What differentiates top-producing mortgage originators from their peers is that they have multiple customer acquisition strategies, they have a higher level of product knowledge and they perform value-added pipeline management activities. What they don’t spend their time on is administrative activities and nor should they, said the chief executive of Mortgage Success Source, Holmdel, N.J.
David Fournier, during a session and follow-up interview at the Mortgage Bankers Association Loan Production Conference in New York, said his observations were based on the results of an MSS study released at the show, “Mortgage Loan Origination: Reaching Peak Performance During Challenging Times.”
The market has changed, Fournier said, and loan officers today have to go out and get clients by developing and cultivating relationships and by being there when the consumer has a need.
MSS, which is the parent of Mortgage Market Guide and LoanToolBox, started out as a mortgage broker centric company. But now, about 40% of its subscribers are mortgage bankers. As the market changed, the company needed to change, he explained, so it commissioned a study for internal use. The study gave MSS an incredible amount of data it felt it needed to share with the industry.
The information was gathered through an online survey by FirstUSA Data with 3,600 respondents. There were over 500 follow-up calls made.
Fournier said the loan production spectrum could be divided into three tiers. Over a three-year period, the top producers originated 430 loans on average with volume over $96 million.
The middle tier did 128 loans on average with volume of $27 million, while the bottom third did just 66 loans on average with under $11 million in volume.
For the preceding 12 months, the top one-third averaged 150 loans and $34 million in volume. The second tier was less than half of that on average, at 68 loans and $14 million, and the fall-off to the third tier was by half again, to an average of 35 loans and less than $6 million in volume.
There is good news for those managers with producers in the lower two tiers: the originators in these groupings can be moved up if they have access to the best resources and learn how to focus their time and effort on customer acquisition and gaining product knowledge, he said.
He said the study found the top group did not have better training or more experience than the members of the other two tiers. What they were better at was maintaining customer contact and reacting to the changes in the marketplace more quickly than their competition.
The study found that the top producers spend at least one-third of their time on acquiring new customers and maintaining relationships with prospects and former customers.
Specifically, their priorities were to tend to their existing referral sources, develop new referral sources and database marketing. All three were cited by at least 40% of respondents as a high priority.
Surprisingly, few loan originators spend a significant amount of time on social networking or data mining. The study calls this “a slower-than-expected adoption of customer acquisition activities that many experts say will become increasingly important in the future.”
Fournier added that originators could not ignore what consumer eyeballs are looking at now, when it comes to social media.
He said the top performers use three times more customer acquisition strategies than their lower-tiered colleagues.
As for acquiring knowledge about products and industry trends, the study found that just 28% of mortgage loan officers spend at least 30% of their time in this area. But of the group that does, 60% were in the top one-third performance grouping, while 5% were in the bottom tier.
Enhancing product and financial knowledge is considered to be the factor that generates the highest improvement in performance, the study added.
Top performers tend to rely on trade journals and publications more heavily than the others for information, and they complete more accreditation and licensing coursework.
When it comes to pipeline management, top performers in general spend less time administering this area, except for when it involves a direct customer interaction (hence, the reference to value-added activities).
If a pipeline activity does not involve direct customer interaction, the top-performing loan officer typically found a way to get the job done through automation and the use of support staff.
Furthermore, the survey discovered that 65% of the top performers placed a high priority on spending time and attention addressing customer concerns about mortgage products. Overall, fewer than 40% of respondents had a similar answer.
More than half of the top performers considered discussions with customers about affordability and payments to be a high priority, compared with less than 40% of respondents.
The survey noted these findings in the area of pipeline management tie into those regarding knowledge. To explain a product effectively to the consumer, the loan officer first must understand that product and that only comes with “deep knowledge of the marketplace. A top performer acquires knowledge and then uses that knowledge on behalf of his or her clients.”
Similar to the finding regarding pipeline management, top performers delegate their administrative tasks to others and/or use automation to handle them.
This allows the top performer to maximize the amount of time they can focus on their customers.
Many companies use third-party sources to provide such things as customer acquisition tools and services as well as provide knowledge to their staff. While almost eight in 10 respondents said they were generally satisfied with the results they were getting with the tools they had available, seven in 10 added they would like their employers to provide additional tools, which would help them do their jobs better.
There was one finding in the survey that does cast a cloud on the future of the mortgage originator. The problems in the industry over the past few years weeded out many newcomers who might have become top producers (along with taking out the weak producers) as well as discouraging potential new loan officers from become a part of the business.
Approximately 93% of the respondents have been in the mortgage business for five years or longer, with 62% of the group having been in for 11 years or more.
These numbers show that the industry is likely to have a problem replacing the current generation of top producers when the time comes.
