industry need to return to putting ethics over earnings, principles over profits and re-centering the American Dream of Homeownership on the age old firm foundation of “secure at home” ownership, rather than “size of home” ownership. Where obstacles abound, opportunities much more abound. In the next five years, we are going to have an abundance of both. Remember, the greater the obstacles, the greater the opportunities … and the greater reward! David Lykken is president, mortgage strategies and managing partner with Mortgage Banking Solutions. David has
more than 34 years of industry experience and has garnered a national reputation. David has become a frequent guest on FOX Business News with Neil Cavuto, Stuart Varney, Liz Claman and Dave Asman with additional guest appearances on the CBS Evening News, Bloomberg TV and radio. He may be reached by phone at (512) 9779900, ext. 101 or e-mail dlykken@mortgagebankingsolutions.com. To listen to author David Lykken’s online radio show, log on to www.blogtalkradio.com and type in “Lykken on Lending” in the “Search” box on the right-hand side of the page.
The Future of Mortgage Banking By Tommy A. Duncan
My company, like so many others, is changing the way we conduct business to keep up with the ever-changing market and environment. We are focusing on several tenants in our business: Customer service, technology and quality.
Customer service/phones
mation is secure and protected, which is why every data center should make an SAS-70 Type II Certificate available. Customers want seamless integration and processes, and providing this through a variety of technologies in order to reduce work load efforts for efficiency is what today’s customers expect.
Quality
MISSOURI MORTGAGE PROFESSIONAL MAGAZINE O SEPTEMBER 2009
Make it a point that all The end result or the final phone calls are answered, product must be of great even if someone dials a quality from the perspecdirect line. After four rings, tive of the customer. If the lines hunt and the you have the best cusphone dials the all lines that tomer service and have are available or forwards integrated the best techthe call on to an on-call repnology, it will not matter resentative. Customers want if the final product has to speak to a person regardnot met the customer’s less if they are helped or expectations. Two years “Yes, we are all impactnot. When customers call, it ago, my company (Quality ed by regulatory and is usually a sense of urgency Mortgage Services), rebecause they are trying to legislative changes, but evaluated these three tenthere will continue to get approved with Federal ants of customer service, Housing Administration be a demand for home technology and quality, (FHA) loans, a line of credit and property financing. and set goals to strive to with an investor or they are The professionals who make this our core combeing audited. These things petency. The results have plan and prepare for are important to the cusenabled us to gain more these regulatory tomer, and because they business and grow as a are routine in daily opera- changes will be the ones respectable business in tions, every customer who will be able to per- the industry. form the financing.” must be treated as if they are the company’s sense of On the horizon urgency to support them The change that we see on in resolving their problems or concerns. the horizon that may be necessary to keep up with an ever-changing market is Technology change itself. Everything is changing in Customers want to feel that they are the industry. Those who do not change getting the best when they ask for serv- with the industry will surely fail. In order ices. Show them the additional value of to stay current with the changes, one technology in providing their results. Customers want to feel that their inforcontinued on page 36
www.NationalMortgageProfessional.com O
two times in a month, then, in effect, score this point, consider the closure of they could fund $20 million of mort- TB&W in August. The takeover of Colonial gage loans in a month and if they could Bank was the catalyst of this very large turn is three times a month, they could independent mortgage banker to close its doors. TB&W’s closure had a huge impact fund $30 million dollars a month. If Colonial’s warehouse banking cus- on many smaller independent mortgage tomers turned their warehouse lines companies who were selling them loans, two times a month, then more than $8 the impact of which is still having an effect. Again, this is a serious crisis that not billion dollars of funding would have been immediately removed from the only threatens the survival of many indemarket. Without this happening, the pendent mortgage bankers today, but also mortgage lending industry is already a significant percentage of the funding experiencing a capacity issue because capacity that is badly needed to fuel and of so many lenders going out of busi- facilitate the economic recovery this ness, or if still in business, they are nation so desperately needs. It has been already operating at maximum funding suggested that the lack of warehouse line capacity. Is it any wonder when the liquidity in the residential financial marFederal Deposit Insurance Corporation kets could be the Achilles tendon of an (FDIC) negotiated BB&T taking over economic recovery. As a result, the U.S. Colonial’s branches that FDIC required Treasury has been meeting with mortgage as a part of the deal that BB&T keep bankers and warehouse lenders. There Colonial’s warehouse banking unit has been talk of letting Fannie Mae, operational for a minimum of one Freddie Mac and Ginnie Mae get involved year? If they hadn’t, it would have ugly. with warehouse lending for a season, but that now has lost Taylor Bean & momentum with the Whitaker (TB&W) “In fact, I will make this bold departure of Joe had to close its statement at the front end of this Murin as president doors as a result of article … “More wealth will be of Ginnie Mae. The the Colonial Bank created in the next five years in Treasury could do failure. Many mortgage companies mortgage banking than in the past much to alleviate this crisis without 25 years!” would have either spending one dollar been forced out of business or forced to significantly of tax payer money in the form of another bailout. One such possibility is to get reduce their funding capacity. Because of a serious warehouse funding the Federal Home Loan Bank involved. shortage in our country, it can take three to Bottom line is that we need leadership six months at a minimum to obtain a new and action from the number one “C-Level warehouse line. Not only that, every ware- Suite” in the country, the White House … house lender still in business has “raised specifically, President Barack Obama and the bar” of minimum requirements. Sadly, his administration. many independent mortgage bankers would not qualify today for a new ware- The opportunity and the challenge house line if they lost their existing line. For the most part, most warehouse At the beginning of this article, I made this bold statement: “More wealth will lenders require the following: be created in the next five years in 1. Higher “tangible” net worth levels. mortgage banking then in the previous Tangible is synonymous with cash or a 25 years.” As outlined above, the road very liquid asset. With the exception of to these potential treasures may be a few remaining “capture” warehouse treacherous and tumultuous, but it will line providers, it is difficult to get a come to pass … mark my word. My warehouse line with less than $1 mil- hope is that for those of you who have lion tangible net worth. Most won’t talk made mortgage banking your career of unless there is a minimum tangible net choice, will see these “obstacles” as “opportunities” to be overcome knowworth of $3 million, preferably more. ing that doing so will position you to be 2. Almost without fail, every warehouse one of the few that make so much. The lender requires a company be prof- good times typically don’t bring about itable for the past two years. Many com- enduring riches. Hardships, while never panies have struggled with profitability pleasant for the season, cause our roots over the past two years. As a result, to grow down deep, positioning us for many otherwise good companies are that which endures … something that being turned down even if they have involves much more than just riches. Above all else, and even more turned the corner and are profitable important than any riches that could be today. earned, I challenge each of you to leave The warehouse liquidity crisis isn’t limit- a legacy of excellence for the next gened to just smaller companies. To under- eration of mortgage bankers. We as an
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