WE’RE HEARING this doesn’t happen every day. I’m actually getting email from readers who agree with me that our industry really is like professional football. Well, professional may be pushing it a bit. Turns out, I’m not the only one comparing the mortgage industry to the NFL. My friend Kesna Lawrence at Datamyx wrote his
And we’ve just scratched the surface! There are many ways that our two pursuits are largely similar. So, this week I would like to rattle off some more examples that celebrate the great sport of football and our chosen profession of mortgage banking.
First, I would like to recognize a recent NFL retiree who decided after a long 10-year career that the game had become too dangerous. Of course, I am referring to Brandon Moore, the offensive lineman made famous by having his own QB’s head run into his butt, or more aptly described as the butt in the butt fumble play. That play nearly put a nail in his career, but the final straw was being picked up by the Dallas Cowboys. I guess playing for Jerry Jones and the
So, as we all prepare for the start of the NFL this week, we know that football is a game with two conferences. Every team plays in one or the other, which is pretty much like the mortgage industry. In our business, you’re either playing with a product from Fannie Mae or Freddie Mac. Those are our playing fields.
Now, it is true that football can be played in other odd leagues, like Arena Football and the CFL to the north. But, the players on most of these teams probably feel a lot like subprime lenders (very little investor support, pretty poor consumer relations and a general consensus from players in the major leagues that you’re a bottom feeder).
There is the Lingerie League, which recently rebranded themselves as the Legends League and features seven-on-seven contact football played by scantily clad ladies and has a league headquarters in Las Vegas, but I don’t know much about it or watch it myself. So, that odd league could be compared to the upcoming jumbo mortgage market. Definitely not conventional funding but very attractive to the right borrower. These deals can get you into plenty of trouble, however, if they’re not properly underwritten. But I digress.
In general, like the NFL, borrowers are pretty much going to be offered a game that falls into one of two conferences: GSE Conference with the Fannie and Freddie divisions and the Government Loan Conference with FHA and VA divisions. With guidelines tight for the fewer loan programs currently available, borrowers feel like they’re throwing a Hail Mary pass every time they approach a bank for financing. Many are.
But then, borrowers don’t play our game every day like we do. We know every step in the mortgage process while they only know they need financing. In some ways it’s like pushing a bunch of 99-pound high school kids out onto the field to scrimmage with the Patriots. Talk about fast and furious.
Our industry, like professional sports, can be hyper competitive. One negative result of that in sports has been the rise of performance enhancing drugs or PEDs. Juicing up to stay strong when you’re clearly putting your body through more than it can handle is illegal. Unless it’s the Fed that’s pumping in the juice as part of a federal program to buy MBS in an effort to keep our teams playing. These things tend to pump up the numbers but can skew who the real winners are.
This makes a difference, in home finance and football, both of which affect me. I’m in the mortgage industry, but I’m also a player in the football realm as well well, fantasy football. This past week was our draft and believe me, this is serious business.
In fact, fantasy football drafts are very similar to what many mortgage companies are going through right now. We use all of the data available to us in an attempt to determine which new player has the talent to join our team. In mortgage, it’s the search for the best loan officers. As you build your teams, you can’t know if the new talent will work together, but you like the numbers they posted last year. It’s a tricky game to play and the cost of making a mistake can be high. Last year’s numbers could be inflated, and certainly not a predictor of future results as we enter a much more difficult purchase season. And, just like the NFL’s salary cap, we only have so much money to go around.
It’s about time to wrap this column up, but before I go, let me leave you with one more way the game itself is like the mortgage process. Just like a football field, we push our deals toward the closing table 10 yards at a time. It can take a long time to score. Few players leave either field without plenty of bruises. And having a game plan is critical. Stratmor has a
So, as we watch football this week, keep this in mind. At the end of every game, the winning football team gets the game ball, a misshapen bladder full of hot air surrounded by a sweaty, mud-covered pigskin. At the end of our game, our borrowers get to move into a new home, and they also get a four-inch stack of documents they don’t understand and 30 years of mortgage payments, but they don’t typically have the two blown out knees and brain damage that goes with a career in the NFL. Maybe it’s a toss-up.
In football and home finance, emotions run high. The best players in both know the risks but play the game anyway. They just love the game. Our customers will keep buying houses because they love the way a new home makes them feel. We all do. The winning companies will be the ones that learn how to get on the same team as their borrowers, giving them a solid playbook to operate by and then coaching them on to success. Now let’s get out there and play some...mortgage lending!
Garth Graham is a partner with Stratmor Group, and has over 25 years of mortgage experience, from Fortune 500 companies to startups, including management of two of the most successful mortgage e-commerce platforms. He was formerly with Chase Manhattan Mortgage and ABN Amro, where he was a senior executive during the sale of its mortgage group to Citigroup.
