If you spend any time around the clubhouse of any decent golf course in America, you’ll hear people talking about their swing. The people who take this game seriously can be compulsive about discussing this critical aspect of the game. The swing, it turns out, is central to everything good and bad that happens on a golf course. After playing the game for decades myself and having raised two boys who also love the game, I’m not immune from being pulled into one of these conversations. It’s easy to get fixated on something that can literally make or break your game.
These days I don’t have to be in a clubhouse to hear people fixating on a single critical aspect of their performance. I hear it all the time in the mortgage business. My friends talk about compliance in the same way my golfing buddies talk about their swing. They seem to think that if they can just get that right, everything else will take care of itself. You know what? They may be right.
Sports color commentators like to rhapsodize on the many critical elements of the performances on the field or court. To hear them describe it, the player is thinking about a million things at once in order to do whatever is necessary to win the game. In my experience, that’s not the case. In fact, my best games are those when my conscious mind is least aware of my performance and muscle memory takes over, once I’ve made my decision about how I’ll approach a given shot.
I think it’s true of most games. Most winning teams are made up of players who are really, really good at one, or at most a few, critical things. In basketball you’ve got the player that can sink the three-point shot or the free throw, almost every time. In boxing, it’s that knockout punch. Baseball has its home run hitters and the best quarterbacks have mastered the passing game. In golf, it’s the swing.
Good golfers spend many hours on the driving range, training their major muscle groups to smoothly execute a good golf swing. Once they master it, they’ll use it every time they address the ball. I mean every time. The swing rarely changes; the selection of the club will determine how the ball, once hit, will fly and for how far. And there are other decisions the golfer must make in those seconds before the swing, but once that club starts moving, the good golfer believes he knows exactly where it’s going and gives it very little thought.
This concept can be applied to mortgage lending. In the lending game, there are only a few things that must be done absolutely right. These are the things that, if done poorly, can actually put the lender out of the game entirely. When it comes to the mortgage business, the thing that must be perfected and never change is your stance on compliance.
In this game, compliance is the only thing that can get you kicked out of the game immediately for doing poorly. Right now, more people want financing than can qualify for a mortgage, which means that even poor marketing will allow a company to stay in business for a while. Make a mistake with compliance and you could be out of the game.
Some companies are good at one kind of product or lending in a particular geography. That’s fine. They don’t have to be good at everything. But when it comes to compliance, you have to comply with all of the rules in every part of your business or you lose.
Federal regulators have made it clear that they will enforce these new rules aggressively and require all players to keep audit trails to prove that they have compliant processes in place. Compliance is now the most critical part of the lending game.
A basic tenet of golf is keeping your eyes on the ball. There are golf pros at just about every golf course in the country that make their living helping people perfect their swings. These guys do only one thing; they help people get better at the game. There have been a number of pros who have contributed to my playing over the years and I remain in their debt today. They have increased not just my ability, but my enjoyment of the game.
So, if there was a compliance pro in your clubhouse today, what might he advise you to do in order to get your stance right, to help you address compliance in a manner that will make sure you keep enjoying your game?
1. Assume the same stance every single time you address a deal. Compliance isn’t just important for a few of the loans you make, or even most of them. We have to be compliant every single time we interact with the borrower. Make it a part of the way you approach the business every single time a deal crosses your desk.
2. Don’t get caught up in the idea that only one technology will make you compliant. Different jobs require different tools just like different shots call for different clubs. Find out what works and use what works in your business.
3. Practice compliance like you practice your swing on the driving range. The CFPB has made it clear that compliance is not something that can be tweaked in the lender’s shop and then forgotten. It’s a renewed challenge every time a different consumer enters the branch or fills out an online loan application. Maintain your monitoring and training programs and measure what matters. It will keep your entire team moving in the right direction.
Some may think that comparing compliance to a golf swing is an oversimplification. I’ve been playing the game long enough to know that there’s nothing simple about getting your swing right. Once you do, you must internally maintain it and then your performance becomes a factor of the club you choose and the way you address the ball. By thinking of compliance in the same way, lenders may find it simpler to deal with the many changes new regulations are bringing to their businesses.
Gregory E. Teal is president and CEO of Ernst Publishing, an industry data and technology provider that processes over 150 million transactions involving closing cost data each year. His golf handicap is 4. Teal can be reached at Gregory.E.Teal@ernstinfo.com.