When I first landed in the business of mortgage loan origination back in 1983, the first milestone I was told to shoot for was $12 million a year. Originators who produced a million dollars in total closed loans each month were said to have “arrived.” Once there, the second level of success to set your sights on was $25 million a year. People who consistently produced over $2 million a month were said to have “achieved.” Finally, the peak performance group to belong to was the $50-million-plus club. Those stellar, superstar originators “amazed” everyone with the volume of loans they closed and the money they made.
Fast-forward almost 30 years, and the benchmarks are about the same. Although our average loan amounts have increased (and the total number of lenders has decreased), those three milestones remain as key career goals many loan originators strive to attain.
I hear a lot of people today talk about reaching “the next level.” Many loan originators closing a half-million a month are still trying to get to a million. Lots of million-dollar-a-month producers say they want to grow their business to achieve results of $1.5 million or $2 million. And some superstar performers at $50 million to even $100 million a year are now strategizing ways to originate even more loans and make more money in the coming years.
It’s 2012. Where are you right now in terms of your results? Are you where you should be at this stage of your career? More importantly: Where do you want to go next?
In my travels across the country meeting and working with loan originators at all levels of loan production and performance, I find that the happiest and most positive people are those who are still growing. Not content with where they are now and not complacent to accept their current standing as the end-all, they are continually looking for ways to reach their own “next level”—and they are implementing actions that will help take them there.
Clearly, growing your results from $500,000 to $1 million a month, or from $20 million to $40 million a year is not a simple feat. Achieving goals like these may take a number of substantial improvements and additions to what you do (or don’t do) every day. The most pivotal place to start is by taking a close look at what I call your “Origination Business Model.” Here’s what that means...
A loan originator who produces $1 million a month has an Origination Business Model built to produce $1 million a month. The amount of hours he works, the number of real estate agents he calls on, the level of his database marketing, even the internal origination process, the systems and the technology tools he uses to run his practice are all designed to create a specific output: about $1 million a month. If he hopes and expects to get to a different level at some point, say, $2.5 million a month, he needs to start his journey toward that goal by building a different Origination Business Model: one designed to consistently produce an output of $2 million to $3 million a month.
Your Origination Business Model encompasses many aspects of how you operate your lending practice. To see evidence of this, closely observe how a $12-million-a-year loan originator works and runs his business in contrast to how a $25-million-a-year loan originator works and runs his business. Here are some things you might notice:
• The $12 million originator comes into work around 9 a.m., finishes his day around 5 p.m., and takes off early most Fridays. A $25 million originator starts work at 8, is often still in the office taking care of his business well after 6, and puts in a few extra hours on the weekend.
• A $12 million originator calls on 10 to 20 marginal, low-producing and/or high-maintenance real estate agents and takes whatever leads he can get from them. The $25 million originator has solid relationships with just five or six top-producing agents in town who refer him top-quality clients—and they refer him exclusively.
• The $12 million originator is buried in his loan files and spends the bulk of the day processing, chasing down conditions, and dealing with difficult borrowers and their equally difficult loans. A $25 million originator takes a complete and clean loan application, submits only quality loans that have a high probability of closing, and has his assistant or personal loan processor deal with the time-consuming and labor-intensive paperwork.
• A $12 million originator gets a few loans and referrals here and there from his past customers. The $25 million originator is proactively marketing his database of past customers with emails and post cards every month, and receives numerous calls and referrals throughout the year.
• The $12 million originator hears a good idea for improving his business, thinks about it a while, and goes right back to what he’s always done. A $25 million originator hears a good idea for improving his business, thinks about it a while, and begins implementing the idea the very next day.
These comparison examples can go on and on, but the key point is that a $25 million loan originator thinks, acts and run his or her business differently than a $12 million originator (just as people closing $50 million a year operate under a completely different Origination Business Model than do those closing $25 million a year). It’s not just about making more sales calls; it’s about a significantly different way of doing business altogether.
The primary reason why so many smart, experienced and talented loan originators never reach their next level of success is because their business model just isn’t built for it. They are attempting to originate $2 million or $3 million a month on a platform that’s designed to generate half that volume, maybe less. To get to where they want to go (and deserve to be) these people need to radically change their entire business model—what they do and how they do it. Remember what Einstein said: “Insanity is conducting the same experiment the same way again and again and expecting a different outcome.” Many loan originators are doing the same thing the same way every day, and that’s why they continue to get the same result.
Here’s a great experiment: Write down where you are now in terms of your average monthly production volume ($500,000 a month, $1.5 million a month, etc.). Then, write down where you are headed in the next couple of years. What do you feel you have the potential to produce 12 to 24 months down the road? Finally, make a list of what your Origination Business Model would look like if you were operating at that level of performance. What would you be doing new, more of or differently if your business was humming along at that loan volume every month? How many hours a week would you be working? How many referral partners would you have? What would your database marketing efforts look like? What kind of internal processes would you have running? How many people would be supporting you? Finally, how would you be thinking, acting and behaving differently if you were closing that many loans and originating that level of production?
The answers to those questions paint a picture of what life at that level would be like. If you are excited about what you see in that picture, the time to start building your new business model is now. If today is the tomorrow you planned for yesterday, then the time to start planning for tomorrow is today.
