Monday, November 15, 2010

Happy Holidays

I often speak of pipeline risk and there's no riskier time as we head in to Thanksgiving, Christmas and New Years. It's so important to look at your locked pipeline and expiration dates. Is there a heightened awareness around the holiday? I sure hope so. Are you loan officers aware which clients are going on vacation and won't be around to close or submit conditions in time? With new volume added each day, many companies fail to closely monitor their locked pipeline and the costs of extensions or expirations. Be proactive you can surely limit surprises, not to mention costs!!!

Oh, and if you hedge your pipeline or take forward positions, remember that your profitability relies on your pull-through accuracy. Deviate from your historical averages here and you'll likely see a drop in revenue as well. Trust me, it happens EVERY year during the holiday season.

Thursday, November 4, 2010

Remember Econ 101?

It was a class many of us took freshman year of college, Econ 101. It took us through the basic principles of business, finance and of course, economics. So how many mortgage bankers are following one of the first lessons, the relationship between supply and demand?

I can remember my first Econ 101 lesson; it was 90 minutes of grueling rhetoric detailing the relationship between supply and demand. Countless graphs and yield curves used to explain their correlation and how they effect pricing. Sound familiar or did you play "hooky?"

For a mortgage lender, the product is a loan but how many bankers or more specifically secondary and capital markets managers actively think of loans as their product? And then think of the good old S/D curves described throughout the first lecture of Econ 101?

The first rule of a supply and demand model: When demand increases and supply remains static, a higher price point is achieved.

For the past six months now every banker I've spoken to is running at maximum capacity. Firms frantically look to increase ops staff to handle the influx of volume but for most they simply cannot keep up. And even if they can, many then run into warehouse/capacity issues. Bottom line here is that demand is HIGH and supply seems to be somewhat limited. So what's my point? Prices!!!

We all know how the large investors react when the MBS market is rallying, lining their pockets a bit. How many bankers and capital market managers have their finger on originations, turntimes, and pricing? Truly understanding the relationship can yield tremendous profits, easily 20-100k/month, depending on your size!!!!

Managing margins like my favorite infomercial, The Ronco Rotisserie Oven, would be a mistake. Don't "Set It, And Forget It", your Econ 101 prof would surely be disappointed.

Wednesday, November 3, 2010

Referrals come from GREAT customer service!

If you do not know the value of referral business then it is time to WAKE UP!!!

I Googled "referral business" and one of the top results was a website listing their top 5 tips for generating referral business. What was Tip #1?

1. Referrals always begin with providing your current customers with prompt, reliable, quality service. They’ll be happy to spread the word on your behalf—often without you having to ask.

No surprise here. SERVICE SERVICE SERVICE your clients as best you can at ALL TIMES. This is what you need to be all about. Going above and beyond to create an inimitable experience based around prompt, reliable, quality service. The kind of experience that your clients will want to climb to the mountain tops and shout about.

The simple truth is that excellent customer service is more rare than you think. You may believe that you have to make some major changes to how you do business to become the well rounded banker that you aspire to be. The odds are that you do not. Start by making small changes like:

- Having an upbeat attitude when you pick up the phone. (Clients can hear this and your positive energy can drive the conversation in the right direction).

- Spend more time listening to your clients. (They will tell you everything you need to know to close them IF you allow them to speak.)

- Keeping appointments for phone calls. (Your client's time is precious. Even if they are retired and home all day you should still stick to the schedule to show that you respect them.)

- Delivering good news quickly and bad news even faster. (My rate dropped? I'd love to know. My loan can't close? I NEED to know NOW.)

- Sending thank you cards to closed clients. (They make a huge impression but are undervalued by most salespeople??)

How important is your career to you? Make the investment of time and effort to deliver the kind of service that will bring referral business in the future. Act NOW and reap the benefits tomorrow.