In today’s low-rate refinance “boomlet” it would be easy and, frankly, human nature, for a mortgage originator to focus on their current pipeline. The old saying, “You have to make hay when the sun shines,” is true.
And the sun is definitely shining right now in the mortgage industry, with the combination of historically low rates and the summer months driving both a booming refinance business and a strong purchase pipeline. An important caveat, however, is that originators have to keep their eye on the future as well.
Think back to what your pipeline and prospects looked like just a few months ago this past January. Rates were significantly higher, the purchase season was frozen due to winter weather throughout much of the U.S. and the buzz around the industry was not a positive one.
You have to ask yourself honest questions at different points throughout the year. Have you built a business that will continue to succeed when purchase season grinds to a halt with the unavoidable Mother Nature-driven slowdown later this year? Have you built a business that cannot only capitalize on the current refinance boomlet, but of equal or more importance, is your business built around being productive in a higher-rate environment combined with a slower time in the purchase market?
For many originators, the answer is no. And nobody is judging you for that. First and foremost, the reality is you have to capitalize on the here and now. Every industry, every successful CEO and every forward-thinking business person always has to first execute in the here and now, otherwise there is no point planning for the future.
That being said, these same uber-successful individuals in any industry worldwide also dedicate time to craft business strategies that look forward one, three and five years down the road. And that is what sets apart the “environmentally successful” originator from the “perpetually successful” originator.
Perpetual vs. environmental
The environmentally successful originator is someone who works hard and is solid at what they do, but is susceptible to simply riding the direction of the market, up and down, over and over, which is what our industry always does. What goes up must come down. These types of originators will have boom years and bust years, much as our entire industry does.
The perpetually successful originator capitalizes on current boom times while planning for the future. This originator steps back and heads to a coffee shop or a library, or closes their office door and sets aside current work for future-related work.
Think of the perpetually successful originator as an athlete. They work out as much as anyone — lifting, cycling, running, etc. What sets them apart, however, is the stretching, the yoga and the off days that give them the time to be ready for future workouts. Those that break up the routine and think beyond their current pipeline will be the originators who perpetually succeed, regardless of the direction of interest rates and no matter the season.
Ask yourself honestly: Are you an environmentally successful originator? Are you a perpetually successful originator? Are you somewhere in between?
Must-have targets
Look at the top 250 originators nationwide and, year after year, most of the names are the same. Yes, some new names come in and the names certainly move around, but a supermajority of these people remain in the top 250 year after year.
Every single one of them is a perpetually successful originator for a reason. They always take time, no matter how busy they currently are, to plan for the future. Each and every one of them has a business plan. Each and every one of them has a one-, three- and five-year plan as well as goals to accompany each year in the plan.
To be a perpetually successful originator, you have to build a solid business plan, set goals and then track your progress against your business plan. Any solid originator business plan always includes some “must-have” objectives.
These objectives include annual origination goals; marketing plans and budgets; customer relationship management (CRM) system plans and campaigns; lender review and selection; product review and selection; website review and investment; long-term goals; and tracking methodology and measurements. Let’s dig a little deeper into each of these objectives.
Goals and marketing
Setting an annual origination goal provides you with a compass by which to steer the remaining entirety of your one-, three-, and five-year plans. Without that compass, it is difficult to set budgets, make investments in technology, and pick the lenders and products that will make you more successful. This doesn’t have to be an incredibly complex process.
Start simple. Take your year-to-date originations in 2019, put a growth percentage on top of that and then annualize that for the rest of the year. Then decide what you think a reasonable growth-percentage estimate is for 2020 and you now have your 2020 goal. Rinse and repeat that process all the way out to 2024, then put pen to paper by writing that into your business plan.
In designing a solid marketing plan and budget, you have to review your business model. Ask yourself, how do I want to attract new business? Can potential referral sources and future clients find me online easily? At a minimum, making decisions on the following investments will help you both set a budget and chart a course ahead.
Determine if you are active on social media sites (such as Facebook, Twitter, LinkedIn and Instagram). Choose which forms of advertising you are planning on investing in (such as mailers, billboards or radio). Take a look at investments in any form of search engine optimization as well as your e-mail marketing approach.
If you have drip campaigns — marketing sent over a long period of time — loaded in your CRM, look at whether the CRM is providing what you need. Birthdays and anniversaries of clients, along with rate-drop alerts, should be preprogrammed. Referral sources should be loaded in with their own specialized campaigns.
Clients should be able to find everything they need about you online, including loan applications. They should be able to choose to receive status alerts via text messages, e-mails or automated phone calls. By answering all these and other pertinent questions, you’ll end up with a fully formed marketing strategy, as well as a budget outline by adding up all the investments and improvements you want to make in the coming years.
Lenders and products
One of the biggest mistakes that originators make today is something along the lines of, “I don’t work with that kind of client.” That phrase could have many meanings. It could mean they don’t originate nonqualified (non-QM) loans, jumbo loans or government loans.
What it likely means is that the originator doesn’t have the right mix of lenders and products. That will really hamper their business in the long run. A client’s profile today can be vastly different than the same client’s profile one or more years down the road. Are you going to turn away a lifelong client in the future because you don’t offer a certain product or don’t have the right lender to facilitate that product?
At a minimum, today’s originator should make sure they have access to the following product lines through the best lenders that provide them: agency loans; Federal Housing Administration, U.S. Department of Veterans Affairs and U.S. Department of Agriculture loans; state-subsidized bond loans; non-QM and jumbo loans; hard money; and home equity lines of credit.
A forward-thinking originator is always evaluating the lenders with whom they work, to see who best supports the aforementioned products and has core expertise in them. The originator needs to consider the lender’s product expertise, technology platform, pricing, service and their client-for-life policy. Originators also should ask who owns the loan-servicing rights.
Choosing the right suite of lenders for each of the major product lines can have a huge impact on both your short- and long-term success. Make it a point to do an annual lender review as part of evaluating your annual business plan. Create a scorecard and rank them on a scale of one to 10 for each service. Get rid of the two or three lowest-ranked lenders each year and seek out someone better.
Finally, ask yourself what your plans are for the future. Do you want to remain an originator? Maybe you want to become an independent broker, partner with a certain lender, become a branch manager or even retire.
Setting goals around your future self is an extremely important agenda item, yet it’s one of the easiest things to lose track of. Remember the old question, what do I want to be when I grow up? Answer it sooner rather than later as it will inform your annual strategy and business planning.
