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   ARTICLE   |   From Scotsman Guide Residential Edition   |   August 2018

Wanted: Leaders for Turbulent Times

The mortgage industry is crying out for direction, but leadership needs to be developed

Leaders, take note. The seismic shifts in the mortgage industry won’t slow down anytime soon. Talented originators longing for the chance to serve homebuyers won’t keep waiting for leaders adhering to the old way of mortgage lending to get with the times.

Over the next year, real estate financing will continue changing at a frenetic pace. Consumers’ habits and preferences will continue evolving. And the influx of financial technology will continue overhauling an entire industry’s way of doing business.

Originators are closely monitoring the changing landscape and hope to withstand its tide. They want to adapt by serving borrowers with top-level customer service and the latest technology to make homebuying simple and convenient. And they want to remain in business, build their brands and forge fulfilling and rewarding careers in a dynamic industry.

What is the key to keeping them inspired? Devel- oping leaders who are strong, courageous and forward-thinking. But there’s a problem. Effective leadership in the mortgage industry is hard to find these days. Few leaders are visionary. Many shy away from transparency. Not enough are courageous.

The very qualities that top mortgage talent seeks to emulate are missing from the leadership ranks. Should the dearth of competent and adaptive leadership go unaddressed at a mortgage company, it ultimately will slip into relative obscurity and fail to compete with newer companies that understand what the industry is becoming.

Not all is lost, however. There is a solution, but it must come from the top and permeate throughout an organization — from people to process. If mortgage industry leaders want to recruit and retain top talent and remain relevant, they must practice and hone those three qualities mentioned previously: vision, courage and transparency.

Vision

Leaders take the lead because they see ahead. They have vision and know exactly where their organization is headed. A leader with vision will plan, plan and plan again. They’ll think about the contingencies and prepare for the inevitable. They’ll know how to create a cushion for the hard times and encourage their teams — take note of the word “teams” and not “employees” — to weather the storms.

They don’t only manage or oversee. They understand how to communicate and execute their vision. And they’re proficient at recruiting others who align with it. They have immeasurable influence, can transform environments and know how to build workplace cultures that inspire their teams to perform their best.

When wage growth crimps, borrowers tend to save more and spend less — that includes spending less on housing.

That’s great, but how does this apply to mortgage lending? Every transaction is a person. Mortgage companies are made of people, not robots (despite the wave of automation sweeping the industry), and they respond to the needs of other people.

A lender may surpass volume records year after year, but none of it’s possible without the customer and the mortgage originator. Both are vital to keeping the mortgage process churning. The leader who keeps that in mind will maintain his perspective and focus on caring for the customer and his teammates, not just the bottom line.

Courage

The mortgage industry has endured tough times. The Great Recession sent the housing market to its knees, creating the need for stricter regulations that ensure consumers remain protected from predatory lenders. While the current administration has peeled back some of the toughest rules, the industry remains under a microscope.

Leaders must display immense courage — and ingenuity — to lead their organizations through these turbulent times. That means making hard strategic decisions to ensure their companies’ survival for the next 10, 15 and 20 years. It also means learning how to overcome the challenges apparent in the industry. What are some of those challenges? Although pending home sales continue to rise month over month, affordability remains the most persistent problem in the housing market, according to data from the National Association of Realtors.

The average price of an existing home is upward of $250,000, and mortgage rates keep climbing. Citing research from Arch Mortgage Insurance, CNBC recently reported that housing affordability is on pace to weaken at its fastest rate in 25 years. Housing demand is reaching all-time highs, but available inventory is shrinking to all-time lows. A report from Zillow shows that homebuyers have 9 percent fewer home options to choose from than they did a year ago. Of the ones available, most are high-priced.

American unemployment has dipped to historic lows, but wages overall remain stagnant. On the heels of a suspected uptick in wages earlier this year, average earnings fell by 0.1 percent between March and April, knocking down theories that wage growth was beginning to firm up. When the labor force experiences healthy wage growth, it ignites the housing market because financial wherewithal is greater. Simply, borrowers can afford more house. When wage growth crimps, borrowers tend to save more and spend less — that includes spending less on housing.

It will take unrelenting courage to lead mortgage companies and loan originators through this choppy terrain. Leaders will have to be brave enough to change the way they’ve been doing business so they can adapt to all these shifts.

Transparency

No one wants to work for a leader who keeps secrets, has trouble with honesty or hides from conflict or tough conversations. Because their ability to earn a living is directly tied to how much volume they sell, originators aren’t interested in listening to empty rhetoric, and they’re good at sniffing out false promises and insincere talk. Their livelihoods are at stake.

They prefer leaders who are straight shooters. Honest. Candid. They want to know the truth about what’s happening in the industry and how it affects their organization. They want to chart their career paths and need to rely on leaders who commit to open and honest dialogue. 

Honing these qualities takes time, and time is a major investment that many in the mortgage space feel they can’t afford to make. After all, who can focus on sharpening leadership skills when faced with having to produce business in a contracting industry?

Leaders don’t just happen. They need to be developed at all levels of an enterprise. And there are organizations that offer training programs, including major trade associations and private companies with mortgage-training expertise. The available programs use a variety of teaching methods, including web-based lessons, in-person classes, seminars and tutorials aimed at developing and improving leadership, sales and management skills. The point is, there are options.

•  •  •

Now, the takeaway: Good leadership is paramount to the survival of our industry. And leadership of that caliber can’t be encumbered by frills, false promises or cowardice. High signing bonuses, car leases and other extravagant perks are nice. Still, they’ll never beat a leader who is candid, strategic and courageous. Those are the types of leaders your team members will follow. 


 


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