Mortgage Professional America June

LEAD GENERATION YOUR GUIDE TO GETTING IT RIGHT MORTGAGE PROFESSIONAL AMERICA MORTGAGEPROFESSIONALAMERICA.COM ISSUE 7.03

HARD MONEY HOW AND WHEN TO TAKE THE PRIVATE MONEY ROUTE JOE CARTELLONE THE JPMORGAN CHASE MORTGAGE BANKING NATIONAL SALES EXECUTIVE REVEALS ALL

CORRES PONDEN T

LENDING How to b rea

k into th

is lucrati ve mark et

MORTGAGE PROFESSIONAL AMERICA: THE NEW NAME FOR THE NICHE REPORT

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CONTENTS

14

COVER STORY

Correspondent lending Why this can be a lucrative channel for those who have the wherewithal to make it succeed

NEWS 6 | Round-up The biggest stories to impact mortgage originators 48 | The data Must-read statistics for mortgage professionals

30

Jodie V. Tanga Why opening a branch at just 22 years of age has paid dividends

FEATURES 26 | Lead generation MPA reveals crucial tricks of the trade to keep the leads rolling in

34 FEATURE

HARD MONEY Why hard money is a viable – and fruitful – option for closing a deal in record time

BUSINESS STRATEGY 40 | Networking Have you been taught the wrong way to network?

44 | Branding How to build your brand and boost your business 62 | Insider secrets Double your income with less work

INSURANCE INSIDERS 10 | Joe Cartellone JPMorgan Chase mortgage banking national sales executive reveals his plans and predictions 22 | Michael Mann The Fairway Independent Mortgage Corporation branch owner explains how he overcame the odds 54 | Favorite things StreetLinks president Tom Hurst talks football, Top Gun and chicken wings

2 | JUNE 2013

MORTGAGEPROFESSIONALAMERICA.COM

JUNE 2013 | 3

CONTENTS / EDITOR’S LETTER

MORTGAGE PROFESSIONAL AMERICA

COPY & FEATURES MANAGING EDITOR Robin Christie JOURNALISTS Diana Aqra, Kelli Rogers CONTRIBUTORS Nikki Heald, Julia Palmer PRODUCTION EDITOR Roslyn Meredith

ART & PRODUCTION SENIOR DESIGNER Rebecca Downing

SALES & MARKETING MEDIA SALES MANAGER Chris Brezsko COMMERCIAL DEVELOPMENT MANAGER Jon Tkach COMMUNICATIONS MANAGER Lisa Narroway MARKETING EXECUTIVE Anna Farah TRAFFIC MANAGER Tina Thomas

CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley MANAGING DIRECTOR Claire Preen CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR – BUSINESS MEDIA Justin Kennedy CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil Editorial enquiries Diana Aqra diane.aqra@keymedia.com Kelli Rogers kelli.rogers@keymedia.com Advertising enquiries Chris Brezsko chris.brezsko@keymedia.com Jon Tkach jon.tkach@keymedia.com Subscriptions Tina Thomas Ph: +1 720 452 2600 tina.thomas@keymedia.com Key Media 7807 E Peakview Ave Suite 115 Centennial CO 80111 United States of America tel: +1 720 452 2600 Offices in Singapore, Auckland, Toronto, Denver mpamag.com Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as MPA magazine can accept no responsibility for loss

A NEW START Hello and welcome to Mortgage Professional America (MPA), the new name for the Niche Report. We hope you like the newly relaunched magazine and emerge from reading it full of ideas to help you take your business to the next level.

To that end, our cover story focuses on correspondent lending – an area of the mortgage market that an increasing number of originators are delving into as they see the opportunities it presents. Turn to page 14 for the lowdown on correspondent lending and where it can fit into your business.

Hard money is another area of focus in this month’s issue (page 34). It may have the reputation of being an unforgiving industry, but we discover that it has become a viable – and fruitful – option for mortgage originators wishing to close a deal in record time.

Moving on from closing deals to opening them, lead generation has become a vital element of any mortgage originator’s business plan, and we explore the various strategies and technologies that an originator can employ to keep the clients coming in (page 26).

Throw into the mix our interview with JPMorgan Chase mortgage banking national sales executive Joe Cartellone (page 10), essential business strategy advice on how to get your networking strategy right (page 40) and build your brand (page 44), and some savvy insider tips from a real estate mogul (page 62), and we hope that MPA will become your essential business guide going forward.

Robin Christie, managing editor, MPA

CONNECT

Contact the editor: Printed on paper produced from 100% sustainable forestry, grown and managed specifically for the paper pulp industry

4 | JUNE 2013

robin.christie@keymedia.com

MORTGAGEPROFESSIONALAMERICA.COM

JUNE 2013 | 5

NEWS / ROUND-UP

Reno, Nevada

FORECLOSURES

EMINENT DOMAIN DEBATE RETURNS

NEGATIVE EQUITY

WORST STATES REVEALED

Although the end of last year finished up with property ownership still having been a bad investment for most Americans, with more than 20% of homeowners being in a negative equity position on their homes (according to CoreLogic figures from the final quarter of 2012), spare some sympathy for those in Nevada, where more than 50% of homeowners owe more than their homes are worth. In fact, CoreLogic’s data shows that just five states are responsible for nearly a third of the whole country’s negative equity.

STATES WITH GREATER THAN 100%+ LTV: THE TOP & BOTTOM 10 NV FL

52.4%

40.2%

AZ 34.9% G

33.8%

MI

31.9%

IL

28.4%

CA

25.2%

OH

25.0%

MD

23.5%

RI

23.4%

US IN

9.7%

HI

9.2%

OK

9.1%

WV

8.8%

TX

8.5%

AK

8.4%

NY

8.3%

ME MT

288,900 Employment in the mortgage banking and brokerage sector rose to 288,900 in March from 287,300 in February.

Source: US Bureau of Labor Statistics

7.9% 7.2%

ND 5.6%

6 | JUNE 2013

21.5%

Source: CoreLogic

Securities industry representatives spoke recently to officials in North Las Vegas and Richmond, California, with the goal of putting an end to the proposition of granting eminent domain powers to several US municipalities overwhelmed with foreclosures, according to several reports.

While Mortgage Resolution Partners representatives claimed the scheme would help cities recover from the housing crisis, the Securities Industry and Financial Markets Association (SIFMA) said it was unconstitutional and that using eminent domain in this way would not only harm everyday investors and pensioners but could also undermine the US mortgage market.

“We think that credit will become constricted because securitization investors will have no interest in any loans from that town,” said Chris Killian, managing director in SIFMA’s securitization group. Pointing to the Case-Shiller Home Price Index for Las Vegas, at a current level of 106.05, up from 90.21 a year ago, Killian asked: “Do you want to take the risk of wrecking our housing market that might have started to improve?”

MPAMAG.COM

JUNE 2013 | 7

NEWS / ROUND-UP

LENDING

SECURITIZATION

COMMERCIAL AND MULTIFAMILY LENDING ON THE UP Commercial and multifamily lending increased 9% in the first quarter of 2013 compared to the same time period last year, according to the Mortgage Bankers Association Quarterly Survey of Commercial/ Multifamily Mortgage Bankers Originations.

The multifamily and commercial markets have heated up since a decline in overall homeownership rates following the financial crisis, according to Fitch Ratings. Much of the growth in demand for multifamily properties during 2009–11 has been attributed to the decline in homeownership, the rating agency said.

According to the US Census, the renter population (aged 20–34) is expected to increase from 66 million in 2012 to 70 million in 2025, putting further upwards pressure on the multifamily market.

JUMBO SECURITIZATIONS ON THE RISE

Other

8.80% Government

9.40%

Mortgagebacked securities

8.80%

SHARE OF MULTIFAMILY MORTGAGE DEBT

Fannie, Freddie

43.60%

US and foreign banks

29.50%

Sources: American Banker/Federal Reserve, Trepp LLC

The 9% increase in commercial and multifamily originations was driven by a 35% increase in hotel and a 30% increase in multifamily properties, as well as a 2% increase in industrial properties, and was offset by a 6% decrease in office properties,

a 15% decrease in health care loans and a 25% decrease in retail property loans.

Top investors in commercial and multifamily loans were commercial mortgagebacked securities and government-sponsored enterprises (Fannie Mae and Freddie Mac).

5th Mortgage brokers are the 5th most inquired about and the 24th most complained about category of the approximately 800 Better Business Bureau categories.

Source: Better Business Bureau

Private-label securitizations are nowhere near pre-crisis levels, but securitization activity is picking up for several issuers. The most active have been Redwood Trust and PennyMac Mortgage Investment Trust, which have each issued several residential mortgage-backed securities trusts this year.

Redwood Trust has issued at least 12 securitizations in 2012 and 2013 that are backed by similar loan characteristics, mostly prime jumbo residential mortgages.

PennyMac also announced its own jumbo mortgage securitization in 2013 as well as a $200m initial public offering (IPO). It said its IPO will go towards funding the continued growth of its correspondent lending business, including the purchase of jumbo loans, and repayment of debts.

MORTGAGE FRAUD FACT FILE

$2.69bn

Mortgage fraud losses in the 2012 financial year

70,291

The number of mortgage frauds reported during the 2012 financial year

72%

The percentage of pending mortgage fraud investigations (as of March 31, 2013) involving losses of $1m or more

1,954

The number of pending mortgage fraud investigations (as of March 31, 2013) Source: FBI Financial Crimes Report

8 | JUNE 2013

MPAMAG.COM

HOUSING

GOVERNMENT-SPONSORED ENTITIES

FHA MAY BE REGAINING ITS MARKET FOOTPRINT

FANNIE AND FREDDIE PROFITABILITY MAY COMPLICATE WIND-DOWN PLANS

The Federal Housing Administration’s (FHA’s) role in the housing market declined following the financial crisis but may be rising again with the FHA taking several steps over the last few years to improve its financial condition.

The FHA stepped in during the financial crisis and covered roughly one quarter of all mortgages in 2010, but news that losses were exceeding its revenue caused it to take a step back and make major changes.

It increased its annual insurance premium paid by borrowers by 10bps, set tighter restrictions to obtain mortgage insurance, and began selling distressed assets on a large scale to investors.

It appears that the FHA’s market footprint may be on the rise again, after dipping to roughly 15% (of all new and existing homes) in 2011. Its market share in the fourth quarter of 2012 grew to 16.5% of all mortgages, according to the Department of Housing and Urban Development.

Fannie Mae and Freddie Mac returned to surprising profits at the end of 2012, making a complete turnaround from their near insolvency and forced government conservatorship in 2008.

The return to profitability is said to have reduced the pressure on Congress to reform or wind the institutions down, considering they are still indebted to the US government.

Fannie Mae reported $7.6bn quarterly earnings in the final quarter of 2012, a record amount. For the full year Fannie earned $ 17.2bn, compared to a $16.9bn net loss in 2011. Freddie Mac earned $11bn in 2012, compared to a $5.3bn loss in 2011.

FHA SHARE OF HOME PURCHASES YEAR

NEW HOMES

ALL HOMES (NEW AND EXISTING)

2001

7.64%

14%

2002

9.82%

12%

2003

10.03%

9%

2004

7.70%

6%

2005

5.58%

4%

2006

5.03%

4%

2007

5.97%

4%

2008

17.61%

13%

2009

26.63%

19%

2010

30.03%

19%

2011

25.57%

15%

2012

21.25%

16%

20

2012 FHA MARKET SHARE

15

% 10

FANNIE MAE AND FREDDIE MAC 2011, 2012 EARNINGS, US$

17.2bn

$

34%

of current and prospective homeowners don’t know what the term “annual percentage rate” (APR) means and 1 in 4 believe you must close with the lender that pre-approves your mortgage.

11bn

$

FY2012

FY2012

Fannie Mae

Freddie Mac

FY2011

FY2011

-$16.9bn

-$5.3bn

Source: Zillow Mortgage Marketplace

1Q 2012

2Q 2012

3Q 2012

4Q 2012

Source: Department of Housing and Urban Development

Source: Fannie Mae, Freddie Mac

JUNE 2013 | 9

HEAD TO HEAD / JOE CARTELLONE

THE CHASE IS ON 10 | JUNE 2013

MPAMAG.COM

JPMorgan Chase mortgage banking national sales executive Joe Cartellone reveals the organization’s plans for the year ahead and his predictions for the mortgage industry What is Chase’s main focus in terms of the mortgage production channel for 2013?

A. Our primary focus for mortgage production in 2013 is to grow market share, help customers realize the dream of homeownership, and deliver an outstanding customer experience. For us, it’s not simply about making a loan. It’s about making a loan that the family can afford over the long term, and deepening our relationship with the customer.

We continue to invest in this business by growing our sales force and introducing technology applications to improve the customer experience.

Over the past two years, we added 1,600 mortgage bankers, bringing our total to 4,700. We have built capacity to meet the growing demand from customers who are interested in buying a new home or refinancing their existing home.

Also, we recently introduced a new mobile app, Chase My New Home. More than 110,000 people have downloaded the app, and we are hearing great feedback from users. It allows prospective homebuyers to search and rate housing options based on personal criteria; record notes, photos and videos about the houses; calculate payments; and schedule meetings with local Chase mortgage bankers.

These are just a few of the ways we are making it easier for customers to do business with us.

Do you see demand ebbing if rates tick up over 4%?

A. I think demand will continue to be strong, even with a slight increase in interest rates.

If rates get closer to 5%, I anticipate fewer homeowners will decide to refinance their home, but I don’t think it will discourage prospective buyers from purchasing a new home. And rising rates should be a reflection of an even stronger economy, which means even more homebuyers in the market. The economy has improved, and the housing market is strong. It’s a great time to buy a new home.

Will there be growth in the overall correspondent channel?

A. We will continue to grow and invest in our correspondent channel. Today, we are the second largest correspondent lender in the country, up from the third largest the prior year. It’s a very good business for us. It gives us a great opportunity to not only service new loans but also expand our relationship with these customers by offering them other banking products, whether it be checking, savings, investments or credit card accounts.

“I think demand will continue to be strong, even with a slight increase in interest rates ... It’s a great time to buy a new home”

JUNE 2013 | 11

Head to head / Joe Cartellone

“Every month we’re seeing more signs that the housing market is recovering. The median price for new homes increased 7.2% in 2012.

New home sales in March were up 18.5% from a year prior” JPMorgan Chase made the decision to close down origination through mortgage brokers to focus on its proprietary channels. What brought the bank to that decision and what impact has it had?

A. We wanted to better control the customer experience. We’ve focused a lot over the last couple of years on direct engagement with customers. It’s the right approach for us, and one that is working.

We were recently ranked number one for customer satisfaction among large banks for originations and servicing by J.D. Power.

Brokers were made scapegoats for the dangerous lending practices prior to the financial collapse. What can they do to help to rebuild the industry’s reputation?

A. Set the bar high for the lending officers you employ. Train them well and place a lot of emphasis on loan quality.

Would Chase consider a return to the broker channel should the industry prove viable?

A. We have no plans to return to the broker channel.

We are focused on managing the customer experience and improving overall customer satisfaction.

We’ve made great strides over the last year, and we attribute much of this success to our focus on customer experience.

12 | june 2013

What is Chase’s outlook on the nearterm future of the housing market?

A. Every month we’re seeing more signs that the housing market is recovering. The median price for new homes increased 7.2% in 2012. New home sales in March were up 18.5% from a year prior. Pending home sales recently reached the highest level since March 2007.

Chase is seeing similar growth trends. In the first three months of 2013 our mortgage loan originations were $52.7bn. That’s up from 37% year-over-year. We have helped nearly 950,000 individuals and families purchase homes over the last four years. We also helped more than 2.4 million individuals and families refinance their homes over that same period of time, saving the average homeowners $200 per month.

We are encouraged by these results and expect housing demand to increase over the course of the year and into 2014.

Which markets in particular does Chase see as areas of growth for 2013?

How are you looking to penetrate those markets?

A. Our branches cover most of the core markets across the country, including California, Florida, New York, Texas, Illinois, Arizona and other major cities, and we have a top-three share in almost all of those markets. We rely heavily on retail originations and will continue to add mortgage bankers to cover those branches. I anticipate the number of loans that are initiated by our branches will grow significantly.

We are offering a number of local educational resources to arm prospective homebuyers with the information they need to make informed housing decisions. For example, we’re holding hundreds of home-buying workshops across the country at our branches and other locations in the community where people can come to talk to our mortgage professionals.

We have a multifaceted approach to communicating with new and existing customers. From our mortgage bankers in branches and in call centers, our outstanding interactive website, events we host and local partnerships we build, our tentacles spread far and wide.

Ultimately, we want to attract new homebuyers and expand our relationship with existing customers. We think we have the right products and programs to achieve this goal.

MPAMAG.COM

JUNE 2013 | 13

SPECIAL REPORT/ CORRESPONDENT LENDING

T N E D N O SP

G N I D N E L E R R CO

t e k r a m e v i t a ucr

How

14 | JUNE 2013

l s i h t to n i k a to bre

MPAMAG.COM

ext n e h t ss to nding e n i s u eir b ondent le h t e k the a e p t v s o a e t r h t r e co hose that wan h o t h o t w g s in or or t t k f c a e o n i v fl bill? g o i y r l e m o h g t e n n i t v i a s fi Lo ncrea be a lucrat ed. Do you i e r a l leve l. This can e it succe e chann ithal to mak ates. w where qra investig A Diana

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After large lenders like Bank of America, Citi and others pulled out of the wholesale space years ago, loan originators have had to look for different sources of lending to make up for the loss.

In today’s market, new correspondent lenders have entered the space to fill the gaps that larger lenders have left behind. Correspondent lending institutions (LIs) have set up robust networks of correspondent branches and independent mortgage bankers that are efficiently buying loans and selling them directly to investors, despite the difficult regulatory environment and competitive market.

Correspondent lenders work in a very similar way to brokerages but acquire more control over the entire loan origination process. Instead of waiting for a wholesale lender to close on a loan, the correspondent lender can fully underwrite and close the loans under their own roof, thereby becoming the lender, or banker.

By agreeing to be a correspondent lender, a mortgage originator can reduce ‘turn times’ on loans because they house their own underwriters,

JUNE 2013 | 15

SPECIAL REPORT/ CORRESPONDENT LENDING

“The value of correspondent lending is to control the loan origination process from cradle to grave” Rick Roque

and therefore they are the ones in charge. Furthermore, correspondents eliminate a great deal of market and liquidity risk associated with selling solely through the wholesale channel, and instead share the risk with their correspondent partners.

Correspondent lending is a little like skipping the middle man, because LIs generally have direct and licensed approval to sell to private investor banks and the government-sponsored enterprises Fannie Mae and Freddie Mac. Substantial start-up costs and training are required to become a correspondent lender, and the underwriting guidelines under correspondent agreements can be strict and somewhat standardized. But considering that life isn’t going to get easier for originators, it may make sense for them to go the correspondent route, which should increase their capacity, capital, and credibility.

THE PERKS Whether you are an independent mortgage origination company or a mortgage professional looking for another job to land, correspondent lending can offer some significant benefits when compared to the wholesale market.

One major reason for going down the correspondent lending route is the ability to retain control over execution.

As Rick Roque, vice president of corporate business development at Residential Finance Corporation, and a 20-year veteran of mortgage lending operations, explains, “the value of correspondent lending is to control the loan origination process from cradle to grave.”

In essence, the correspondent acts as the lender, writes the loan in their own name, and 16 | JUNE 2013

prepares the loan for delivery to the investor. This is different from the wholesale channel, in which the wholesale lender would close the loan in its name and then sell the loan to the investor.

So how does this arrangement benefit the loan originator? According to Matt Lee, Envoy Mortgage correspondent branch manager for Colorado and New Mexico, the correspondent channel minimizes the time spent waiting for a wholesale lender to close approvals – or turn time.

Lee also points out that originators can also achieve a lower ‘fallout’ rate (the ratio of unclosed loans to total loans) because the loan delivery agreement with the LI is negotiated up front.

What’s more, as JVM Lending owner Jay Voorhees explains, there can also be pricing benefits. The Walnut Creek, California-based loan originator explains that, by reducing the steps it takes to sell the loan into the secondary market, pricing in the correspondent lending channel can be superior to wholesale market prices.

DIVERSIFICATION Another key reason for a mortgage originator to enter the correspondent lending market is the opportunity for diversification.

Clem Ziroli, President of First Mortgage Corporation in Ontario, California, is a prime example of a mortgage professional who has recently entered the correspondent lending space in order to diversify sales avenues. Previously working solely through retail and wholesale channels, he says First Mortgage Corporation found a hole in the Federal Housing Administration (FHA)-backed correspondent lending market.

Already an active producer of FHA-backed mortgages, First Mortgage found several other smaller banks and mortgage originators doing the same thing. Ziroli then set up a correspondent lending division through First Mortgage’s corporate office to buy FHA-backed mortgages and sell them directly to Ginnie Mae. The company now has a network of local correspondents who are consistently delivering loans to his office, which also gives him a strong stream of mortgage servicing revenue.

The key to correspondent lending success, Ziroli says, is finding a niche. As he puts it, it’s about finding the guys who are doing what you do and building a network.

One area that’s currently worth considering, he suggests, is the jumbo loan product. It’s a

MPAMAG.COM

JUNE 2013 | 17

SPECIAL REPORT/ CORRESPONDENT LENDING

CORRESPONDENT LENDING – PROS AND CONS THINKING ABOUT BECOMING A CORRESPONDENT LENDER? MATT LEE OFFERS HIS KEY CONSIDERATIONS:

The positives

The negatives

COMPLIANCE BECOMES A BREEZE

‘PROCESS SHOCK’

Compliance should come easy for a loan officer working under a correspondent branch. If the branch has done all the legwork to become a correspondent, loan origination compliance should be streamlined for each officer.

Living under correspondent rules will be a shock at first for many originators who are used to their own ways of doing business. In many ways, correspondent lending means more standardized processes and bureaucracy.

BETTER CONTROL OVER LOAN EXECUTION

MORE LIABILITIES

Loan officers are given more control over a loan’s origination through a correspondent channel.

Because the correspondent branch is able to originate loans from opening to closing, they are better able to control timelines and client concerns.

Aside from buy-back risks (if loans are bad, a correspondent has to buy back the loan), correspondents should be wary of complicated compensation packages. Under Dodd-Frank provisions, loan officers cannot be paid on a per-loan basis, meaning they cannot be paid based on how much profit they generate for the lender.

Loan officers can be held personally liable if they accept a compensation agreement like this.

SOME PROFIT DISCLOSURES DISAPPEAR

As a correspondent lender, originators can waive the rebate or profit disclosures on loan documents because the parent correspondent is assuming that responsibility. Even though the originator may be making the same profit as before, he no longer has to explain to the client all the details about his compensation.

SELLING INTERNAL REFERRALS IS OK

Under correspondent lending rules, internal referral income is OK, which means that one correspondent branch can refer a client to another branch for a fee.

Under mortgage broker rules, this act is a felony.

Lee says referral income makes up about 5–7% of his income each month.

growing market, and investors are highly attracted to buying this type of product, thanks to its low risk and high balances.

Voorhees adds that, as more lenders pull out of their wholesale channels, and compensation caps become more punitive, originators should plan on “moving in the [correspondent lending] direction.”

BECOMING A CORRESPONDENT – IT TAKES TIME Correspondent lending is a growing trend as underwriting guidelines tighten and the market for mortgages continues to contract. But there’s a lot of work that goes into following this movement and becoming a successful correspondent lender.

Now that the subprime boom is over, top LIs and investors are looking for the highest-quality ‘squeaky clean’ loans, so staying on top of compliance regulations and maintaining financial and opera18 | JUNE 2013

MORE CONTROL BUT LESS FLEXIBILITY

Although there is some added control over the origination process, some parts of the correspondent lending process cannot change after the loan is closed. This means, if an important detail or cost was omitted from binding loan documents, a correspondent will likely have to ‘eat’ the costs later.

tional soundness is the key to staying competitive.

There is a stringent application process for mortgage originators to become correspondent lenders. First, originators must meet the minimum capital requirements to become a correspondent, which is usually around $1m.

LIs can be “very picky” about who they choose to have correspondent relationships with, says Rob Chrisman, a 27-year veteran of the mortgage banking industry and author of Pipeline Press.

“Sponsors want a strong sense of financial soundness from their partners, especially under Dodd-Frank’s heightened regulation,” he says.

Establishing warehouse lines of credit is one of the most challenging tasks of an aspiring correspondent. On top of meeting minimum capital requirements, originators must establish a qualifying warehouse line, which can be as high as $1m. This line will be the direct funding and backbone for their mortgage originations. Sometimes a

SPECIAL REPORT/ CORRESPONDENT LENDING

Considering that life isn’t going to get easier for originators, it may make sense for them to go the correspondent route, which should increase their capacity, capital, and credibility

correspondent’s LI will provide a warehouse line; at other times a mortgage originator may have to look elsewhere.

What’s important is that warehouse lines are built over time, says Lindsey Neal, spokesperson for Titan Lending Solutions, a third-party service provider for originators who are making the transition to bankers. Neal says lenders assess risk in different ways. But normally, if a mortgage originator can prove it has the capital and capacity to produce a large number of loans with a low fallout rate, lenders will generally extend and increase credit lines.

It’s also worth bearing in mind your parent’s motivation for buying your loans, which, as Ziroli suggests, may not primarily be to make a profit from them.

“The main motive for correspondents to build correspondent lender branches is to build their servicing portfolio,” he says.

COSTS AND RISKS In today’s correspondent business, “cash and compliance are king,” says Residential Finance Corporation VP Rick Roque. You may be operating under only one set of guidelines, rather than the many that apply to wholesale lending, but it’s a much stricter set of rules. There is a great deal of operational and technological infrastructure that needs to be established before considering going down the correspondent lending route.

20 | JUNE 2013

“[Operational complexity] is so significant that a lot of the lenders (who do not have the proper capital or operational infrastructure) are not going to survive,” says Roque.

Neal adds that some companies need about three months of ‘hand-holding’ before they can make the full transition. He points out that it takes having a team of fully equipped and trained staff to take a loan from application to closing and sale in the secondary market.

BUY-BACK RISK Aside from the start-up costs, aspiring correspondents must understand the future costs and risks this type of lending presents. And the number one risk that originators who enter the correspondent lending market will face is buy-backs – the obligation that loans that do not meet investor requirements must be repurchased by the correspondent.

In short, correspondents must assume liability for the loans they originate and sell through the correspondent channel. This is an entirely new risk for originators who have never had to worry about repurchasing a loan that later went into default.

What this means, says Neal, is that originators are dealing with a “whole new level of responsibility” if they become correspondent lenders. It’s vital that correspondents should have capital set aside in case investors find that the loan does not meet proper underwriting guidelines set out at origination.

She adds that, furthermore, many originators are simply inexperienced at dealing with loan repurchases. However, some companies will soften the blow of a repurchase request. Neal explains that Titan Solutions, for example, will find a ‘reassignment,’ or an alternative buyer for a rejected loan.

Buy-backs will be a natural course of business for correspondents, adds Chrisman. He estimates that correspondents can expect to spend 20–40% of their time working on buy-backs.

It’s also worth bearing in mind that correspondents’ liabilities may also be increased in 2014 when risk retention rules under Dodd-Frank will require lenders to hold up to 5% of their loans’ risk on their balance sheets.

COMPLIANCE DICTATES PRODUCTION Although correspondents do enjoy higher production capabilities, they should not expect to produce loans beyond market capacity.

According to Chrisman, aggregating companies like IndyMac who funneled their loans to

originators have fallen by the wayside. He believes that the days of production overruling compliance are over. Nowadays, it’s a case of ‘compliant operations’ dictating operations, he says.

A great deal of the criticism and blame for the mortgage and housing crisis was put on mortgage originators, Neal adds, but now what remains must be responsible and compliant originators.

“Overall loan quality is higher than it has ever been,” she says.

WHERE DO WE GO FROM HERE? Following the financial crisis, legitimacy and credibility have been a major issue for mortgage originators, and joining a network of correspondents could provide a means of establishing those credentials. By operating under an LI’s name, correspondents may find that it’s easier to attract the trust of other lenders, investors and clients while maintaining many of the benefits of having an independent mortgage origination company.

Roque notes that, in today’s market, small to mid-sized mortgage companies don’t have many other options to stay alive apart from joining larger lender networks, and finding the capital to grow.

Roque and Voorhees agree that most nondepository lenders and mortgage firms are simply ill-equipped to operate under today’s compliance requirements, while Chrisman adds that “it’s still an ongoing debate if the broker model will survive.”

Chisman believes that smaller, specialized businesses may survive, but medium to large operations may find that it’s worth their while setting up correspondent relationships that have agency approvals, such as Ginnie Mae, Fannie Mae and Freddie Mac.

“The key to correspondent lending success is finding a niche and building a network” Clem Ziroli

QRM EXPLAINED The Qualified Residential Mortgage (QRM), which is expected to be put into effect next year, will be an additional reason for originators to improve their operations. The rule is likely to make a 20% down-payment a requirement for borrowers, and also require lenders – including correspondents – to hold on to 5% of the risk of each loan.

PROFILE / MICHAEL MANN

RISING

FROM THE ASHES

Two and a half years ago, Michael Mann was fed up. Following a series of personal and professional challenges, he was on the brink of closing his under performing mortgage brokerage and launching a new career. Fortunately, he changed his mind and decided instead to radically change the way he did business.

The gamble paid off, and this month Mann’s team is closing 25 loans worth around $5m

22 | JUNE 2013

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TOP LOAN OFFICER MARKETING TIPS How did you begin your career as a mortgage professional?

A. I don’t believe anyone grows up as a kid, saying “I want to be a loan officer” or “I want to work in the mortgage business”. I sure didn’t! I got into the ‘so-called’ mortgage industry as a part-time loan officer in September 2002, and I say ‘so-called’ because at the time you needed more licensing to cut someone’s hair than you did to finance someone’s mortgages worth millions of dollars. I began working full-time a few months later, in January 2003, and worked for a few different companies before starting my own office in 2009.

Why did you decide to open your business?

A. I didn’t like working 9 to 5 for someone else, so I joined a national mortgage lender, Fairway Independent Mortgage Corporation, and opened my own branch in January 2009. I got into business because of the freedom and flexibility. Unfortunately, I initially thought that it meant showing up when I wanted to and doing whatever I liked, but I soon found that freedom and flexibility only come after you have the discipline to do what needs to be done first.

What are you most proud of achieving in your career?

A. Early on, the majority of my business came from refinances – it was about 25% purchase lending and 75% refinancing. Today, our main focus is to have a purchase-first mentality, and in 2012 our final numbers were 92% purchase and 8% refinance. We didn’t get there overnight; I finally decided, after reliving my first year in business over and over and over again – seven times in a row! – that I was being strung along by the refinancers, and it wasn’t a stable or steady business plan. So we used a very specific strategy to bring that purchase figure up to 92%.

Could you share a few details of the strategy you used to grow your purchase lending?

A. I made a purposeful, laser-focused business decision to go after the real estate agents in our area, in a different and unique way compared to what every other mortgage broker was doing.

Basically, I treat the real estate agent as my client, in addition to the person who is actually buying the

Plan: First you need to put a strategic marketing plan in place, and then stick to it. So many people try a strategy, and if it doesn’t work after 30 or 60 days they give up.

Connect: One of the most effective and easiest marketing strategies to run is also the one that so many people mess up, and it is consistent marketing to your database of past clients – and, in our case, realtors. You have to mail to your people every month, consistently. Not once every quarter, not twice a year, not whenever you have news to share, but every single month.

Follow up: I don’t want to sound simplistic, but when you follow up your marketing pieces with a phone call, you can end up tripling your conversion ratios. Most people will do the mail piece, but they don’t follow up with a phone call. That’s been a big key to success for us.

house, and by doing that I am able to create a new business channel with that realtor. I work with them and help them to grow their business, by teaching them how to market themselves, because the more that I help other people achieve their goals, the more my business seems to take care of itself. It’s really cool how that happens!

Did it take long to see real changes in your loan book, moving from refinances to purchase money?

A. No, it didn’t, and it’s very important to point out that it didn’t take me 10 years to achieve this – it really was a two-year turnaround. I don’t believe in letting the market dictate your business success.

The last two and a half years have not been the greatest market we’ve had – in fact, it’s been pretty ordinary. But I’ve still been able to grow my business to the point where we’re closing $5m in sales this month. And the cool part is – I don’t do most of the work! At least 80% of the work is handled by my team.

Has that been part of your success strategy – building an effective team around you?

A. Absolutely. When my daughter was born, on September 19, 2010, she was three and a half months early; at 1lb 10oz and 12 inches long, we actually JUNE 2013 | 23

PROFILE / MICHAEL MANN

Inspiration: Mann’s daughter spent 97 days fighting for her life in hospital

5 MENTORS WHO CHANGED MY LIFE My dad: The main thing I attribute my success to is having really great mentors in my life, first and foremost being my father. He taught me how to run a business and be a strong salesperson, but, more than that, he showed me that you need to go through life with a sense of humor.

Brian Peart: He reintroduced me to my partner, who is always there when I need him – the man upstairs; he reintroduced me to God. And he’s truly, truly running the show here.

MICHAEL MANN’S VISION FOR SUCCESS “When I set out to transform my business, I had a vision to achieve four things. I wanted to work less than 40 hours per week; build a competent, professional team; create systems so that my team does 80–90% of the work; and go on vacation for one week per month. People told me it was impossible, but it wasn’t. These days, I take a week-long vacation every single month. I just got back from St Lucia, and last month we spent a week skiing in Utah.

My biggest problem right now is working out where to go next month!”

24 | JUNE 2013

didn’t know if she was going to survive. She spent 97 days in the hospital, and during that very stressful time my business tanked. There was one month where we closed one loan, and the next month we closed no loans whatsoever. Although I had two people working with me, I realized, ‘If I’m not here, this thing takes a nosedive’. I considered quitting the mortgage business altogether. That night, when I went to the hospital to visit my daughter, the doctor told me that they had to sedate her because she was ‘trying too hard’. Here is a 1lb 10oz premature baby trying too hard, and I was thinking about quitting. Well, that settled it – I wasn’t quite ready to give up, so I walked into the office the next morning and said, ‘Alright, folks. What happened over the last two months is never going to happen again.

Things are going to change, and if you want to stick around, I need fighters. Are you in?’ They both said yes, and since then we’ve grown to 11 employees.

This month we closed 25 loans, of which 23 are purchase loans. And my daughter is a 100% healthy two-year-old!

How were you able to actually step away from doing so much work day-to-day?

A. Over the last 12 months, one of my mentors, Carl White, has been hugely instrumental behind me setting up my business to operate efficiently without me being there. Everyone who works in my business knows what their job is, and we’ve implemented systems and structures to make sure the same thing happens every time on each of our files. It means we’re able to deliver the best service we can, and it means I don’t work more than 40 hours a week, ever. In this business, it’s so few and far between that people do that. My team actually urges me to go play more golf, simply

Louise Thaxton: She really taught me that it’s not only about writing loans; it’s about making a difference in other people’s lives. She’s got the biggest heart, and she’s taught me to be charitable.

She’s one of the top producers at Fairway, and without her I wouldn’t be where I’m at in my career today.

Rick Ruby: From Rick, I learned how to structure a team, how to put job descriptions in place, and how to be really laser-focused on the numbers.

Carl White: He’s really become a huge factor in my life. The main thing Carl has taught me is how to focus on my strengths, and to find other people who are strong where I am weak. He’s been able to help me implement everything I’ve learned over my career, and, as a result, I’ve seen explosive growth over the last 14 to 16 months.

because that’s one of the ways that I get more loans – on the golf course.

What are you passionate about, outside of the mortgage industry?

A. I’m passionate about my family, absolutely. And I’m also driven by my purpose, which is to give back. In April this year, through a donation project run in conjunction with Fairway, the Boot Campaign, and Military Warriors Support Foundation, we were able to present a home, free and clear, to a Purple Heart recipient who was injured in Afghanistan in 2009. This April was the five-year anniversary of my father’s passing; he used to advocate for our disabled veterans, and when he was dying I promised I would continue his legacy to support the veterans.

It’s a huge cause and a driving force behind everything that I do.

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JUNE 2013 | 25

FEATURE/ LEAD GENERATION

LEADING THE WAY Lead generation is constantly evolving and, as Kelli Rogers discovers, owning your niche, being choosy with online efforts, and remembering what mortgage customers are really after are crucial tricks of the trade

T

The mortgage lead, the lifeblood of mortgage companies, is as important as ever to landing a potential customer for a mortgage loan.

In terms of growing a business and producing additional income, lead generation is king. But navigating the ins and outs of an increasingly complicated, tech-heavy marketing and advertising world is becoming yet another challenging game of risk versus reward for mortgage originators.

The process by which companies secured customer interest or inquiries was once a matter of direct mailers and radio spots. While these media are still popular, the game has changed when it comes to where the consumer is directed.

“More buyers and borrowers are online now, searching for information about loan programs,” says Mark Madsen, VP of search engine marketing at Best Rate Referrals. “Mortgage originators have more noise to compete with on the web, so driving targeted traffic to personal websites and landing pages is the primary challenge.”

The online destinations of increased traffic have also seen considerable changes. “The tools we used in 2007 seem primitive compared to what is available today,” says Scott Schang, branch manager of Broadview Mortgage Corporation. “It’s easier to make something that looks professional.”

DECIDE YOUR STRATEGY The evolution means things get tricky when deciding where your customers are, how to reach them, and the best way to measure your attempts to do so.

There are two approaches to lead generation: paid and earned, Schang says: “Paid leads stop when the money runs out, but earned business will last a lifetime.”

The approach depends on budget, and at what point an originator’s time is worth more than the money they could spend to buy the leads, Madsen says. A mortgage company can purchase leads, run a series of targeted direct mail campaigns, and improve their lead conversion systems. Depending

MORTGAGEPROFESSIONALAMERICA.COM

on the niche and loan volume, a good cost per acquisition is $350–$700 per closing, he says. Then it’s a game of managing volume effectively.

Large companies like Quicken Loans are the biggest buyers of internet leads. They are successful because they have the manpower to pursue them, says Forward Leap Marketing CEO Wade Schlosser.

But this route can also work for smaller businesses, especially those who don’t have time to dedicate to an intensive website and marketing plan.

Whether buying exclusive or non-exclusive leads, Schlosser encourages originators to talk to their lead generation company if a certain avenue isn’t working: “Develop a relationship with your company. Ask if they have different sources, different products. The problem some people have is they jump around and think someone else has the new hottest leads.”

Instead of looking at upfront costs, mortgage professionals should look at cost per lead and cost per closed loan, says LeadSource Marketing and MailerLeads president Keith Allman: “For instance, postcards don’t do well on lead generation, so even though a postcard may cost you $2,000 less than a mailer, your cost per lead would be higher.”

In most cases, all roads lead online. When establishing an online presence, Sexton & Co. president Jerry Sexton advises originators to go where their customers are: “If your target is males between 35 and 45, take a look at their demographic and what they’re looking for.”

Then tailor your marketing to your demographic, Allman says. Candidates for reverse mortgages aren’t going to be on social media, while text messaging might be a good idea for first-time homebuyers.

Online consumers want a website that has the information they are looking for, and mortgage originators should develop a website based on the keywords people use in their searches, Sexton says. “I find it very ironic when companies say, ‘We do jumbo loans,’ and I ask, ‘Well, do you have a page dedicated to jumbo

KEYS TO SUCCESSFUL LEAD GENERATION AUTHORITY Choose a niche to own.

BUYER EMPATHY Understand the needs and wants of your target audience.

TRUST Design a site and/or landing page that converts.

MARKETING Drive qualified traffic to that site/page through search engine optimization, pay-per-click advertising, press releases, content marketing, and online networks.

SALES MANAGEMENT Invest in a top lead-management system and constantly measure results – from traffic to lead, to follow-up, application, funding and post-closing.

BUSINESS BUILDING Pick a new niche and start over.

Mark Madsen, Best Rate Referrals

JUNE 2013 | 27

FEATURE/ LEAD GENERATION

ESSENTIAL WEBSITE TIPS WHY USE MAILERS

Precise targeting A good direct-mail company will complement their mailer with effective data. With ‘firm offer of credit’ so important in our industry, getting to the right consumer is not only important but required by law to use credit data.

Immediate response: Within one to two weeks, you’ll get 80–90% of the total responders contacting you.

Easy-to-track ROI: With sophisticated software today, you can track your campaign up to the minute. Even if you don’t use a software system or have one in place, it’s easy to count how many times someone calls for you.

Inexpensive: When you look at cost per funded loan, direct mail outperforms all other media.

Touch and feel: Your prospect can hold a mailer in their hands and it can’t be deleted with a ‘click’.

Keith Allman, Lend Source Marketing & Mailerleads

28 | JUNE 2013

loans?’” Sexton says. “They don’t, but they expect somebody to find them.”

Schang urges originators to give thought to how they want to represent themselves online: “Instead of saying ‘I’m going to build a website and get a bunch of anonymous leads,’ think of it as a way for people to get to know you better,” he says. “Let them see videos of you talking, solving problems.”

To increase site traffic, Madsen suggests taking advantage of successful real estate sites: “Buyers will spend four to six months on a real estate site, while they might spend 90 seconds on a mortgage site,” he says. “So put your content on a local real estate company’s website to drive targeted traffic to your site.”

BUILD TRUST It’s also important to start with a niche and define yourself in that space. Owning a niche within a city comes with branding benefits, trust and authority.

In 2007 Schang targeted a single loan product for teachers in California in low-performing schools.

Once his team started marketing to this hyper-niche, expansion was easy. Now in the niche of boomerang buyers, he says that his method of educating and empowering consumers through his blog is still the most powerful form of lead generation.

“You can drive traffic to a page, but you’re not going to have that trust,” he says. “Our emphasis on education and communication puts us at a level of control with the transaction.”

This trust is what prompts a borrower to call you over your competitor, and originators have very little time to earn it. With mortgage marketing online, says Madsen, “borrowers are looking for a reason to disqualify you, not hire you.”

NETWORK AND CONNECT Social media has helped consumers become savvier in how they research online. Integrated properly, social media marketing on Facebook and Twitter can create more traffic for an originator’s site but won’t generate leads at the level a mortgage company needs to measure the effectiveness of their investment based on funded loans. “Social networking is great for fostering and amplifying relationships,” Schang says.

“It’s a fantastic medium for staying in touch with people, but it’s more personal than it is business.”

The means of generating leads may have changed with the aggressive advance of technology and online content, but Madsen says the process is still all about the consumer. “[The] key point many originators marketing online fail to realize is that peopledo not

Know what people are searching for.

Google’s keyword tool can tell you the search volume for particular keywords.

Build pages for those specific keywords.

You need the keyword in the page title, description, header, content, and even in image tags.

Provide links to your website in press releases, links from YouTube, Yelp, etc.

Use analytics. Track how many people come to you and from where. Have goals for these visitors.

Hire a professional. There are many people who can say they build websites, but few actually know how to do it right.

Jerry Sexton, Sexton &Co.

want a mortgage; they want a home, lower payments, to pay off debt, a better life, to renovate a property.”

Schang agrees that by keying into client needs, mortgage originators will have a better chance of closing sales. “Nowadays anyone can publish anything online. The only way to differentiate yourself is to just completely focus on the consumer,” he says.

Consumers can also get anything they want for free online, Schang says. “People will cut and paste an underwriting guideline and wonder why they aren’t getting any leads. It’s because they aren’t providing a service that consumers can’t get for free.”

FOLLOW UP Follow-up is crucial to turning leads into sales, and could be the most important aspect of your lead generation strategy, Schang says. But according to Madsen, this is where many originators drop the ball.

“On average, not including niche-specific, 92% of mortgage internet leads do not get called or emailed back more than two to three times by an originator,” he says. “Even worse, a significant amount of time passes between the lead delivery and follow-up.”

Use your online presence to send regular, valuable updates to your readers, Schang suggests.

If you’ve purchased your leads, calls and emails are crucial to keeping the lines of communication open, Schlosser says. “You should have an automatic dialer, offered by companies like Leads360, so as soon as the lead hits you can be dialing out to the consumer.” An automatic email should also fly to their inbox as soon as possible, and about once a day for the first week and a half. The closing cycle

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for purchased leads can be over 120 days, so keep dropping check-in emails, says Schlosser.

It’s also important to review where your leads are coming from and which source generated the bulk of your business. “The biggest thing you can do nowadays is analyze the data from your efforts,” Sexton says. “You can track how many people came from your social media sites or pay-per-click campaign.”

“Paid leads stop when the money runs out, but earned business will last a lifetime”

MIND THE RULES

rates and scenarios and not including full disclosure of what interest rates and scenarios are based on.”

But the more rules there are, the better it is for people who follow them. Shelling out for the manpower necessary to keep up a compliant website or blog, and the repercussions should a representative of the company make a false promise or break an online regulation, can be a risk, but the reward for an honest online presence can certainly be worth it, Schang says: “Lead generation isn’t for the weak of heart or the quick-buck type. Consider it a long-term effort.”

Mortgage lead generation is governed by a strict regulatory environment, so it’s vital to comply with the Consumer Financial Protection Bureau’s regulations. “A rogue loan originator with a non-compliant blog or Facebook account could potentially cost their company tens of thousands of dollars in government fines,” Madsen says. “So the additional cost of compliance and legal has to be factored in.”

Schang adds that it’s a dangerous environment for somebody trying to trick people into doing business with them, “such as talking about specific

– Scott Schang, branch manager, Broadview Mortgage Corporation

See p53 for more essential lead generation statistics

JUNE 2013 | 29

PROFILE / JODIE V. TANGA

HOW I BUILT MY TIGHT-KNIT TEAM OF POWER PRODUCERS

Jodie V. Tanga was just 22 when she stumbled across an irresistible opportunity to set up her own branch of a friend’s mortgage company in Hawaii. A decade later, she’s her own boss and business is booming.

Tanga says the secret to her success is simple: “I work very, very hard and I embrace change” Having worked at HSBC, Jodie V. Tanga wasn’t exactly new to the finance industry when she decided to take the plunge and launch her own mortgage brokerage in 2004. But with just 12 months of on-the-job training under her belt, she wasn’t overly experienced either.

“I attribute my success to great mentors and, most importantly, hard work. I just did not give up,” Tanga says of her early days in the industry.

“I’ve worked very, very hard to find a good balance of product and service so that referrals would keep coming in. I was never being satisfied with my level of production, so I always felt a desire for continuous growth and process improvement.”

Tanga’s path to business ownership began when she decided to move back to her home state of Hawaii, and a friend offered to show her the ropes and help her set up a net branch of his brokerage.

“I basically had someone hold my hand in showing me how to start my own branch in Hawaii, 30 | JUNE 2013

which was a huge help, as he was already approved with all the lenders that I needed to work with,” she explains.

“The main reason I went in this direction is because he was very successful, made good money, had a good family life, and was self-employed, so he didn’t have a ‘boss,’ per se.”

It was a lifestyle Tanga was keen to emulate, and she wasn’t about to let her age get in the way of achieving big things.

“Being young has its ups and downs,” she admits.

“But I’ve learned that if you just keep on keeping on, most importantly with work ethic, a high level of service and product knowledge, then age will no longer be an issue.”

BUILDING AN EFFECTIVE TEAM She may have launched her business as a one-man show, albeit with support from ‘head office’ in Oregon, but Tanga has certainly learnt the value of

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JODIE’S TOP TIPS FOR SUCCESS Let go and delegate: I learned from my great mentor Carl White that if someone can perform a task 80% as well as you can, it’s good enough.

I no longer do things that aren’t the best use of my time.

Systems, systems, systems: Everyone is busy, so mortgage loan officers who set up streamlined processes and an accessible team will see increased business.

Be accessible, always: The general trend is a low level of service.

Those who are accessible will expand their market share.

Think less; act more: Don’t over-think things. If something is working for someone in your industry, chances are it will work for you – the difference is in doing it, rather than saying you will do it.

PROFILE / JODIE V. TANGA

TOP 5 HAWAII HOUSING STATS

1

Home prices in Hawaii increased 14.6% year-onyear in February, the fourth highest increase in the US, according to CoreLogic. (Hawaii’s median home price is $438,000, according to Zillow.)

2

Hawaii was among the five states with lowest foreclosures in the 12 months ending March 2013, with 421 foreclosures. This put it behind South Dakota (81) and Washington DC (101), but ahead of North Dakota (487) and West Virginia (554).

3

States like Hawaii, which have non-judicial foreclosure practices, are experiencing higher home price appreciation than states with judicial foreclosure laws, says the National Association of Realtors. Non-judicial proceedings allow foreclosures to be processed outside of the court, and in general are faster than court-processed foreclosures.

4

The Kona (northern) coast of Hawaii saw dramatic improvement in sales in the first quarter of 2013, despite low inventory, according to Pacific Business News. There were 223 home, condo and land sales, more than any other quarter since 2006, says Hawaiian Isle Real Estate LLC.

5

Hawaii is one of the states with the lowest average loan-to-value (LTV) and negative equity ratios. Its average LTV is 52.4%, compared to a national average of 69%. Only 9.2% of mortgaged property is experiencing negative equity, compared to a 21.5% national average.

time management and effective delegating. “We each have only a certain number of minutes to build our success, so time is money,” she says. “And if I’m spending time weeding through emails or taking applications, then I’m not using my time to the best of my ability.”

While Tanga knew this to be true in theory, she admits that it wasn’t a concept she put into practice right away. In fact, for five years she oversaw every aspect of her business, believing that she wouldn’t be able to maintain the same level of referrals or business leads without attending

JODIE V. TANGA’S CAREER TIMELINE 1999–2001 2002 Studied for a degree in Financial Economics at the University of San Francisco

32 | JUNE 2013

Graduated in Development Economics from the University of San Francisco’s grad school

to every task personally. “It’s easy to say, ‘When I get busier, I’ll hire an assistant.’ But the thing I didn’t realize was that I would never get busier until I hired that first assistant. By waiting, I placed a ceiling on my own production,” Tanga explains.

“I now have a partner, Derek Tanga, who is also my brother, plus two in-house loan coordinators and three virtual assistants. We are a tight-knit, small but power team of producers. I’m very proud of the high standard of ethics we’ve been able to keep consistent since the company started.”

Tanga and her partner have invested much time in developing systems and streamlining the process of who is in charge of what, so that everyone knows their role and is clear about where they fit within the business.

“This has led to increased levels of communication between our clients and referral partners and ourselves, which has led to more referrals,” Tanga says.

Outside of her business, Tanga is “extremely passionate” about health, fitness, and living a balanced life. It was only once she realized that her previous hands-on business model was actually impacting her lifestyle, rather than improving it, that she decided to make some serious changes.

“Family is my number one priority, and prior to building a team my family suffered because of the hours I worked. I’ve learned throughout this past year that it is actually possible to grow my business and work less hours,” Tanga says.

“I’m proud to have taken the risks involved with building a team for my personal production.

Because once I acted on my conviction to grow, and started to add staff to my business, I blew my selfmade ceiling out of the park.”

STAYING SOCIALLY CONNECTED One major benefit of having youth on her side has been Tanga’s ability to embrace social media

2003

2004

First job in the mortgage industry, working as a management trainee at HSBC

Returned to home state of Hawaii; started a mortgage company as a net branch of a friend’s brokerage in Oregon

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THE NEXT 5 YEARS: JODIE’S VIEW The mortgage market is about to get very, very busy, mostly in purchase money. Because interest rates will be coming up very soon, making the transition over to purchase-money loans is very important for all loan officers.

Brokers should make the transition now versus later; they will reap huge benefits if they do, and will not be on the roller-coaster ride of any slow times.

In the next five years I feel the mortgage industry will have some fallout, mostly from loan officers who have only been doing refinances and haven’t made, or can’t make, the transition to the purchase-money business.

At the same time, the purchase market is about to take off, and I feel there will be a lot of banks re-entering the market as well. The evolution, although it may take a while, will be more products and, to a degree, decreased guidelines.

The bottom line is that things will get better, and we will be able to approve more people than we can now.

strategies in her business. “We have implemented social media into our business in a major way,” she says.

“Facebook is a place where people are and want to be, so we, as mortgage professionals, need to be there too! It adds a level of connection with our clients and referral partners and, just as importantly, it also adds a level of presence in the market,” Tanga explains.

Tanga and her team have multiple professional fan pages, which are used to provide information, keep in touch with databases, and as an advertising platform to generate new leads.

Tanga also makes a point of connecting with clients and referral partners via social media avenues such as Twitter, Facebook and LinkedIn

as soon as possible after first meeting them.

While it does require a commitment of time and resources to maintain various connections via social media channels, she believes the payoff is well worth the effort.

“It’s almost like, if you aren’t on Facebook, it is pretty much just as bad as not having a website,” she adds.

“The best thing about social media is that major strategies and streamlined processes can be taught and delegated out,” Tanga says. “So it actually doesn’t take much time or money: understand it, implement it, then delegate it. Although, honestly, understanding it is not required, as long as you delegate it to the proper team member who can understand it for you!”

2006

2011

2012

2012

Broke off as net branch and started own self-standing mortgage company

Hired first loan coordinator at $10 per hour – production started to increase

Company as a whole wrote $120m in production, with 303 total units

Individual production achieved was $60m and 120 total units

2012 Hired second loan coordinator, three virtual assistants, and a personal assistant

JUNE 2013 | 33

FEATURE/ HARD MONEY

34 | JUNE 2013

MPAMAG.COM

THE HARD TRUTH

Although it has the reputation of an unforgiving industry, hard money lending has become a viable – and fruitful – option for mortgage originators wishing to close a deal in record time. Kelli Rogers investigates

H

Hard money lending has traditionally conjured up a mental picture wrought with scams, urgency and risk. But for those lenders who work in the industry and originators who take advantage of its benefits, hard money can be a welcome answer to a lending dilemma.

A source of funding for those who don’t meet the criteria for conventional financing, hard money lending is not for residential consumer borrowers but more for short-term commercial deals with clients like real estate investors, builders, developers and business owners. “Banks are a little afraid of lending because they’re still licking their wounds,” says EZ Money Lending president Jay Dackman.

“Hard money is just another option.”

And as long as the climate remains cool for traditional bank loans, the hard money industry

continues to boom, says Jeffrey Tesch, managing director of Rehab Cash Now. “There is a strong market for private lenders due to the current lending restrictions with traditional institutions,” Tesch says. “Housing contractors, real estate investors and other small-business owners are eager to find the financing for projects.”

For rehab and commercial loans especially, mortgage originators are looking to hard money lenders to secure loans for their clients.

TRUTH EXPOSED Due to their dealings with nontraditional loans and distressed properties, the misconception is that hard money lenders are mafia types, Dackman says.

“The myth is that if you don’t pay them back, they’re going to break your legs,” he says. But he JUNE 2013 | 35

FEATURE/ HARD MONEY

TESCH’S HARD MONEY TIPS 1. Know your client’s strengths and weaknesses.

2. Know your client’s project, and understand the full details of your client’s plans.

3. Always know the guidelines for each private lender and their loan programs, including the required documentation.

4. Control and facilitate the relationship between the lender and the client.

Jeffrey Tesch, Rehab Cash Now

5. Develop a good relationship with multiple lenders.

explains that hard money guys are easy to do business with, as long as both sides come to the table prepared. “They expect to be paid just like the bank expects to be paid,” he says.

“Another misconception about hard money lenders is that we lend to own,” says Pouyan Broukhim, president and CEO of PB Financial Group Corporation. “But one of our main guidelines is that our loan must benefit the borrower, meaning we like to be a helping hand for the borrower to take advantage of the opportunities that they are presented with.”

An important truth to note about the industry is the speed with which hard money lenders can close a deal.

“If a mortgage originator lands a great deal at some point in time and needs to close in a week, a bank could never do it,” Dackman says. “Hard money guys do.”

Hard money lenders don’t need to have every i dotted and every t crossed to do their underwriting, Dackman explains, which leaves mortgage originators with more options when they’re in a time crunch.

These lenders can underwrite more subjectively and without official appraisal if they so choose.

They can use any one of a number of searches to get a sense of what the value of a property might be.

The result? A lot of simplification, Dackman says.

Brandon Ideker, president of Colorado Short 36 | JUNE 2013

Term Funding, agrees that hard money lenders are important players where time is a concern.

“We can close a loan in a couple days, where it might take a month or two for the bank,” he says.

“We come in and fill the gap in that time so the originator doesn’t lose the property.”

COST OF SPEED But there is a cost for the ease of the loan. Thanks to freedom from regulation, high interest rates are the mark of hard money loans as a way to compensate the lender for the considerable risk they undertake.

“We are easier to deal with than the bank; you just have to write us a bigger check,” Ideker says.

His firm, based in Denver, charges 16% interest but with no points up front. By comparison, David Hansel of Alpha Funding Solutions, based in New Jersey, charges 14% and four points up front.

Interest rates at private lending firms can range anywhere from 12% to 21% and from zero to 10 points up front, and typically the biggest loan one could expect would be between 65% and 70% of the after-repair value (ARV) of the home, Hansel says.

Hard money lenders evaluate based on the collateral and what it will be worth when completed.

“Someone could call and say, ‘Dave, I think I could pick this property up for $250,000. It’ll cost $50,000 to rehab and will be worth $500,000 ARV,’” Hansel says. “Theoretically, if they put up no money at all, we are at a 50% loan-to-value ratio.”

“We deal with brokers who look for realistic compensation of a point or two” – David Hansel, partner, Alpha Funding Solutions

The plan should be for the hard money loan to be refinanced out of the deal as quickly as possible, he says. A realistic exit strategy is key when it comes to clients with high-interest loans.

“Even though the rates and points are high, it’s profitable if they are being used for a short-term purpose,” Hansel says.

Many hard money lenders went out of business

because they couldn’t sustain the losses when the bubble burst in 2007 and 2008, Dackman says. So the ones that survived realized they had to change their methods in more ways than one.

“Before the bubble burst, hard money lenders were generally asset based, meaning they would look at real estate only in terms of whether they wanted the deal,” Dackman says.

But he says that now the creditworthiness of the borrower is as important, if not more important.

Though the qualifying criteria for asset-based loan financing varies widely by lender and loan purpose, Hansel says many mortgage originators still think hard money lenders only look at the asset value. It’s important for originators to know that many hard money lenders evaluate each deal holistically, based on asset value, credit, borrower’s experience in the asset class, and borrower’s balance sheet, he points out.

From there, the lender can decide whether to pursue the deal or not.

“I might take someone’s bad credit if they have cash, can get the job done, and there’s a lot of equity in the deal. Someone else could have decent credit but never have done a rehab before,” Hansel says. “I might be less inclined to take that deal.”

POPULAR OPTION Despite high interest rates, the hard money business is busy.

“The banks are still trying to unload some of the distressed stuff off their balance sheets,” Ideker says. “But the distressed side has been very lucrative for the hard money industry.”

If anything, there’s more competition in the industry than ever, he says.

Hansel agrees that increased deal volume has been the mark of change in hard money lending in the past few years.

AJ Poulin, VP of sales at Applied Business Software Inc., says sales for his company, which supplies mortgage lending software, also took a hit in

MAY 2013 | 37

FEATURE/ HARD MONEY

HANSEL’S HARD MONEY BY NUMBERS TYPICAL COMMERCIAL HARD MONEY LOAN STRUCTURE

15% 20% 65% David Hansel, Alpha Funding Solutions

65% hard money 20% borrower equity 15% seller carryback loan or other mezzanine loan HARD MONEY FIX AND FLIP

Asset: Multifamily, New Jersey Purpose of loan: Fix and flip Total loan amount: $200,000 Purchase price: $150,000 Rehab: $60,000 Money down at closing: $20,000 After-repair value: $315,000

in 2008 and 2009 but completely bounced back in 2010 and afterward.

“It’s hard to come up with accurate figures on hard money lending, since the industry is somewhat invisible and falls under the general lending category,” Poulin says.

But he says hard money lenders will be around for a long time to come.

“Hard money lenders have adapted to the facts on the ground and always find a way to shift when the market changes,” Poulin says.

“There is a strong market for private lenders due to the current lending restrictions with traditional institutions” – Jeffrey Tesch, MD, Rehab Cash Now

Loan-to-value ratio: 63% Rate: 14% and 4 points origination

HOW TO MAKE THE DEAL So why should mortgage originators get serious about forging relationships with hard money lenders? They fill a need in the market, and there is money to be made, though hard money lenders feel they assume most of the risk and should reap rewards accordingly.

As with conventional loans, brokers are typically paid a percentage of the origination fee when the loan closes, Tesch says, though each lender will have different structure payouts for brokered loans.

“We deal with brokers who look for realistic compensation of a point or two,” Hansel says. “There are also brokers that look to make four points to refer a hard money deal.

We cap our brokers at two points. We assume all the risk and should reap the bulk of the points.”

Once Hansel does good business with an originator, he’s more likely to push deals through with the same contact.

But, in order to do that, there are a few things originators should keep in mind.

38 | JUNE 2013

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DACKMAN’S HARD MONEY MYTHS

“Originators should take the attitude that ‘I don’t want to put a lender in a deal where he’s going to be at risk,’” Dackman says. “They should make believe it’s their money.”

Dackman advises originators to stream their deals so that, when it gets to the lender, the lender knows there’s most likely something viable there.

“I would say from your average broker I may do one out of five deals,” Dackman says. “The brokers that are good, when they send me deals now, I do nine out of 10. Everyone’s happy.”

Tesch agrees that much of the hard money business is reliant on strong relationships.

“A large portion of the success of Rehab Cash Now depends on the broker relationship that we continually establish,” Tesch says.

It’s about full disclosure and transparency, Dackman says of mortgage originators dealing with hard money lenders.

“If everything looks good on paper and it just so happens that the property is across the street from a Section 8 apartment rental, that should be something the broker discloses to the lender, not fails to tell him,” Dackman says.

Hansel advises originators to work on deals that make sense.

“Residential brokers in New Jersey are not going to fund a $3m coal mine project in North Dakota,” he says. “Sounds far-fetched, but we are pitched similar deals a lot. Look for a deal that you would put your own money in, and, more than likely, a private lender would as well.”

While mortgage originators should come across hard money clients in everyday dealings, Dackman

1. We don’t care about credit.

2. We don’t care if you pay us back; we’ll either break your legs or take the property.

3. No personal guarantees.

4. Our interest rates bring grown men to tears.

5. Every hard money lender is connected to the mafia.

says it’s only as hard to find good hard money lenders as it is to find good originators.

“The reputation of the lender is more important than the pricing offered,” Broukhim says. “There are many lenders who are using the ‘bait and switch’ techniques to lure potential originators and borrowers to the table. If it sounds too good to be true, then it probably is.”

Bad hard money lenders sneak fees and seem evasive or are overflowing with grandiose promises, he says.

“Seedy originators and seedy hard money lenders will find each other because people of like mindsets find each other,” Dackman says. “If you’re a bad broker in terms of how you do business, a good hard money lender won’t do business with you, and vice versa.”

There will be trial and error, but Dackman advises to go by word of mouth.

Jay Dackman, EZ Money Lending

Head to mpamag.com to view our exclusive hard money lending video

JUNE 2013 | 39

BUSINESS BUSINESS STRATEGY/ STRATEGY/ NETWORKING NETWORKING

NETWORKING: ARE YOU GETTING IT RIGHT? Networking is a vital part of building up a mortgage origination business, but have you been taught the wrong way to network?

Julia Palmer explains

40 | JUNE 2013

N

Nearly every job title I have trained to network over the years has shared the sentiment that they dislike networking.

There is no escaping the fact that the word ‘networking’ has a dirty connotation in business.

In my opinion, this is because most people have been taught the wrong way to network or not been taught at all! It is an expectation of each role in some capacity or another, but unfortunately most people fear, dread, or simply avoid it. Worse still are those who feel forced to network and put on a different persona to help them cope, making them quite awkward and sometimes even fake versions of themselves – never nice to meet!

The financial services industry is one of the most networked, but the last few years have seen the gaps widen and the pressure increase. Having worked closely with some of the market’s biggest banks, insurers, mortgage originators and financial plan-

By taking a look at how you network and by making changes to be more strategic, you can increase your influence and operate in stronger networks

MPAMAG.COM

ners, I know only too well how vital relationships are to success. The good news is: by taking a look at how you network and by making changes to be more strategic, you can increase your influence and operate in stronger networks.

There is no doubt that the the financial crisis permanently altered the business environment that we work in, and the rate of change in organizations is only going to increase in the next 18 months. With this in mind, I hope to help shine some positive light on networking and the consequent networks we produce, with a view to helping individuals and organizations get better returns from both.

Apply your networking strategy to all your relationships – organizational, industry, suppliers, stakeholders, clients, community and, of course, personal.

(MODERN-DAY) NETWORKING DEFINED Networking has a somewhat negative connotation, mostly due to how it is undertaken. But this view is changing as people realize the power that lies in having strategic connections that align with their business and personal goals.

Let’s define strategic networking by outlining what it’s NOT:  It’s not just having 500+ friends on a social networking site  It’s not getting as many business cards as you can at a social or business gathering  It’s not about knowing lots of people and wanting to have coffee with all of them  It’s not simply wining and dining clients or prospects through expensive hospitality It IS about:  Planning and establishing key connections  Knowing the right people – and knowing them well  Building a set of quality two-way relationships, and not simply collecting a large number of connections  Becoming a trusted ally of your connections and becoming a hub – the ‘go to’ person in a network

ARE YOU AND YOUR ORGANIZATION RELATIONSHIP-FOCUSED? The highest-performing companies worldwide are differentiated by their ability to attract, leverage and retain relationships. Networks are more than just JUNE 2013 | 41

BUSINESS STRATEGY/ NETWORKING

WHAT TYPE OF NETWORKER ARE YOU?

STRATEGIC

This group is made up of the rare few who have invested in two-way reciprocal relationships.

Influence, visibility and communication are strong.

INVOLVED

This group is active and often has quite big networks. They can lack focus, which impacts the quality and outcomes of their network.

your customers; attention must also be given to shareholders, partners, industry, the community, and employees. However, according to research conducted by the Business Networking Academy, 75% of business people admit that their existing networks do not support the results they need, and 99% state they would like specific training on networking and network management.

The questions to consider are:  Is there a gap between your intention and how you are perceived in your relationships?  How conscious or deliberate are you at creating a network that is aligned to your role?  How conscious or deliberate are you at managing a network so that it benefits you and those in it?

Networks are powerful and relationships are important. Combine these two things with thought to the future and you have strategic networks – a strong set of relationships that can deliver mutual value to those involved. Built and maintained with care, strategic networks can then go to the next level, allowing you to potentially leverage the power of other people’s networks.

WHAT TYPE OF NETWORKER ARE YOU? Given that we all network in some capacity, it pays to look at how you do this and if it is working.

Unfortunately, many people have been taught the wrong skills and may spend a considerable amount of time and effort with no return. On the flip side, we all know someone who is a ‘born’ networker as well.

Start by identifying where you fit and then look at the steps you can take to improve (see diagram above).

42 | JUNE 2013

???

ACCIDENTAL

MISGUIDED

This group doesn’t really think too much about networking but may be in the right place at the right time, so will get occasional rewards from it.

This group exhibits incorrect skills, and often they are detrimental to relationship building, eg pronounced card collectors.

BENEFITS OF A STRATEGIC NETWORK There is a growing body of research that correlates the importance of relationships with business outcomes. Let’s face it – every time you interact with someone (potentially new or existing to your network), you can either build or lose credibility. The approach you take directly impacts the quality of the networks at your disposal.  A strategic network will give you access to people with knowledge and authority. As you build relationships with these people, you will build your own knowledge and also gain authority by association.  A strategic network will deliver you introductions, referrals and endorsements that will lift you above the commodity debate. But you’ll need to deliver real value.  A strategic network will help build your personal brand and allow you to be introduced as an authority, someone who delivers on commitments, someone worthy of doing business with.

In today’s ever-changing world, this is the best insurance against the winds of change that any individual can invest in. Your very livelihood depends not only on what you know but who you know, who knows you, and, even more importantly, who is promoting you.

Julia Palmer is a respected networking strategist and chief executive of the Business Networking Academy, providing training to create and manage networks that work. To learn more, visit juliapalmer.com

MAY 2013 | 43

BUSINESS STRATEGY/ BRANDING

BUILD A

BULLETPROOF

BRAND

44 | JUNE 2013

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Branding is more important than ever in the mortgage origination business. MPA reveals how every mortgage originator can build their brand and boost their business.

Business is not business – business is personal, and people do business with people they like, trust and perceive as being credible. The mortgage broking profession is based on relationships, so we need to consider how we can maintain this in today’s digital market.

Every day we are confronted with a mass of technology, and there are certainly many benefits to working in a digital world – streamlined processes, the ability to work remotely, increased speed, and a multitude of choices. However, in a digital environment one of the greatest competitors to mortgage originators is the direct market. Unfortunately, there seems to be a perception of ease and accessibility around applying for mortgages online. Also, people think it’s not only quicker to jump online to apply for their mortgage but more cost-effective.

So how does this impact on originators when selling mortgages? Well, it provides an opportunity for brokers to promote their value and the benefits of dealing with one individual – something the direct market cannot offer, or compete with.

VALUE OF THE BROKER The value of retaining an originator ensures personalized attention, and this enables clients to build a genuine relationship with one point of contact

at the business. There is also the advantage that brokers are experts in mortgages and can carry out comparisons, saving time for their clients. Originators also have knowledge of a client’s history and experience, so are in a prime position to ensure the correct mortgage is selected. Of course, the value certainly comes into play at the time of application, when clients have direct access to their originator who can provide support and guidance.

PERSONAL BRANDING Another way of promoting your value is to increase your professional visibility, and you can do this through personal branding.

Personal branding relates to the way you market yourself to the outside world and what message you project. It relates to how others see you, and thankfully you do have some influence over it. As we know, perception can be a powerful persuader, and your personal packaging speaks volumes.

Personal branding incorporates: • What you are – values, morals, ethics • Who you are – history, skills, qualifications • How others see you – reputation, credibility, trustworthiness • Authenticity – promoting a genuine and honest brand

JUNE 2013 | 45

BUSINESS STRATEGY/ BRANDING

“…the way in which you are perceived can influence a client’s purchasing decision” Nikki Heald

Perhaps you have not thought about your personal brand. However, research has demonstrated that the way in which you are perceived can influence a client’s purchasing decision. Getting your personal branding right may be the difference between making or breaking a potential business opportunity.

‘NO FRILLS’ OR ‘QUALITY’?

Personal branding has a profound impact on career progression. If you are an emerging leader intending to progress within the mortgage profession, ensure you promote your brand both internally (for promotions, opportunities, etc.) and externally to clients and colleagues.

Your current personal brand will influence whether you are perceived as ‘no frills’ or ‘quality’.

People like to be associated with quality, so it’s worth striving towards developing a credible and authentic brand proposition.

You may be thinking, what is the value of developing my brand? Well, you may know how fantastic and wonderful you are, but other people may not be so aware. What we do know is that some brands are simply more credible than others. When you think of Donald Trump, Oprah Winfrey or even Paris Hilton, you may think of a series of terms that you identify with their particular brand or profile. Interestingly, the perceptions we have of those brands will have a huge impact on whether you want to do business with them – and your clients are no different.

Now consider your current personal brand. Grab a piece of paper and write down a few terms that

46 | JUNE 2013

describe you. These could include enthusiastic, the go-to person, solutions-based, creative, dynamic, passionate, and knowledgeable.

FIRST IMPRESSIONS COUNT First impressions are powerful and are also an important component of your personal brand. We never get a second chance to create a great first impression, so it’s essential we get it right every time.

Statistics show that impressions are formed within 3–30 seconds, so we need to maximize that small window of opportunity. During the first impression, people are assessing three major factors related to the other person. Those factors, and the weighting of their importance initially, are shown in the graphic below.

During the first 3–30 seconds, 93% of the first impression we form about others is based on the visual, and we either like what we see or we don’t.

Prospective clients are no different.

Presentation

Speech

7% 55%

Body language

38%

WAYS TO BROADCAST YOUR BRAND After investing time, energy and commitment in developing your brand, it’s essential you consider ways to broadcast it. This is certainly not the time to be shy.

One way is through networking and hosting events. You don’t have to host a huge event; you could simply invite colleagues and clients to a breakfast. And ensure you network within your target or niche market, otherwise you are simply wasting time.

Getting published is a fantastic way to get your brand out there. Writing articles, newsletters or even books is great for your profile. You can also sit on a mortgage origination advisory board and make sure this is included in your bio.

MPAMAG.COM

GETTING THE DETAILS RIGHT Your bio is a way of promoting you. It should outline who you are, what you have achieved, and your brand proposition. Be sure to include it in any marketing material that is distributed.

Other ways of promoting your brand include chairing meetings, taking on community service, volunteering for high-profile projects, and delivering presentations.

GROW YOUR BRAND Continually work on your personal brand, and challenge yourself to take it to the next level.

Regularly review your brand and ask others for their feedback.

Again, business is not business – business is personal, and that’s why people do business with people they like.

Your personal brand increases your visibility and influences clients’ purchasing decisions. And what is said of you ultimately determines the quality of your brand.

BUSINESS CARDS Make sure they are clean, crisp and in good condition.

WEBSITE You need to have a presentable and professional website.

BIO List your achievements and attributes and include your bio in all marketing material.

LINKEDIN This is an excellent way to display your experience and skills online. Make sure you have a professional photo attached.

ONLINE VISIBILITY Write for online websites and have your profile and opinions online as much as possible.

Nikki Heald is a corporate trainer, presenter, businesswoman, founder of Corptraining, and co-author of “Views On The Way To The Top”.

JUNE 2013 | 47

DATA / STATS

GLOBAL COST OF LIVING Do your clients complain about the cost of living in their area and that it’s hard to meet mortgage repayments when grocery bills alone eat into a large chunk of their disposable income?

Spare a thought for the residents of Tokyo where, according to the Economist Intelligence Unit’s Worldwide Cost of Living 2013 report, the cost of living is 52% higher than in New York, a city that’s hardly renowned for its affordability.

10 MOST EXPENSIVE CITIES

At the other end of the scale, Mumbai, India, and Karachi, Pakistan, have a cost of living that’s just 44% of New York’s. Demonstrating the sheer scale of living costs worldwide, the statistics below give an indication of the average cost of everyday products in each of the world’s 10 most and 10 least expensive cities. According to the report, a loaf of bread will cost over $9 in Tokyo, for example, while in Mumbai it will sell for just 86 cents.

Tokyo, Japan

Osaka, Japan

1

1

1

4

4

6

7

8

9

10

Cost of living compared to New York

152%

146%

137%

136%

136%

135%

131%

128%

126%

124%

Loaf of bread

$9.06

$7.94

$5.03

$6.31

$4.87

$3.25

$6.08

$8.95

$9.40

$5.63

Bottle of wine

$15.95

$17.55

$25.38

$17.58

$25.03

$25.65

$16.74

$9.45

$18.14

$8.19

20 cigarettes

$5.57

$5.57

$15.48

$15.24

$15.72

$9.76

$8.32

$8.10

$7.30

$8.32

1 gallon of unleaded gasoline

$7.46

$7.42

$5.68

$9.88

$5.64

$6.59

$7.61

$9.01

$7.57

$7.72

Rank

10 LEAST EXPENSIVE CITIES

Sydney, Oslo, Melbourne, Zurich, Singapore Australia Norway Australia Switzerland

Tehran, Jeddah, Iran Saudi Arabia

Panama City, Panama

Paris, France

Caracas, Geneva, Venezuela Switzerland

Colombo, Bucharest, Algiers, Kathmandu, New Delhi, Mumbai, Sri Lanka Romania Algeria Nepal India India

Karachi, Pakistan

Rank

122

123

124

125

126

126

128

129

130

130

Cost of living compared to New York

58%

57%

56%

55%

54%

54%

50%

48%

44%

44%

Loaf of bread

$1.55

$1.33

$3.34

$2.27

$1.92

$1.89

$1.21

$1.11

$0.86

$1.76

Bottle of wine

n/a

n/a

$6.92

$12.35

$3.77

$11.28

$21.33

$21.38

$23.82

$14.79

20 cigarettes

$2.53

$2.40

$4.08

$3.78

$3.59

$5.01

$1.69

$2.08

$1.79

$1.73

1 gallon of unleaded gasoline

$2.01

$0.49

$4.35

$4.43

$6.47

$1.06

$5.34

$4.69

$5.22

$4.66

Source: Economist Intelligence Unit

48 | JUNE 2013

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JUNE 2013 | 49

INDUSTRY

MORTGAGE

STATS

DATA / STATS

50 | JUNE 2013

7 2 3

8

5

GLOBAL HOUSING AFFORDABILITY Have you ever wondered where America’s most affordable properties are?

According to the 9th Annual Demographia International Housing Affordability Survey: 2013, Detroit, Michigan, tops the affordability list with a median house price of $75,700, which is only just over $35k more than the city’s median annual household income of $49,800. In fact, according to the study, this makes Detroit the most affordable city in the world for housing.

The global affordability top spot is shared by another US housing market, that of Evansville, Indiana, while the rest of the top 10 are also found in the US. However, this should be put into the context of the countries examined, which were Australia, Canada, China (Hong Kong), Ireland, New Zealand, the UK and the US. So how did these other nations fare? Our neighbors in Canada had a diverse spread of housing markets when it came to affordability, with its 10 most affordable markets taking various ranks in the list from 20 to 146. Meanwhile, Hong Kong tops the unaffordable list - with a median house price that’s more than 11 times its median household income. Other cites to make the most unaffordable list include Vancouver, Honolulu, Sydney and San Francisco.

USA LOCATION

WORLD RANKING

MEDIAN HOUSE PRICE

MEDIAN HOUSEHOLD INCOME

Detroit, MI

1

$75,700

$49,800

Evansville, IN

1

$69,400

$47,500

Las Cruces, NM

3

$71,400

$36,700

Atlanta, GA

4

$106,700

$53,500

Flint, MI

4

$85,000

$41,500

Lansing, MI

4

$95,700

$47,300

Lubbock, TX

4

$89,200

$44,000

Toledo, OH

4

$86,900

$42,800

Youngstown, OH-PA

4

$82,000

$41,300

Canton, OH

10

$90,000

$42,500

MPAMAG.COM

CANADA WORLD RANKING

MEDIAN HOUSE PRICE

MEDIAN HOUSEHOLD INCOME

Frederickton, NB

20

$150,400

$65,000

Moncton, NB

20

$141,800

$61,900

Saint John, NB

33

$150,500

$61,300

Windsor, ON

33

$154,100

$62,000

Thunder Bay, ON

73

$176,400

$62,500

Trois-Rivieres, QC

73

$134,000

$48,400

Charlottetown, PEI

85

$175,000

$59,600

Saguenay, QC

85

$165,800

$56,400

LOCATION

Sudbury, ON

120

$211,500

$65,900

Brantford, ON

146

$219,600

$64,800

MOST UNAFFORDABLE CITIES MEDIAN HOUSE PRICE

MEDIAN HOUSEHOLD INCOME

1. Hong Kong

$409,800

$36,300

2. Vancouver

$607,000

$63,700

3. Honolulu

$627,200

$67,200

LOCATION

1

4. Sydney

4 9

$631,100

$76,000

5. San Francisco

$568,000

$73,200

6. Auckland

$414,200

$61,500

7. London

$473,200

$60,400

8. New York

$394,700

$63,400

9. Melbourne

$520,400

$69,400

6 Source: 9th Annual Demographia International Housing Affordability Survey: 2013

JUNE 2013 | 51

DATA / STATS

HOME OWNERSHIP: RISE AND FALL

Northeast

HOME OWNERSHIP RATE IN US BY REGION

80

Midwest South West

70

60

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Source: US Census

%

2000

How did ownership rates fare pre- and post-financial crisis? Back in 2000 the US home ownership rate hit 67.5%, and it rose as high as 69.2% in 2005. Since then, however, it has fallen by 3.8% to hit 65.4%, according to the latest US Census data.

Looking at it region by region, the Midwest now has the highest rate of home ownership at 69.7%, followed by the South (67%) and the Northeast (63.9%). The West trails the pack at 59.5% – 5.9% lower than the nationwide rate.

The graph below indicates the inflation rate movements that accompanied the fall in home ownership. According to Federal Reserve figures, the annual average inflation rate was 1.58% in 2002, rose to 3.39% in 2005, and peaked at 3.84% in 2008, before crashing to -0.36% in 2009. If you think those figures are volatile, take a look at 1976 to 1983, when the average annual inflation rate went from 5.76% up to 13.5% and then down to 3.21% - all in the space of seven years!

US

Year

15 12 9

INFLATION RATE

% 6 3 0 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979 1978 1977 1976

Year Source: Federal Reserve

-3

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LEAD GENERATION BY THE NUMBERS What mortgage originators need to know

HOT TIPS

391%

Leads called within 60 seconds have a 391% better chance of converting

138%

Attempting contact at least six times can increase the contract rate by 138%

3 or more texts

Sending three or more purposeful text messages after contact has been made with a prospect can increase the conversion rate by 328%

>50%

More than 50% of aged leads are still interested in buying 30 days after inquiry

60%

Nearly 60% of salespeople make less than six contact attempts

78%

of buyers close with the company that contacted them first

☎ CALLS

5 mins

Calling a lead within five minutes increases the contact rate by 500%, compared to calling after 10 minutes

76%

Up to 76% of high-quality leads contacted within three minutes are immediately qualified

EMAIL

16%

☎☎

Making two calls versus one increases the chance of contacting a lead by 87%

50%

of leads typically receive just one call

2.8 calls

Lenders averaged 2.8 calls per lead

24 hours

Leads that are sent email messages in between phone contact attempts have a 16% higher chance of being contacted by phone

74% of lenders failed to call within 24 hours

5 out of 19

391%

Five out of 19 lenders had instant email capabilities

100 times

Calling a lead within five minutes makes you 100 times more likely to reach the lead than if you called after 30 minutes

➨FOLLOW-UP

3.5 times

Leads that receive email nurturing have a 3.5 times higher conversion rate

53%

An average 53% conversion gain can be achieved with the recommended email timing

<1

Lenders averaged less than one email per lead

58%

58% of lenders sent email within 24 hours

Response within one minute = 391% improvement in conversion rate

47%

47% of lenders failed to make an average of one call attempt per lead

21%

Only 21% of lenders attempted to call leads within 24 hours

9 out of 19

Nine out of 19 lenders failed to attempt contact with all leads Source: Leads360

JUNE 2013 | 53

LIFESTYLE / FAVORITES

Favorite things Tom Hurst, president, StreetLinks The one-time flight instructor and pilot turned appraisal management superstar isn’t concerned with celebrities, but he’ll recite every line of Top Gun, and he’s passionate about his family

Sport: Football. I played from age eight to 25, and it’s the epitome of a team sport. I played a year for a semi-pro team when I was 24, which was an interesting adventure after I hadn’t really played in five years. I love watching the game too, and I have multiple footballs in my office that we’re always throwing around. You have to watch out or you’re going to be hit!

Tom Hurst

Book: 12: The Elements of Great Managing, by Rodd Wagner and James K. Harter. Boring, I know, but this book opened my eyes to truly fulfilling the needs of associates. I bought a copy for each of my managers.

If I was going on vacation, I’d choose a John Grisham or Nelson DeMille.

Food: Wings. Really, what’s better than chicken slathered in buffalo sauce? The best wings in Indianapolis are at a local bar and restaurant called Shallo’s.

They’re meaty, spicy and messy.

No bib for me – I live my life by just diving in.

Drink: A great red blend, Malbec or Cabernet! I’m a neophyte wine connoisseur and I’m just figuring out what I like. I’m not a beer guy and I don’t like hard alcohol, but I really enjoy a glass of red wine when my wife and I go out to dinner.

Place to be: Anywhere with my family. With four young sons and a wonderful wife, it’s the company that matters, not the location! Anytime it’s warm, we’re on our boat. We like to go down to Dale Hollow Lake, but if time is an issue we go to the local Geist Reservoir.

54 | JUNE 2013

Music: It doesn’t get any better

It’s like a bathtub relative to the number of boats, but my boys enjoy it.

than Zac Brown Band! They didn’t come to Indianapolis this year, so my wife and I flew to Tampa and went to their concert. If you picked up my iPod, you’d find everything from Johnny Cash and Waylon Jennings to Zac Brown, from classical all the way to rap.

I have about 1,200 songs, so if you can’t find something you like on my iPod, you don’t like music!

Celebrity: None – in the end, they put their pants on one leg at a time just like us. I’m sure many of them are great people, but without ‘knowing’ them, they are strangers to me!

They’re just people and they might not even be nice – we don’t know. I stick to my friends, the people I know.

Working in the mortgage industry: I love the mission

Vacation spot: Siesta Key Beach. I’ve been there every year since I was 17, and my wife since she was a baby. I proposed to my wife there, and it’s where each of my four sons’ toes have hit sand for the first time!

Movie: Top Gun. It inspired my love of aviation. I saw it for the first time in middle school. I wanted to fly an F-14 Tomcat so bad. I can still recite every line of the movie.

My team will tell you I use quotes from it every time I make a point. If we’re starting a big initiative, I say, “Tally ho, right two o’clock. I’m in.”

we’re on – the burning desire to leave a positive mark on the industry. It’s not that I think we’ve changed the world, but when we entered the space it was mired with mediocrity and complacency.

We helped lead a revolution of bringing quality and service back to appraisal management. We’ll continue to find opportunities to bring positive change and value.

I love that we have a team that has a unified vision to do that.

CLASSIFIEDS

CLASSIFIEDS AGENCY & FHA HomeBridge 855-729-2884 HomeBridge is a national wholesale lender offering both conventional and government products. We are committed to providing the highest value to our clients through competitive pricing, unique product offerings, superior customer service, and state-of-the-art technology.

Pacific Union Financial Correspondent correspondent@loanpacific.com Fannie & Ginnie direct conduit offering Niche Correspondent.

United Wholesale Mortgage 800-981-8898 Discover Lending Made Easy! UWM is a Technology Leader with UW to DU Findings, Superior Customer Service, and an Expert Sales Force. The ELITE program provides the Best Conventional Rates & Pricing in the Industry! Signing up is easy! Join our valued Broker network at www.UWM.com

800-663-0997 Use our $$ to purchase distressed properties. NO DOWN PAYMENT & NO MONTHLY PAYMENTS! We put up all the $$ as your joint venture partner OR we can lend you up to 100% of the Purchase Price + Rehab Funds. Ask for Melanie.

Kennedy Funding 800-342-8500 Specializing in nationwide fast, creative short-term bridge loans ranging in size from $1 million to more then $50 million. Loan commitments in 24 hours. Fast closings. Loans are available for note purchases, acquisitions, land development, construction, workouts, refinancing, bankruptcies and foreclosures.

Master Capital Solutions NEW 630-279-5222 National & International, Business & Commercial loans from 100K - 1B, Fast Structure and Comprehensive Services. We also have conventional, down payment and collateral assistant programs.

JUMBO

COMMERICAL

BofI Federal Bank

FundingEdge

888-883-9672 Jumbo and Super Jumbo Loans 5/1 - 7/1 and 10/1 options

830-331-4030 & 210-249-2111 Commercial Real Estate Finance, Business Finance and Oil & Gas Royalty Loans.

HARD MONEY\CONSTRUCTION\REHAB

GreenLake Real Estate Fund, LLC

Alpha Funding Solultions 732-657-2014 Rehab/Fix and flip. Foreclosure bailout. Commercial bridge.

We are a direct lender. 100K to 2MM. NJ, NY & PA. All property types and deals considered. Call or email us to run a deal by us. www.Alphafundingsolutions.com , info@alphafundingsolutions. com

FundingEdge 830-331-4030 & 210-249-2111 FundingEdge is a correspondent for agricultural land & ranch financing and providing commercial real estate financing options through its network for private money and conventional programs.

GreenLake Real Estate Fund, LLC 310-462-4637 Private direct commercial loans nationwide! All property types except raw land. Our latest fund was raised specifically for loans in this tough economy. We’re eager to lend, so please call today!

56 | JUNE 2013

JV Real Estate Partners, Inc. NEW

310-462-4637 Private direct commercial loans NATIONWIDE! All property types except raw land. Our latest fund was raised specifically for loans in this tough economy. We’re eager to lend, so please call today!

MULTIFAMILY Apartment Bank 877-442-4003 Apartment Bank, a division of BofI Federal Bank (NASDAQ:BOFI), is a Nationwide Direct Portfolio Lender that has solidified its standing as a premier multifamily lender in the small balance lending space. Apartment Bank’s flexible approach is key to freeing borrowers and brokers from the typical headaches and hassles of small loan transactions. Loan amounts from $250,000 to $10,000,000. Visit http://www.apartmentbank. com Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

MPAMAG.COM

SERVICE PROVIDER CLASSIFIEDS TITLE WORK & INSURANCE CRES Insurance Services, LLC 800-880-2747 As one of the largest providers of Errors & Omissions Insurance and Risk Management Services, CRES Insurance has protected more than 75,000 real estate professionals nationwide, since 1996.

Linear Title & Closing 401-841-9991 Linear Title & Closing, Ltd., is a recognized leader and national provider of Closing, REO, Title Insurance and Settlement Services. Our streamlined RESPA compliant process utilizes flexible software tools that are easily integrated with your system.

MGIC 888-644-2872 MGIC makes MI simple with streamlined underwriting for your DU/LP eligible loans.

Scott Bond Services 800-365-0101 A leader in providing surety license bonds, fidelity, and E&O to the mortgage industry nationwide including investor required Special Mortgage Bankers Bonds. Offering a combination of expertise, service, value, and underwriting flexibility that’s second to none.

Applied Business Software 562-426-2188 The Mortgage Office is powerful and flexible Loan Servicing and Pool Software that automates your portfolio management by streamlining your collection process, printing of checks, and sending statements to both borrowers and investors. With our many Add-On Modules you can customize and grow TMO to suit the needs of your business

Byte Software 800-695-1008 Byte Software offers a complete mortgage solution from lead generation to selling loans on the secondary market enabling lenders to close more loans in less time with a SQL database, customization, enterprise scalability, compliance and security.

Calyx 800-362-2599 Affordable software that streamlines and optimizes all phases of the loan process – from loan marketing through closing.

DocMagic 800-649-1362 The largest dedicated loan document production company in the country, delivers a fusion of solutions guaranteed to meet today’s complex loan document challenges.

International Document Services, Inc. (IDS) 800-554-1872 IDS is your mortgage document preparation vendor. With 20+ years experience IDS provides customers with fully compliant closing docs, initial disclosures & fulfillment. With superior customer service, in-house compliance & LOS interfaces, IDS far exceeds our competition.

TRAINING & EDUCATION Kaplan Real Estate Education 877-792-4473 Kaplan is the nation’s leading provider of licensing and exam prep courses. We offer the SAFE Licensing Course in the classroom and live online. To help you pass the SAFE Exam, we also offer exam prep courses in the classroom and OnDemand online.

JUNE 2013 | 57

CLASSIFIEDS

SERVICE PROVIDER CLASSIFIEDS MortgageCurrentcy.com 800-231-4787 Interpreting the complicated mortgage rules in plain language (Fannie, Freddie, FHA, VA, Compliance, Credit) that ONLY affect the loan origination side of the business. Help Desk. Rule Change Calendar. Automatic Face Book posts & Mortgage Talking Points™ for your real estate agents. Online e-zine published 2X month. Try for $1.

MARKETING & LEAD GEN

Best Rate Referrals 800-811-1402 Your mortgage marketing leader with many services available from Direct Mail & List Services, Telemarketing, Internet Leads, Mobile Marketing, and more.

MailerLeads 866-783-4053 x 14 Leader in FICO based lead generation, will help you increase your lead volume 150%. We’ve taken our highly responsive Mailer Programs and incorporated Personal Websites (PURLs) and QR Codes.

One Direct Response 800-483-5129 As a full service marketing company with over 20 years experience, we can help in all areas of your marketing needs.

Right Side Marketing 800-456-4395 Providing exceptional marketing materials for Real Estate and Mortgage professionals since 1985.

Stoneybrook Publishing Inc 800-736-3632 Monthly client newsletters proven to generate new loans from referrals and repeat business.

APPRAISAL & AMC LendersAid

866-656-8258 We are a full-service nationwide AMC and are committed to delivering exceptional customer service and the highest quality appraisal products.

United States Appraisals 866-562-0123 World-Class Service. Nationwide Coverage.

Discover Confidence in Your Appraisal Partner!

StreetLinks Lender Solutions 800-778-4920 Providing lenders with a comprehensive suite of valuation solutions, including full AMC services, self-managed appraisal software, appraisal review tools and robust servicing products.

58 | JUNE 2013

BRANCH OPPORTUNITIES American Pacific Mortgage Corporation 866-486-8159 Established Retail Mortgage Bank, providing Managers and Originators cutting edge tools and resources to make their business a success.

Guaranteed Home Mortgage Company, Inc. 888-572-3602 We’re expanding our nationwide branch network . Join a lender who invests in YOU! 20+ years, well-capitalized, wide range of products, licensed in 28 states, immediate marketing investment in your branch, Next Day Pay(TM) to transitioning branches, on Inc. 500 list of fastest growing companies.

Hometown Lenders 888-606-8066 We help you grow your branch and skyrocket your income! Our recruiters put producers in your branch, and our proven marketing maps are guaranteed to help you double your income. Get connected with other branch managers who are crushing it. Call us today to find out why our branches aren’t going anywhere. Ask us about our sign-on bonus program!

Mountain West Financial 888-845-4530 Consistent. Reliable. Competitive. With over 20 years of experience in Retail Branching, Mountain West Financial opens doors to limitless opportunities.

Residential Finance Corporation 800-785-6277 At RFC we believe the status quo simply isn’t good enough.

We’re doing retail branching a little bit differently. We start out with an award winning culture and take care of our customers, both internal and external, like family. With that basic premise met, everything else falls right into place. Partner with us!

Residential Home Funding Corp.

866-319-4442 We have a reputation of providing ongoing support and communication to every branch, every day - that is our #1 priority. Our branch offices enjoy the security of being associated with a natioanlly recognized mortgage banker. We are East Coast Experts.

MPAMAG.COM

JUNE 2013 | 59

CLASSIFIEDS

60 | JUNE 2013

MPAMAG.COM

JUNE 2013 | 61

COLUMN / INSIDER SECRETS

DOUBLE YOUR INCOME No matter how well your business is going, this real estate guru says you can reach higher while working less

WITH LESS WORK CONCEPTS TO CHANGE YOUR THINKING INNER MARKET

The outer market is what the Dow Jones did last night, what the weather did, what political party holds sway. You have no control over it. The inner market, which is the other 95% of success, is what you have 100% control over. These are the critical things that change business forever.

SHIFT YOUR PARADIGM

PERSONAL AUDIT To perform a personal audit on your effectiveness, rate yourself from 0 to 10 in each category, making sure you do so honestly. Having performed the audit a number of times, even the best originators average around 5.5–6.25 out of 10, leaving vast room for improvement. Take some time to rate yourself in the following areas, and discover where you can strive to do more. Add up your total score and divide by 8 to get an overall average score.

THINK BIGGER

If I started my business and said I just wanted to survive, it would have been a very different outcome.

REMOVE MOORING LINES

Get rid of the things you say about your industry or your life or your business that hold you back.

GOAL CLARITY SUCCESS PLAN

Change your thinking. If you think the market is tough, go talk to someone who’s just doubled their business and they’ll tell you the market isn’t tough.

If you think the best you can do is $10m a month, go talk to someone who’s doing $20m a month and ask how they do it.

PERSISTENCE

DAILY EXECUTION OF PRIORITIES

PRODUCT KNOWLEDGE

ENERGY AND PASSION

PROSPECTING ACTIVITIES

POSITIVE ATTITUDE

CLOSING SKILLS

RUTHLESSLY ELIMINATE EXCUSES

There are no excuses that stop you from achieving whatever you believe.

PASSION AND PROCESS

You can be passionate and do well, but you’ll never reach your potential until you bolt on some high-level processes that allow your passion to be channeled intelligently into unique and world-changing outcomes.

RAISE YOUR STANDARDS

TOTAL SCORE

62 | JUNE 2013

Expect more of your people in terms of productivity and customer service, and expect more of yourself.

MPAMAG.COM

12 LIFE-CHANGING IDEAS 1. PREPARATION IS FREE One of the keys to success is preparation, which costs you nothing. It’s attention to detail. It’s giving yourself a half-hour before a meeting and a half-hour after the meeting.

2. SPEED OF TRUST When Berkshire Hathaway closed a multibillion dollar deal with Microsoft, the deal moved at lightning speed, closing in months rather than the years analysts expected. Asked how it was able to move so quickly, Berkshire Hathaway head Warren Buffett said, “Because we trust each other.”

Building trust will greatly increase the speed at which you’re able to do business.

3. HYPER PRODUCT KNOWLEDGE A personal coach to top real estate agents argues that one of the primary reasons clients hire agents is for their hyperlocal knowledge. You must study your industry like a Harvard Business School course.

4. DOLLAR-PRODUCTIVE ACTIVITIES Focus on things that create revenue for your business. Moving paper from one side of your desk to another, getting yourself a coffee and going out to personally courier your documents to the lender isn’t going to grow your business.

5. IDEAL WEEK AND MORNING RITUAL When you decide what your dollarproductive activities are, it’s important to decide when to do those things. Every morning between 8am and 9am, I used to ring every client I had.

Then I would spend an hour prospecting. I made sure the things that were important to my business were getting done before the other stuff.

6. SUCCESS SYSTEMS Don’t just systemize your business, but also systemize your life. When I’m traveling, I have a checklist for traveling. It’s all seamless.

7. FIVE FACE-TO-FACE QUALIFIED MEETINGS DAILY This may seem like a lot, but it was the secret to success for a top US real estate agent.

Assuming around an 80% conversion rate, 25 clients a week could yield some atmospheric settlements.

8. BUILD A BIG PIPELINE You need to build a big pipeline because there are going to be a dozen plates spinning in the air and a few of them will fall down. If you only have six potential clients and three fall down, it’s an impending disaster. If you have 27 in the pipeline and three fall down, you don’t even blink.

9. OUT-LISTEN THE COMPETITION Originators can be very good at talking, but the real key to building client relationships is listening. If you’re meeting for an hour, you should spend 45 minutes listening to the client’s needs and concerns, and maybe 15 minutes prescribing and advising.

10. DELIVER +1% A bicycle repairman found a way to over-deliver for his customers. He knew it generally took around 45 minutes to fix a bike, but he told his customers each repair would take an hour. In the additional 15 minutes, he would perform simple tasks like cleaning the bicycle chain, polishing the chrome, or adding accessories. By taking just a little longer, he gave his customers more than they’d asked for.

11. MANAGING EXPECTATIONS People come in, and they don’t take loans every day. You need to let them know where delays occur and that if they have concerns they can call you.

12. RAVING FANS When you do business with someone, you want them to leave that transaction and say to themselves and all their friends and family, “That was the best service experience I ever had.”

JUNE 2013 | 63

MOTIVATION / DIFFICULT BOSSES

BAD BOSSES

9 coping strategies to get you through the day 01|WORK OUT WHAT PLEASES THEM

Bosses are people. Just like you do with clients, parents and spouses, find out what they want and give it to them. It’s no surprise; they will like you better.

A gift could be something tangible like chocolate or diamonds, but it’s more lasting to find out what they value. Tim loves to be loved. Tell him you love him (literally). Brad likes to know things are under control.

Say “Everything’s under control,” and show him a plan.

Sandra likes to be informed. Start every email with “Just so you’re informed.” Discover what value is important to your boss and work out how to satisfy it every day.

02|SPEAK THEIR LANGUAGE

Andrea loves to see pictures, graphs and colour. Update her with something she can see. Anthony needs to hear good (or bad) news. Make sure either is delivered in your most pleasant-sounding voice. He’ll love it if you read to him as well. Susan wants to experience your successes. Walk her through them; let her meet your prospects for a minute. Give her a moment to really get what you’re on about. Your boss has a preferred language (visual, auditory or kinesthetic are the names of the languages). Speak it.

03|

READ THEIR MIND

This may seem impossible, but what most impresses your boss is when you anticipate what they want. This means completing a task and answering the next question before they ask it. Let’s say you’ve created a Facebook page that brings in 20 new leads. Don’t just report back on the new leads. Read your boss’s mind.

Uncover where the leads came from, identify the segment, and evaluate the value of Facebook as a lead generation tool. Ask yourself “What next?”, and be ready to answer it if they ask.

PICKY, 04|IFGIVETHEY’RE THEM HALF Office politics expert Cindy Tonkin is the author of ‘Consulting Mastery: The Ability Myth: Being Good is Not Enough.’

64 | JUNE 2013

Some bosses just don’t seem to be able to keep their hands off your work. So don’t give them the completed thing to pick holes in; use their brains to help you get the job done. Don’t go in with a fully formed strategy for improving the back-office processing; go in with a

newborn strategy. People feel better about a strategy when they feel they have created it themselves. Allow your boss to have that illusion of control. And stop frustrating yourself.

05|STAY OUT OF THE WAY

One short-term strategy for managing a bad boss is the simplest. Just stay out of their way.

Keep your nose clean and stay under the radar.

OUT HOW THEY 06|WORK JUDGE YOU

Anne is not a morning person. She found out her boss judged her on how early she got to work. She managed her boss more effectively when she arrived at the office at 7am. Her boss felt Anne was working harder, even though she spent the same number of hours at the office. You may have formal performance indicators like deals completed or dollars billed, but check out if your boss has a hidden measuring system, too. They may measure you by the quality of your relationships in the office, the sound of your voice, how stressed you seem, or what time you get to the office in the morning.

07|CROWD-SOURCE AN ANSWER

Don’t reinvent the wheel; other people have worked for this person before. Some of them have succeeded well. Take them for a drink and ask for tips.

08|REFRAME HOW YOU SEE THEM

When Rosie pictures her difficult boss as a four-year-old in nappies, she can’t help but smile.

Smiling changes how you interact with the world. When you suppress negative emotions your blood pressure increases. People see this. Try picturing them with nappies and a dummy, and see if that changes how you interact with them. And never tell anyone what you’re doing.

09|MAKE PLANS

Finally, if you have tried all there is to try, then make plans to move on. If you can’t get on with this boss, work out how you can get away from them. Soon.