One of the reasons the mortgage business cycles from boom to bust so frequently is that the industry's collective knowledge doesn't get passed along (or does and is forgotten).
What other explanation (other than magical belief) can account for the fact that negatively amortizing mortgages were at the core of the last two mortgage collapses?
Fortunately, there's a way to mitigate this problem. And it has the side benefit of being extremely gratifying for those who do it.
I've just come back from an exciting week of mentoring young people in Santa Clara, Calif. And while my experience was with young journalism students, I'm sure mentoring young mortgage recruits or finance students could be equally rewarding.
Mentoring has obvious applications for increasing minority and female presence in the mortgage industry. But it is not limited to that. For instance, the mortgage business is rich in trainers. When I was editor of Broker magazine, I got to work with many of the top trainers in the business, including Greg Frost and Karen Deis, who still writes marketing columns for us in National Mortgage News and Origination News.
And while training usually is for-profit rather than volunteer work, a considerable amount of mentoring of young trainees did go on in the mortgage seminars I attended. I remember Greg Frost giving one young guy a list of potential mortgage leads to try, each of which was deemed undoable by the extremely green mortgage originator. Greg didn't give up but went on until he came to something the trainee said he could do. That was passing out pamphlets in his apartment building, which potentially was filled with people wanting to move up to ownership.
Another young guy raised his hand and asked, "How do you get referrals from a real estate agent?" Sounds like a dumb question, but obviously this guy's whole career had been in refinancings and now he was facing the prospect of having to go out there and get leads for the purchase market. That young originator also got some valuable mentoring that day.
The trade groups, like the Mortgage Bankers Association, have their own education programs that can be used for professional development and mentoring. But some mortgage officials have obviously given a lot of thought to mentoring and recruiting issues on their own.
Nancy Alley, vice president of strategic planning at the electronic recording vendor Simplifile, has her own take on the value of mentoring. A lot of mentoring programs have "mixed results," she said, because they don't get practical enough. She prefers a "sponsor" approach, where a manager or mentor gets behind a person's career, talking about them to people in the industry, putting them out there in the way of opportunities or interviews, and pushing them to challenge themselves. The sponsor approach "really resonated for me for my own career," said Alley, a veteran technologist who won the Mortgage Technology magazine Steve Fraser Visionary Award in 2012. I'd call this approach mentoring on steroids.
Alley participated in a panel on attracting women to mortgage technology at this year's MBA tech conference. The focus of the panel, she said, was "why do women opt out of mortgage technology?" Research indicates women may be opting out of seeing themselves in tech careers "as early as grade school." And that's because some women have a perception of themselves as not being capable to succeed in technology, she said.
Debra Still, MBA chair for 2013 and only the second woman to lead the group in its 100-year history, has said mentoring mortgage women was a key part of her term. In her exit interview with National Mortgage News, she described women repeatedly reaching out to her for advice on professional advancement after many of the dozens of appearances she made around the country during her year in office.
By mentoring the new recruits in the business or the kids who are thinking about entering the field, mortgage executives can give new meaning to the term "mortgage pass-through."
Mark Fogarty, editor at large for National Mortgage News, brings more than 30 years of observing the mortgage business to his analyses of the industry.