The Mortgage Market Shift is Coming, Part 1: How to Build Your System for Success in Any Environment

I'll never forget the day I came to the realization my business model had failed. 

My expenses exceeded my income, I had little to no liquid savings outside my real estate investments and private money loans secured by real estate – all of which were losing equity faster than I could sell them. I became aware there was a high probability I was going to lose my rental properties, all my investments…and I feared my marriage, as well.

The first 7 years of my mortgage career had been a smashing success. By the time I was 29, I had built a mortgage practice with gross commission income exceeding $1M a year. I had purchased and was managing (together with my wife and mother) about 65 rental units, I owned multiple private money notes, and I had built up a net worth of several million dollars.

For a kid who grew up on food stamps, with nothing more than a high school degree for an education, I had accomplished more in that 7-year run than I had imagined possible. 

And then the Great Recession and Mortgage Meltdown hit me like it did many in our industry. Seemingly overnight, cracks began to form and my business model showed fatal flaws. 

Even more frightening than the realization that my business model was suddenly defunct was the reality that I did not possess the tools and the skills I needed to shift rapidly. I realized that if I was going to survive, I needed to develop a new set of skills – a new operating system for success. I was going to have to take a quantum leap forward in order to survive the chaos and economic crash going on around me - and it was solely up to me to find out where to jump.

Where the Mortgage Market is Heading

I share this story with you because today we are in a similar time of rapid change, confusion, and chaos. 

While lower interest rates have been a boom for many of our businesses thus far, there will come a time when rates bottom out and begin to rise. Margin pressure will once again be a significant challenge for every mortgagee and loan officer. 

Imagine a time when many of the largest private mortgagees in the country have gone public via SPAC or IPO, and after doing so no longer need to originate loans at a profit. As long as they show a continued ability to grow and increase market share, their share prices will appreciate.

The Amazon Model

Take Amazon, for example. Jeff Bezos's company didn't make any profit for the first nine years of its existence…but its share price appreciated significantly during that time.

As Amazon grew and gobbled up market share in the mid- to late-90s, the value of its stock appreciated significantly making Bezos and his investors very rich. By 1996, Amazon had sales that reached $15.7 million. By 1997, that had grown to an astonishing $147.8 million.

But by the end of the decade, Amazon wasn't as promising as it once seemed. Despite having revenues of $1.6 billion in 1999, the company still managed to lose $719 million. Things didn't get better in 2000, when it was found that Amazon had just around "$350 million of cash on hand," despite raising billions of dollars.

Amazon finally turned a profit in the fourth quarter of 2001, which was almost eight years after being founded and six years after going public. 

Are You Prepared for the Shift?

I’m sharing this with you because I can imagine a scenario where the top mortgagees in the country begin to follow a similar “Wall Street” model to get rich (no longer needing to make a thick profit margin for their stock prices to go up).

Are you looking forward to competing with the top mortgagees in the country AFTER they have gone public and begin originating loans for little to no profit? When shareholders can get rich from share-price appreciation alone, the rules of the game will change.  

Let's also envision that while all of this is going on, the Federal Reserve is successful in its endeavor to create higher levels of inflation. The low interest rates we’ve enjoyed this past year begin to tick higher, making refinancing less appealing.

By this time, the vast majority of our clients will have refinanced at rates below 3%, and refinances as a percentage of the total mortgage market will have shrunk to the lowest level on record.

Imagine the immense competition for purchase business as refinance applications plummet and margins compress in fierce competition for the remaining purchase business. 

As a loan originator you have the gift of low interest rates and abundant business today. However, it’s unlikely these times will last much longer.

It is of the utmost importance you are ready for the epic market shift that lies ahead. This means upgrading your operating systems and learning new skills – skills you will seriously need when this refinance boom ends.

Below are the three pillars upon which I have built my operating system. I have been using and refining this process for the last ten years, and it has brought me levels of productivity, leverage, and life balance I could never have imagined. I’m confident it will do the same for you.

Pillar #1 – Say and Believe There is More than Enough Time in the Day 

Our words are strong. So strong, in fact, that we rarely ever EXCEED what we SAY. 

What we should be constantly affirming to ourselves – and anyone who asks how we are doing – is that we are blessed with opportunity today and grateful for the growth that comes with it.

The responsibility to get your daily tasks done rests solely on you, just as it rests on me to accomplish mine.

Is it easy? Hell no! But the obstacle keeping us from succeeding is not that there is not enough time in the day. The problem lies within our strategy and time integrity – we often suffer from insufficient (or wasted) amounts planning, leverage, and focus needed to get our tasks done.  

The challenge is NOT the amount of time in a day – it is the amount of responsibility we are willing to take for how we spend our time. 

There is more than enough time in a day for those who strategize how to best use it.  

Pillar #2 - Determine What Your Genius Zone Activities Are & Say NO to 1,000 Things

Your Genius Zone activities are responsible for 80% (or more) of your income, but typically only take up 20% of your time.

When I am in my Genius Zone, I am maximizing my personal economic value by performing impactful tasks that I absolutely love to do. These activities thrill me and remind me how much I love my life and my job. 

If you want to have more control of your time, you must have clarity about your Genius Zone activities. If you are not crystal clear about these you will continue to allow yourself to do things that are not worth your time, and you will continue believing there is more to do than there is time to do it.

Once you have clarity on your Genius Zone activities, your decision making is simplified and it is easier to follow the advice of Steve Jobs - say no to 1,000 other things.

For more information on how to optimize your Genius Zone, here’s an article I wrote on my process: Optimizing Your Inner Genius

Step #3 - Build Your Perfect Day

The objective of building your Perfect Day is to intentionally fill your day with activities that propel your life to a higher state. It is designed to pivot you from being frantic and reactive to focused and intentional. It keeps you focused on what is important, rather than what is urgent. 

You will know you've succeeded in creating your Perfect Day when you find yourself feeling at ease, in control, joyful, and producing at a level you've never done before

My Perfect Day is made up of a carefully thought out series of steps that help me prioritize my health, personal growth, and wealth. It allows me to fill up my tank, so I can be energized and focused on serving my family, my teammates, and my clients.

For me, business expansion came after I was intentional about my personal growth and development. I'm a firm believer that's the way the universe works and why Jim Rohn says,

"Success is something you attract by the person you become."

Once you start prioritizing taking care of yourself each morning, your life WILL change…and change is vital in our world today.

Don’t Wait to Build Your Operating System

I began this article sharing a time in my life where I thought I was going to lose it all; my wife, my business, my investments - everything I had worked so hard to create in my life.

I'll close by sharing with you the results of my new operating system. This year my team will serve over 2,500 families and originate almost $1,000,000,000 in mortgage volume.

My wife and I recently renewed our wedding vows on our 15th anniversary, and we continue to work on creating a wonderful marriage and relationship. 

I firmly believe my good health, successful marriage, happy family, and business expansion over the last decade can be attributed to the foundation of my operating system.

Finding and building an operating system that works for you is a process of trial and error. Put in the work NOW, so when the shift in the market comes you will be confident in your continued success regardless of the chaos and uncertainty that will surround us all.

In the next part of this series, I will dive deeper into Pillar #1 and explore why it is so important to watch our words and our relationship with time. There is more than enough time to get it all done – trust me!  

Josh Mettle is an industry-leading author and nationally recognized mortgage originator. He is currently a Senior Vice President and the Director of Physician Lending at Fairway Independent Mortgage Corporation. Josh and his family live in Park City, Utah.