An Industry Servant to the Rate! Time to Move to the Offense!

The million-dollar question seems to be "What should we expect in 2023"? And depending on who you ask that question to in the mortgage industry you are likely to get a range of answers both economic and tactical on how to tackle what lay in front of us. Also, it has become incredibly apparent that professionals in the mortgage industry still by enlarge got caught by surprise on the turn of the market both mentally and financially, leaving them both caught off guard and ill prepared for the market that ensued most of this year.

But that to me is not the major issue here. What I see is an inexperienced originator and a poorly lead mortgage pro in many instances with bad sales advice from leaders who have forgot what is needed in this market.

As an expert mortgage banking professional for 35 years and today an expert executive mortgage & real estate consultant, I am emersed inside the boiler rooms and board rooms of hundreds of companies in our space. And of course, I am reading, writing and educating on the market, the tactics of selling this market and I am drawing from both experience and proven results in helping professionals make emergent business decisions.

I have, without question, seen some major consolidation and dire moves made this year in life saving measures for companies' preservation. I have helped make the shot calls after reviewing financial forensics for companies that requires a thick skin and complete resolve. And I say all of that telling you I know that a fair percentage of damage has occurred at the hands of slow to respond originators and poorly lead originators, who for the better part of Q4 2021, Q1 2022, stood as if deer in the headlights waiting for the return of prior rates. It would not be until Q2 that they began to hit the road and open their eyes and ears to market strategies that had been being sung from experts who know this market.

I also believe executive leadership has had to address such emergent consolidation they have taken their eyes off the prize of playing the offensive game.

Now, I say this knowing many originators may say no, so I will validate the above statement by saying my company which consults and coaches hundreds or originators found it difficult with a constant and immediate swift provision of detailed sales tactics. Tactics starting with acceptance of the rising rate, understanding of the equity benefits financially to homeowners and also a return to a purchase focus development and with a daily focus for hours a day with hundreds of originators it took several concerted months for them to begin to turn the tide of their sales conversions. We are proving the tactics true with a steadfast and daily resolve to honoring them in our sales efforts.

I was not surprised to find resistance at the originator ranks and to find that I needed to wrestle pros out of their bad habits formed over the tsunami of sales from the prior three years having been servants to their rate sheets. These changes would begin to slowly obliterate their now poor sales tactics through consistent daily iteration of education that of repeating pricing objection education, true economic education (because they really don't know what they are talking about with economics at the loan originator seat) and actual digital strategy that would convert. And here is the exciting part, it is consistently working finally!

The wind in our sails became the consumer palate warming up to the new rate levels, mortgage pros being more willing to try awkward selling tactics that has veterans calling upon their known selling tactics yet forgotten from past rising rate markets. Never mind the thousands of new to market originators that simply lack experience and thus ability to even represent this volatile market, that we have been so rudely re-awakened to.

To expand upon the image in this article header, money is being lost hand over fist by organizations allowing inept leaders to run their sales forces as they always have without proper understanding of what to do while raising the heat on the necessity to act fast. That is happening because sales leaders are often the best quarterbacks from the last great volume surge but not the best leaders in emergent markets like this. The problem is that they have never had to run with the ball in a down-turn market or they don't understand what is different about this market compared to say 07' & 08'. When polling originators about the differences of the market I found quickly they didn't understand the difference. We have since dove into education on this front now giving them the confidence of this market and what is great about homeownership today verses then. That has helped them get moving, but those lessons can't be given in another language that is too economically savvy for their speak. Breaking that down has helped them speak with confidence to the consumer.

Likewise, the confidence to overcome pricing has to also come from a place of understanding on how to give regulatory lessons on the protection of the consumer giving them the reassurance they can't be taken advantage of any longer. Consumers need to be explained the rate verses fee teeter totter of risk-based pricing and what that looks like competitively and their options. Loan Originators need to have to have solid pricing dialogue, to be able to cast doubt into the minds of the consumer about the rate quote they just received to a shopper as a theoretical quote with improper qualifying processes which is the case 75% of the time.

Understanding how to also warm the consumer up to raising their rate right now is actually far easier than anyone thinks when in theory the necessity and financial intelligence to do so is explained by a mortgage professional easily. Taking the time to examine the full benefit for the consumer of their options is something not being done. But loan originators are so out of practice at actually doing a thorough job and are so married to a rate sheet in their thinking about whether they are providing great service that companies are dying more by this mindset than the actual inability for volume to be found by originators who understand millions of people need us right now.

Finally, how we make the phone ring right now is a key player in the entire picture. Lead providers are mopping up with good and bad lead provision both, either way they are creating desperately needed activity and serving some form of thirst-quenching results needed by the masses. There is something to be said about the originator who stays sharp, in this market with iteration of selling. Also, organic efforts need to be incredibly pointed on social media strategy to capture the homeowner who does understand the benefits of a mortgage in this kind of market.

All of this will play a part in 2023. As I write this mortgage originators are dreaming of lessening rates that will resurge their pipelines while companies are still grappling with the massive downsizing needed to survive. The awakening of over-spending in the last few years is prevalent both at the originator seat and the company owner seat. And while everyone settles down into a new spending level and a new earning level, the real victors are practicing the strategies above with great conversion. The focus needs to go to the consumer spending that places homeowners right in the cross hairs of needing cash out refinances still and many very badly right now as you are reading this article. Yet the interest rate is keeping our originators at bay.

For me and my team, my company and the 65 professionals who work for me, we have had hope and a keen belief system that in fact we can sell this market, and we have known this all along. I have known from the moment of the first great wave crashing in against the bow that we already had everything we needed to survive this market, but I also knew it felt like the same storm we once endured previously. In my prior life when 07' hit I was at the helm of a national retail mortgage firm, H & R Block Mortgage and it would fall to complete closure ahead of the market implosion. I would continue on to lead troops through the markets of 08' and 09' and without any breaks whatsoever. It seemed an impossible feat, there was no equity, no demand for homeownership, high delinquency and default and complete collapse of our mortgage market. Hitting the streets back then was impossible and daunting, discouraging and depressing. We hung our hats back then on short sales and mortgage modifications, dare I utter those words aloud...but no, we are NOT there anymore.

We have forgotten what made us great, how we got here and I think how we will actually win forward, if you ask me. I have successfully been able to get mortgage pros to sell well and convert high in this market and I have even taught them strategies related to fishing for real estate sales to provide warm referrals to their real estate partners, I call this "Bring bread to the table" selling theory over the same old pre-qualified buyer plans that originators continue to do which is in theory bringing more mouths to an empty table.

Yes, 2023 is going to be about education and when executives actually lift their heads from their life saving expense cutting and consolidation work and move to the offense, they will find the answers are different than most of their existing sales leaders remember.

I know this article will seem self-serving, but it's not. I truly hope that institutions get it right. That we can do great before the rates drop again, that we can book thousands of loans in the 6's and 7's even that will help us have a future refi market that will follow. But most of all I hope that mortgage professionals learn to be just true mortgage experts. Our futures are depending on us getting this right.

We have learned and changed as an industry so much, but I am not sure we have made mortgage originators great yet. Yes there are some really incredible, great and knowledgeable originators and they know who they are, but there are fewer than you think that are true experts.

I think it's time that the masses really become great and learn true economics, true pricing dialogue and true marketing strategy that supports a needing consumer in the right and most integral ways and that we stop reacting to the rate as if it's the complete barometer of our industry. If we continue to allow rate to be our director, we will be a servant to it forever and we will fall and rise with it opposingly. Which is where we are right now.

I hope the pain of where we are right now makes executives in our industry ask for better sales leadership because driving the troops through this war requires a keen understanding of the lay of the land, a plan with a real map and a leader that is fearless, resolved and of the real belief that this market can be won, as it is, rates and all. THAT is the solution for 2023. When we finally get to paying attention to it.

Until then I will be leading mortgage professionals to the holy land of expertise one class at a time. I know that from educating mortgage companies as well as originators that a better originator will emerge. Companies will get it right if they are willing to face the fact that what they are doing right now is not working.

What will you be doing in 2023? What is your focus? I ask and hope you will share.

Please drop a comment on my strategies and best of luck to you in 2023.