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   ARTICLE   |   From Scotsman Guide Residential Edition   |   June 2013

Keep the Future in Your Sights

Embrace evolving relationships with independent lenders

Keep the Future in Your Sights

Traditionally, loan originators chose to work with independent mortgage bankers because of their interest in having a work environment that values entrepreneurial spirit and gives them the room to develop personal sales processes. In return, lenders typically have provided support and infrastructure, and they have enjoyed the financial benefit that originators’ entrepreneurial drive, assertiveness and initiative bring. 

This symbiotic relationship may be changing, however, as the recent turmoil in the industry has brought a heavy burden of regulations on everyone involved in loan origination and lending, which in turn has stifled some opportunities for entrepreneurialspirit. To understand how originators can take part in shaping their careers and their future relationships with lenders, it is important to take a look at how existing relationships have evolved. 

Room to move

Despite their differences, even the largest of the small- to mid-tier lenders are similar in their approach to managing sales and operations. They typically act in an entrepreneurial spirit and keep check on corporate confines. Independent mortgage bankerscommonly express that they don’t aspire to be like mega-lenders. This apprehension is driven by how they reject being mired in overly formal cultures, restrictive organizational structures and rigid operating policies that, in their view, counter theindependent spirit of originators who look for flexible, high- service environments.

Toward this goal, independent mortgage bankers strive to ensure that their companies have varied processes and customized fulfillment support structures to meet originators’ needs. The structure and organization typically is organic, often developing its identity and personality as a result of the effort to create an originator-friendly environment. Originators in these operations often carry a lot of weight — they are vocal, influential and demanding in exchange for high performance (whether delivered or not).

Maintaining balance 

Keeping this harmony between independent mortgage bankers and entrepreneurial originators historically has been a tricky, but competitive, advantage over more tightly structured lenders. Banks and mega-lenders traditionally have not enjoyed the same flexibility in their operations, nor did they want it. In addition, demands of regulation and the necessities of the heavy management and standardization that large-scale operations call for usually don’t allow for flexible, loosely defined policies and structures. 

In fact, more rigid structures have been a competitive advantage for some large lenders, allowing them to develop brand strength, opportunity to scale and operational efficiencies that smaller, less structured bankers often have difficulty reaching.Independent lenders accepted these trade-offs in exchange for floating in their self-defined space, attracting talented originators with the promise of freedom and financial abundance.

Now, it is becoming more evident that this balance may not be sustainable. The recent regulatory demands on the mortgage industry are threatening the entrepreneurial bliss of independent mortgage bankers and their loan originators. In the past, lenders simply were required to follow the regulations, and examiners focused on watching for incidences of violations. Although this is still true, in the course of ensuring that lenders are not breaking the rules, the Consumer Financial Protection Bureau (CFPB)added a new twist. In addition to the absence of violations, lenders now must not only prove compliance, but also must show that the opportunity for violation is mitigated.

Establishing the type of proof that meets the CFPB’s requirements necessitates introducing tight policies, standardized procedures, formalized audit practices, and independent control and oversight within the organization. To independent mortgage bankers,this starts to make them feel a whole lot like mega-lenders, which they never wanted to be. 

Originators aren’t pleased with it, either. As lenders tighten up and attempt to work within new regulatory boundaries, originators find that the new policies and procedures feel shockingly bureaucratic, structured operations seem to restrict the abilityto simply get the job done and roadblocks are destined to thwart a deal.

All of these changes come on the heels of recent compensation policies that often are seen as restrictive to financial ambition. Unhappy originators, of course, may find a temporary reprieve with a company that has not yet adapted. But one of two scenarioswill be likely:

  1. The lender doesn’t adapt, which leaves originators in a tight spot.
  2. The lender will adapt, and originators will find themselves in the same situation they previously rejected.


Despite the changing environment, independent mortgage bankers continue to recognize the value of entrepreneurially spirited originators, and they want to continue to be lean, nimble and focused on an inspired sales process. Lenders and originators mustinevitably accept the new reality of the mortgage industry, however. Tighter controls are impending, and potentially tighter margins call for more efficient operations — often through more standardization of processes. In addition, demands outside ofthe lenders’ control will continue to add challenges to the sales process. The challenge for independent mortgage bankers is to work within the confines of the industry environment while keeping originators effective and motivated.

Traditionally, originators tackled the conflict between their sales strategies and company pressure by leveraging the inherent power of their position — assertively and insistently demanding justified changes that suit the sales process and exposing the underlying threat of competition for quality originators. Originators still are using these tactics, and lenders still want to respond accordingly by giving originators what they want. Things are different this time around, however. Lenders’ hands are tied because of regulatory and supervisory pressure.

As a result, originators now face a new dilemma. They need a sales process that allows them to do what they do best — that is, they need lenders with robust sales support. They also need strong, viable lenders with solid business practices that will endure for the long term. Within this context, if originators demand sales environments tailored to their terms without consideration of new operational demands, lenders will be left to figure out how to deliver an attractive sales environment and meet the challenge of long-term viability, a tough problem that likely won’t be solved without originators’ help.

Originators should realize that although these changes understandably are unwelcome, they ultimately should cooperate with lenders in the creation of operating environments that can endure financially and stand up to regulatory burdens. This will helplenders have a strong point of view on best practices and will give them the conviction to stand by these practices. By taking these actions, lenders also can focus on enhancing the sales and fulfillment process, and investing in developing infrastructureto support it.


Independent mortgage bankers need originators who partner with them to align their sales processes with regulatory demands. In short, they need intrapreneurs — individuals who operate within the structure of a company, but use entrepreneurial initiative,assertiveness and drive for mutual benefit. Intrapreneurs typically take responsibility for turning ideas into solutions and products.

In a sense, originators always have been intrapreneurs, but acknowledging and accepting the subtle distinction of accepting responsibility for creating solutions makes all the difference. For originators looking to the future, the immediate call to action is to step into a leadership role and actively and collaboratively participate with lenders in shaping a new sales process. 

•  •  •

The relationship between independent mortgage bankers and originators is being transformed. Originators who enjoy a long-term perspective should take action to understand the new environment and the challenges the lender faces, to explore solutions,and to accept the burden of learning new methods, tools or processes. They also should offer ideas, participate in the vetting process and resolve conflicting commitments in a productive way. This may be the only road that will grant a working situation that can satisfy their future aspirations. 


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