fully understand and be effective in their own role. To extend the example, if the processor and loan originator have a full understanding of not only the underwriting guidelines that prompted the underwriter’s condition, but also of the secondary market’s risk factor experiences that prompted the guideline to begin with, the condition likely would have been fully resolved far more easily and efficiently. Ultimately, the borrower would have been hassled less, the processor and loan originator would have been more productive and the underwriter’s relationship with the production staff would have been stronger. The wall never would have been built had the why been adequately understood with what.

In Regan’s famous 1987 Berlin speech he did not simply say, “Mr. Gorbachev, tear down this wall!” In a mere 2,600 words, he made his demand, provided historical context of the building of the Berlin wall and then explained not only how, but why it had failed to achieve its purpose. Then he invited his foes to join him to work together. Toward the end of the speech, he focused on the unity that could be achieved in tearing down the wall by saying, “and I invite Mr. Gorbachev: Let us work to bring the Eastern and Western parts of the city closer together, so that all the inhabitants of all Berlin can enjoy the benefits that come with life in one of the great cities of the world.”

We all know that the Berlin Wall fell, the cold war thawed and the European Union was eventually formed where the wall formerly stood. It did not happen simply because of the demand to tear down the wall. It happened because of the persuasive context of why. What can you do in your organization to improve efficiencies and cohesiveness using the techniques of the Great Communicator and Explainer in Chief? Consider requiring everyone to explain why each time they state what. Imagine the power and benefits why can offer your organization if consistently used.

About The Author

Daniel Jacobs
Daniel Jacobs is the EVP and managing director of national retail lending for MiMutual Mortgage. With nearly 20 years of experience in the mortgage industry, he has previously had senior positions at American Financial Network, Residential Finance Corporation and Freedom Mortgage Corporation. Jacobs can be reached at djacobs@mimutual.com.

Why Tear Down That Wall?

Ronald Reagan knew that tearing down walls Trumped building them. Presidents Ronald Reagan and Bill Clinton were both widely known as master communicators. Their extraordinary communication skills were a key element that made them wildly popular and successful as presidents. During this highly partisan, crazy political season, much can be learned about how to improve the way we do business in the mortgage industry by studying either of these former presidents.

Regan was dubbed The Great Communicator. “What made him the Great Communicator was Ronald Reagan’s determination and ability to educate his audience, to bring his ideas to life by using illustrations and word pictures to make his arguments vivid to the mind’s eye,” opined Ken Khachigian, former Reagan speechwriter.

Featured Sponsors:

 

 
Clinton was known as the Explainer in Chief. Media analyst and syndicated columnist Steve Adubato, Ph.D., makes the case that Clinton used two key techniques that contributed to his success as Explainer in Chief. Clinton used the terms “we” and “us” more than “I” when explaining even the most complex geopolitical or economic issues to the electorate. And he employed liberal use of the Q&A approach. Adubato points out, “The former president consistently asked ‘why?’ something was the case and then quickly and confidently answered that question. For example, Clinton asked; ‘Now why is this true? Why does cooperation work better than constant conflict? Because nobody’s right all the time, and a broken clock is right twice a day.’”

What Builds Walls

It’s not a question, and it’s not “who” builds walls, but “what” builds walls. In the mortgage industry, we tend to undertrain and under-explain. We tend to state the “whats” without the “whys” and inadvertently build walls. Let’s use a simple loan origination example to understand this point. When an underwriter provides an approval condition on a loan, he or she typically states what is needed. The processor and the loan originator scurry about to meet the underwriter’s demand and often become extraordinarily frustrated when the underwriter then asks for more information or rejects what is provided as inadequate. The reason often lies in an underlying lack of understanding of why the item was needed by the underwriter. This lack of full communication and understanding the why behind the request leads to additional cycle time for the loan file, additional labor expense for unnecessary back and forth and general inefficiencies. Perhaps more important, simply stating “what” without “why” is an insidious separator that builds walls between colleagues and erodes the culture of companies and our industry overall.

Featured Sponsors:

 
Why Educates and Motivates

It has been my long-held belief that we should train everyone to have (and everyone should have a keen interest in having) a working knowledge of performing the role at least two steps beyond theirs in order to fully understand and be effective in their own role. To extend the example, if the processor and loan originator have a full understanding of not only the underwriting guidelines that prompted the underwriter’s condition, but also of the secondary market’s risk factor experiences that prompted the guideline to begin with, the condition likely would have been fully resolved far more easily and efficiently. Ultimately, the borrower would have been hassled less, the processor and loan originator would have been more productive and the underwriter’s relationship with the production staff would have been stronger. The wall never would have been built had the why been adequately understood with what.

In Regan’s famous 1987 Berlin speech he did not simply say, “Mr. Gorbachev, tear down this wall!” In a mere 2,600 words, he made his demand, provided historical context of the building of the Berlin wall and then explained not only how, but why it had failed to achieve its purpose. Then he invited his foes to join him to work together. Toward the end of the speech, he focused on the unity that could be achieved in tearing down the wall by saying, “and I invite Mr. Gorbachev: Let us work to bring the Eastern and Western parts of the city closer together, so that all the inhabitants of all Berlin can enjoy the benefits that come with life in one of the great cities of the world.”

We all know that the Berlin Wall fell, the cold war thawed and the European Union was eventually formed where the wall formerly stood. It did not happen simply because of the demand to tear down the wall. It happened because of the persuasive context of why. What can you do in your organization to improve efficiencies and cohesiveness using the techniques of the Great Communicator and Explainer in Chief? Consider requiring everyone to explain why each time they state what. Imagine the power and benefits why can offer your organization if consistently used.

About The Author

Daniel Jacobs
Daniel Jacobs is the EVP and managing director of national retail lending for MiMutual Mortgage. With nearly 20 years of experience in the mortgage industry, he has previously had senior positions at American Financial Network, Residential Finance Corporation and Freedom Mortgage Corporation. Jacobs can be reached at djacobs@mimutual.com.

The Fourth C In Successful Lending

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The industry today places more emphasis on the traditional three Cs of lending than we have seen in quite a long time. In the current environment of homogeneous loan products, however, the most successful mortgage operators value more than just character, capacity and cashflow; they value and nurture a great culture. A company’s culture defines how it delivers its products and services and has a profound effect on customer satisfaction. How does a company create a successful culture? Is one culture better than the other? Is there a “best” culture?

When we think of companies with great cultures we often think of ping pong tables, gaming rooms, free cafeterias and other notions marketed to the public by successful Silicon Valley tech firms. But a strong company culture goes deeper than games and a free lunch. At its root, a good culture stems from leadership deliberately creating an environment and experience based on what they want a company to stand for and mean in the lives of the people. To that end, there is no “best” culture, since different people value different things. It ultimately comes down to deciding what you believe in and becoming that as a company, through and through.

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How does a company go about creating a positive culture? It starts off by defining itself and its core values. Core values, mission statements and comments about culture must be more than mere references in the company’s employee handbook. They must be the very heart and soul of a company’s being. A company must define what is important, what is vital to its success and then live those values in everything it does. For example, if a company values integrity, it must ensure that from the top down it makes the right decisions even when it is difficult and when no one is looking. If it values fun, the company needs to have fun employee events. If it values community service, it should hold routine community outreach with its employees. But most of all, its values must transcend every aspect of the company’s operations on a daily basis.

Think of a successful company culture like an inviting patchwork quilt. Even if patchwork quilts are not really your thing, you have likely seen a quilt that struck you as surprisingly nice. It never seems manufactured, and it always feels authentic with its own distinctive style. Every core value truly carried out, every employee’s contribution, every satisfied and repeat customer and their referrals, the company’s competitive triumphs and challenges are all represented – each with its own patch – on the quilt. Each patch makes up part of the story of who a company is and the overall result has its own look and feel. That’s a company’s culture. And that is how employees and customers judge a company.

Take a moment to evaluate and strengthen your company’s unique and authentic culture quilt. You should find a unified, prideful and loyal workforce that delivers a higher quality of service to its customers with greater employee and customer retention and referral rates. These are the fundamental pieces of a culture quilt that translates into a great place to work.

About The Author

Daniel Jacobs
Daniel Jacobs is the EVP and managing director of national retail lending for MiMutual Mortgage. With nearly 20 years of experience in the mortgage industry, he has previously had senior positions at American Financial Network, Residential Finance Corporation and Freedom Mortgage Corporation. Jacobs can be reached at djacobs@mimutual.com.

The Fourth C In Successful Mortgage Lending

The industry today places more emphasis on the traditional three Cs of lending than we have seen in quite a long time. In the current environment of homogeneous loan products, however, the most successful mortgage operators value more than just character, capacity and cashflow; they value and nurture a great culture. A company’s culture defines how it delivers its products and services and has a profound effect on customer satisfaction. How does a company create a successful culture? Is one culture better than the other? Is there a “best” culture?

When we think of companies with great cultures we often think of ping pong tables, gaming rooms, free cafeterias and other notions marketed to the public by successful Silicon Valley tech firms. But a strong company culture goes deeper than games and a free lunch. At its root, a good culture stems from leadership deliberately creating an environment and experience based on what they want a company to stand for and mean in the lives of the people. To that end, there is no “best” culture, since different people value different things. It ultimately comes down to deciding what you believe in and becoming that as a company, through and through.

Featured Sponsors:

 

How does a company go about creating a positive culture? It starts off by defining itself and its core values. Core values, mission statements and comments about culture must be more than mere references in the company’s employee handbook. They must be the very heart and soul of a company’s being. A company must define what is important, what is vital to its success and then live those values in everything it does. For example, if a company values integrity, it must ensure that from the top down it makes the right decisions even when it is difficult and when no one is looking. If it values fun, the company needs to have fun employee events. If it values community service, it should hold routine community outreach with its employees. But most of all, its values must transcend every aspect of the company’s operations on a daily basis.

Think of a successful company culture like an inviting patchwork quilt. Even if patchwork quilts are not really your thing, you have likely seen a quilt that struck you as surprisingly nice. It never seems manufactured, and it always feels authentic with its own distinctive style. Every core value truly carried out, every employee’s contribution, every satisfied and repeat customer and their referrals, the company’s competitive triumphs and challenges are all represented – each with its own patch – on the quilt. Each patch makes up part of the story of who a company is and the overall result has its own look and feel. That’s a company’s culture. And that is how employees and customers judge a company.

Take a moment to evaluate and strengthen your company’s unique and authentic culture quilt. You should find a unified, prideful and loyal workforce that delivers a higher quality of service to its customers with greater employee and customer retention and referral rates. These are the fundamental pieces of a culture quilt that translates into a great place to work.

About The Author

Daniel Jacobs
Daniel Jacobs is the EVP and managing director of national retail lending for MiMutual Mortgage. With nearly 20 years of experience in the mortgage industry, he has previously had senior positions at American Financial Network, Residential Finance Corporation and Freedom Mortgage Corporation. Jacobs can be reached at djacobs@mimutual.com.

Industry Trailblazing

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Success is no stranger to Daniel Jacobs. He is known most for growing and selling 1st Metropolitan, but his resume goes far beyond just that one company. He has always had a passion for improving the business of mortgage lending. So, it should come as no surprise that he is involved with a new company and continues to push the envelope. What will the mortgage banker of tomorrow look like? How will mortgage lending change over the next five years? Daniel Jacobs sat down with our editors to answer these and other pressing industry questions. Here’s what he said:

Q: How did you start out in mortgage?

DANIEL JACOBS: When I bought my first home I worked with an inept originator who seemed to have all the trappings of success, except for knowledge of her job. She was unable to answer basic questions about the process and documents I was being asked to sign. When I asked why the APR on the Truth in Lending disclosure I was signing was different that the disclosed interest rate she spoke very slowly and loudly and said, “that means the AANNUAL PERCENTAGE RAAATE….” I knew I was neither hard of hearing nor particularly slow in my listening skills. When I heard her mention her newly purchased boat I immediately decided if she could do this job I could do it better. So, immediately upon closing on my home purchase I set out to get into the mortgage industry with the goal of being better than the originator I worked with and to create a better experience of other home buyers in need of home financing.

I started out as an originator and moved into various management roles as I uncovered painfully inefficient processes that I felt I could improve. Most of my positions in the mortgage industry were ones created by my own proposal after identifying organizational problems and proposing to solve them.

Q: How has the mortgage industry changed since you first got involved in the space?

DANIEL JACOBS: The industry has, for too many, morphed from a cohesive profession to a disjointed series of sales and clerical jobs. Mortgage professionals used to be expected to understand the lifecycle of a loan, underwriting guidelines and respect and understand risk. We were a live band with each instrument playing their part in one hall, together, to create cohesive albums. Each band member had to know the other’s parts so they could create songs together at once. Now we are an industry of studio musicians who play our respective part alone in a studio with faceless digital producers who splice and manipulate all the parts together to make singles. Do we still create songs? Yes. But we used to create music. There is a difference.

Originators have allowed themselves to shift from knowledgeable advisors in business development to mere sales people. Processors have allowed themselves to shift from inside knowledge banks and sales and process facilitators to clerks who blindly satisfy a series of checklists in indecipherable processes dictated by automated systems spitting out unpredictable requirements and checklists.

When I started in this business it was incumbent upon all originators and processors to gain a deep understanding of underwriting guidelines and underwriters were gatekeepers of risk, using judgment and common sense. Over the years originators, as a whole, have commanded a greater and greater share of the revenue while becoming less and less invested in the business. Processors have become more and more clerical with checklist satisfaction responsibility. And underwriters have become what processors used to be. The AUS black boxes have become what underwriters used to be. And no one really understands why we do anything anymore. We just do it because the checklists tell us to.

Q: You successfully grew and sold 1st Metropolitan Mortgage. How did you do it?

DANIEL JACOBS: I worked for a very entrepreneurial owner who wanted to grow from a small local broker to a significant national mortgage company. He was willing to invest in acquisitions as well as organic growth. In September 2002 we bought the assets of 1st Metropolitan Mortgage and quickly learned that it was a great sales organization but it was about to implode, as the company had little corporate infrastructure, controls, and systems in place to operate effectively. The company required a complete restructuring.

Step one of this restructuring was to set and establish our professional values and ensure that, even in the absence of sophisticated operational systems, everyone in the company operated with the same fundamental set of governing values. In the first year after the acquisition we had to part ways with well over half the sales staff whose values were not aligned with ours. We parted ways with our largest branches at times when they had differing governing values than the company. And that really helped set the tone for who we were and how we would operate.

We then scrapped everything we did procedurally as a company, unless we could clearly justify it as necessary and relevant at that moment. Doing stuff just because that’s the way we have always done it was not the answer. We had the flow chart hallway where once a week we’d print out poster size flow charts for every department and posted them on the walls. We had sharpie pens hanging on ropes along the wall and every week we’d cross out and change processes for each department and the next week we’d start the new process and we kept doing this until everything really started to work and synchronize into a cohesive system company wide.

Next, we automated everything we did. EDAC (Electronic Data Access Center), our Web-based integrated management system, was born. We established the manual procedures with the reports/output we needed for everything and then we started creating custom technology to support everything we did. We required one control repository for every data point to ensure we never had disparate systems with conflicting data. And every solution had to be able to scale. Nothing could be implemented as a solution unless we could do it 2,000 times per month for the same cost as doing it 50 times per month. We always started with the output we desired and that revealed the input we required. We ended up with a proprietary HRIS, licensing system, internal customer ticketing system, legal tracking system, vendor management, marketing automation system with management dashboard and reporting, all in one. It connected seamlessly into our GL system and LOS for one comprehensive management system that every person in the company used on a daily basis.

This system allowed us to grow our branch, loan unit and employee head count, across the nation with tight controls, scalability, and extraordinary efficiency. With more than $4 billion in volume, 1500+ loans funded per month, 150+ branches at any given time, we had five full-time accounting staff members and four full-time HR staff members. Our systems and automation were extraordinary and helped us get through those tough years when the downturn ravaged the industry.

Of course, the world’s best technology and systems are completely ineffective without dedicated, highly talented staff and management. By establishing an environment where everyone knew what we stood for, where we built technology to help people be effective, where having a lot of fun at work while working crazy hard and being extremely productive was the standard, we had an extraordinary employee retention rate. Companies often tout their culture to others. We found others touting our culture to us. It was really a special group of people with extraordinary dedication who made 1st Metropolitan a great place.

Q: You’ve also become involved with Pro Mortgage Branching Solution. How would you describe their value proposition?

DANIEL JACOBS: PMBS is a small boutique branch recruiting firm I founded with my business partner, Adam Sidle, in late 2010. Adam was a top branch manager and then recruiter at 1st Metropolitan Mortgage. At 1st Metropolitan we used to spend a lot of money producing new branch manager and LO leads to grow the company. Most of those leads did not qualify to become a MetroBranch, but we tracked many of them and found they landed at another company where they were a better fit. So, Adam and I founded PMBS, where Adam is the operating partner, to help retail branch managers and branches with the right lender for their needs. It is a very rewarding business, as the PMBS BranchMatch process is like a great personal matchmaker, trying to find just the right fit for long-term relationships. But at PMBS we are matching branches and companies for long-term business relationship vs. creating personal connections for marriages. Mortgage lenders and branches both love the value proposition because it is a lower cost sourcing model for companies and free to branch managers.

Q: What does it take to be a successful mortgage banker these days?

DANIEL JACOBS: Focus. Intense and multi-faceted focus. Mortgage bankers must be very good at business development, legal and regulatory compliance, secondary execution, efficient process management, and people management.

Ten years ago a mortgage banker could be good in one of these areas and mediocre in others and still remain viable. Today’s environment is so unforgiving in all areas, that mortgage bankers must employ the very best talent, and be committed to an intense focus on being excellent in every area of their business to remain viable.

The gap between viable and highly successful used to be wide. It’s razor thin in 2014, leaving little room for mediocrity or error as a mortgage banker.

Q: How do lenders manage the compliance burden and still remain profitable?

DANIEL JACOBS: The only way to effectively manage the compliance burden and remain both profitable and competitive is through constant process refinement. With costs rising and margins shrinking, lenders must constantly find more effective and efficient ways to operate to remain profitable. With every new compliance burden the entire loan manufacturing process must be considered in context to avoid undue layering of procedures and expenses to address them. Mortgage lenders must reinvent their way of doing business annually to remain competitive in today’s market.

Q: Where do you see the state of innovation in mortgage banking today?

DANIEL JACOBS: Innovation is largely on hiatus in mortgage banking. Non-QM is what is all the buzz, but let’s face it, product development is hardly innovation. Historically, it has been the standard. Perhaps once the industry knows where the secondary market stands, what the fate of the GSEs will be, and we believe we are beyond the danger of an imminent rising rate environment, and the CFPB is a more predictable regulatory body who has established largely known and quantifiable boundaries and risks, the industry will begin truly innovating again.

Q: Lastly, what will mortgage lending look like five years from now?

DANIEL JACOBS: Five years from now there will be fewer mortgage bankers. The barrier to entry to start a new mortgage banking firm will continue to rise with growing capital needs, rising compliance burdens, and greater experience and capital thresholds to gain direct access to the secondary market.

Additionally, we will see more diversified mortgage banking firms with multiple retail production channels ranging from consumer-direct online models to traditional branch models and some hybrid models. Consumers have become more comfortable than ever transacting refinance loans over the phone and Internet. Over the next five years we will see far more move-up home buyers willing to do business virtually, while first time home buyers and buyers with complex financial situations will continue to demand a local, face-to-face transaction.

In five years we will also find lenders offering more commonly offering service level guarantees, as the regulatory climate will have plateaued, the market will have cycled from refinance to purchase to a healthy blend of both again, and lenders will have time in the interim to better focus on perfecting their processes, technology and service value-proposition.

Industry Predictions

Daniel Jacobs thinks:

  1. The CFPB will make a splash with multiple “example fines” of name brand mortgage lenders. The industry will gain valuable insight as to where the new business risk lies.
  2. By spring 2015 non-QM lending will gain significant traction, approaching a double-digit percentage of overall loan volume. We’ll “party like its 1999” – when subprime lending was on the upswing but still made sense. That’s what Prince was referring to, right?
  3. At least two top 20 lenders will exit the industry or consolidate with other lenders.

Insider Profile

In addition to being a partner in Pro Mortgage Branching Solutions, Daniel Jacobs is the division president of American Financial Network. (afnretail.com). AFN is a national mortgage banker, in business since 2001 and has operated mainly in California until recently. Some key members of Jacobs’ management team have joined him to expand AFN’s presence on the east coast, and in 2014 the company has opened six branches. AFN funded $1.6 billion in 2013 and predicts year over year growth in 2014. The company received its Fannie Mae seller/servicer designation as well as its Ginnie Mae Issuer status earlier this year. AFN operates an east coast corporate office and operations center in Charlotte, NC.

Progress In Lending
The Place For Thought Leaders And Visionaries

Welcome Aboard

*Welcome Aboard*
**By Tony Garritano**

TonyG***Each day PROGRESS in Lending goes out to over 12,000 unique lenders. As part of our ongoing effort to deliver quality content and services that lenders can actually use to grow their business, last year PROGRESS in Lending launched a Lender Advisory Panel. Initially there were nine members. We have used their input to improve what we’re doing, continually innovate, and to launch new products like the Lender’s Digital Marketplace. We are always looking for lending thought leaders to join the panel. Along these lines, today we welcome three new members to our Lender Advisory Panel. Join me in welcoming:

DanielJ****A recognized mortgage thought leader and entrepreneur, Daniel H. Jacobs is an executive who enjoys building and growing companies that solve industry problems through a delicate combination of technology and systems implementation, smart infrastructure. For example, Daniel grew 1st Metropolitan’s parent company from six offices and $100 million per year in production in 2000 to a 250 branch $4.2 billion production company with a sterling reputation throughout the industry. In 2011, Daniel went on to build a leading retail branching mortgage banking operation at Residential Finance, as a new business channel, from zero to $120 million per month production channel in two years.

JimMorin****Also, James Morin, the Senior Vice President of Retail Lending at Norcom Mortgage, headquartered in Avon, CT. Since joining Norcom in 2009 he has helped grow the company to a Regional Lender that is now licensed in 18 states and was recognized as one of the “Fastest Growing Lenders in New England.” James has been instrumental in leading the strategic expansion of Norcom production and is in charge of Norcom’s retail platform, including the inside and outside sales departments, marketing, strategic planning, and product development, as well as training and overseeing the sales staff. He has also helped grow Norcom into an active Ginnie Mae Issuer and Seller/Servicer with Fannie Mae and Freddie Mac.

RickR****And lastly, Rick Roque, Vice President and Director of Retail Operations at Menlo Company. Rick entered the mortgage space in 2001 by raising capital for a company called PushMX Software. He later started Menlo Company where he worked directly with mortgage and banking firms who had a desire for acquisitions, were seeking warehouse lines, private capital placements, and an interest in new technology solutions. Roque is an accomplished national speaker on mortgage technology and market trends to both educate banking professionals about product trends, forecasts and technology enhancements.

****All of these lenders are truly visionary and we at PROGRESS in Lending are lucky to have them on hand informing us about how we can continue to deliver quality content and services to help improve mortgage lending.

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.