If I like it I clip it.  OK, I know this one is long, but good stuff worth a read…

 How to Consistently Originate Loans
Perspectives by David Marx

Mr. Marx, principal at DaCor Financial, San Bruno, Calif., has written an opinion piece on how he believes he has been able to originate the same annual volume of loans over more than 25 years regardless of market conditions.

I became a mortgage broker in August 1983, when fixed rates were at 14.5% and by April of 1984, I was succeeding in the business, well beyond my expectations. In the 26 years since, I’ve closed an average of 100 loans a year. Recently, a friend suggested that I take the time to list how I achieved this success. This essay is the result of that introspection. It starts with a discussion of my general philosophy and ethics. Then I present how I handle interaction at the point of sale, followed by marketing both to referral sources as well as directly to principals, and finish with a few specific thoughts. These ideas are applicable for all sales professionals.

General Philosophy:

• That every client or prospective client with whom I meet is better off for the experience. I never recommend action unless I think the action is in the client’s best interest. I never hesitate to state that a client is better keeping his/her existing loan rather than refinancing, if that is the case. My evaluation of every situation is based on what benefits the client and never depends on receiving commission. As a result of this ethic, the source of my business is 100% referral, solely derived from repeat clients and those they recommend me to.

• I live in a constant state of insecurity, and still view each loan as the last one I will ever get.

• I never forget that I am only as good as my last loan. If a real estate agent refers 30 loans to me and I do a fantastic job on each, but less than stellar work on the 31st, I’ll never get the 32nd.

• I don’t work with rude or abusive people.

• I don’t promise to have the best interest rates.

• I won’t work with a borrower that wants to "double-app" me. I don’t solicit business that is already in process with another broker.

• I keep my promises. When I commit to locking a rate that goes up by the time I’m able to lock, I keep the promised commitment and cut my fee. Conversely if there is an improvement in price, I pass the difference to the borrower, usually in a check after close of escrow.

• I under promise and over deliver whenever possible to exceed expectations. It’s a great feeling to be a hero to a customer.

Returning Telephone Calls:

• Even though competition in our industry is massive, many loan agents don’t return phone calls promptly. I return telephone calls immediately, unless I am eating, or in a meeting. Even if a client calls several times and I still don’t have an answer, I return each call, because I know that the borrower will feel better knowing I’m working on the issue.

"When I commit to locking a rate that goes up by the time I’m able to lock, I keep the promised commitment and cut my fee."

• When things go wrong, such as an unanticipated condition or a denial, the first thing I do is let the borrower and the Realtor(s) know right away. It’s best if they hear it from me first. Then, if possible, I take the blame. By taking responsibility the other parties will respect and empathize with me and focus on fixing the problem.

• Many sales trainers recommend closing every letter or discussion to a prospective borrower with the verbiage: "Oh, by the way, do you know of anyone that could use my services?" etc. I don’t believe in asking for referrals every time I see or write someone. If I do a fantastic job they are likely to send me anyone they know. It’s like my auto mechanic. He does a great job at a great price and provides great service. He doesn’t have to ask me to extol his virtues to everybody I know; I love telling my friends about him. And when I do a fabulous job for my clients, I don’t need to ask them for referrals; they can’t wait to tell their friends about me. I know that if someone constantly pestered me for referrals, it would turn me off. Of course I do make mention of my quest for referrals in my closing letter, which says, "I’ve enclosed several of my business cards. As you know all of my business comes from referrals. If you think that I did a good job for you, feel free to give a card to someone that needs real estate financing. Of course if you didn’t think I did a good job, please dispose of the cards safely."

Interaction with Borrowers in the Transaction:

• I meet every borrower or prospective borrower in person. My sole objective when I receive a phone call asking for loan information is to set an appointment for a face-to-face meeting where my goal is primarily to form a friendship with the prospect. A typical meeting takes about an hour, most of which is spent becoming acquainted and finding out commonalities. Often the first question that I ask is if the borrowers are native to the Bay Area and if not, where? Other things I ask about include where the borrowers grew up, what school/college they attended, whether they have children, what sports team they follow, and what literature they read. What people do for a living is always interesting. I enjoy getting to find out people’s stories and discovering what we have in common. Another benefit of doing this is that it demonstrates that I am a person, not a loan machine. If it turns out that the prospective borrowers doesn’t qualify, or for some other reason are not in a position to utilize my service, I never think of the meeting as a waste of time, instead I’ve cultivated new friends and advocates who someday may be buying and in the meantime will be extolling my virtues to their friends.

Sending Letters:

Once a transaction is underway, send the borrowers a series of letters starting with a thank you, which includes an expected timeline of events. A day later, send a letter from the president of the company praising the agent and congratulating the borrowers on choosing him/her. The following day send a discussion of ways to hold title. Also send a letter to the selling agent as well as the listing agent.

Marketing Ideas:

These marketing ideas are not only good but they don’t cost much money. The key is using them on a regular basis.

• Two-dollar bills: Guess how much they cost. When you send one to a prospective Realtor, along with a request to meet for a cup of coffee, the odds that you will get that meeting are far greater. Success in prospecting is based on percentage and two-dollar bills are a cheap way to increase that percentage.

• Luggage tags: I have a machine that makes luggage tags from business cards. The machine cost $50 and tags themselves are inexpensive and easy to make in our office. And who wouldn’t appreciate receiving them? The way to do this is to get a few business cards from a Realtor at the first meeting. Then at the second meeting, give the Realtor the luggage tags. He/she will remember you and doing this increase the odds that he/she will call.

• Change of address cards: On a purchase transaction, we make postcards for the borrower. On one side is a photo of the house that we scan from the appraisal and on the other is the announcement along with the name and logo of the Realtor as well as my name and logo. I either bring them to the signing or give them to the Realtor to give at the signing. It’s a nice inexpensive touch and the Realtors like it because their name is on it as well.

• Newsletter: I send this to approximately 600 past borrowers. I’ve been doing this for the past 12 years and it’s well read. It’s not one of those canned products; my newsletter writer, Janet, sits down with me and together we write every issue. It’s not fancy, but people who know me can tell it’s my "voice." I don’t e-mail it, or send it bulk rate; it goes out first class mail every two to three months. I hide the name of three past clients in the text and if they spot their name and call me, they win a prize. Some people complain that I haven’t put in their name, as if the names were selected at random. Where does it say I have to select at random? I hand pick clients out of my database that need to refinance. I do know that the newsletter has paid for itself many times over, especially in a refinance market.

• Binder: At close of escrow I send out a loose-leaf binder that has "DACOR" written on the cover. Enclosed are a copy of the settlement statement, the appraisal, the note and deed of trust. Also a thank you letter from me (with attached an evaluation form with SASE and business cards.)

• One promotional thing that I do every year is to host the real estate agents that give me business to a party on a private yacht. It takes place on the day that the Blue Angels are flying and doing stunts over the San Francisco Bay. I serve lunch and beer and the basic thing that everyone on board has in common is that they all use me as their mortgage broker.

Refinance:

• Skin in the game: On a floating refinance, the borrower is less likely to shop around if they pay for the appraisal up front. One concern is the length of time that the appraisal is valid; to alleviate that I state that I will pay for a subsequent report if the first one expires.

• I don’t predict rates, and I insist that the borrower make the decision if and when to lock or not. But I do have a few pet phrases that help the borrower make that decision. When asked whether to lock I have two responses that inject a bit of humor. "If you lock today then rates will drop like a stone tomorrow, but if you don’t then they will shoot up like a rocket. So lock if you want to do a good thing for the rest of the population." Another metaphor is the old TV game show, "Let’s make a deal." At the end of the show the contestant had to choose between door No. 1, No. 2 and No. 3. Door No. 1 was open, so the contestant knew what was behind that door, but not what was behind door No. 2 or No. 3. So it boiled down to the borrower deciding between the known, which was door number one and the unknown: doors No. 1, No. 2 and No. 3. Whatever they choose, it’s their choice and I’m not at risk to be blamed for coercing them to lock a rate.

• A good way to meet prospective borrowers: Take classes on a topic that has nothing to do with mortgages or real estate. It’s a way to meet and get to know people without using the hard sell. Consider a cooking class.

A Few Other Ideas:

• Vocabulary and phrases: Use "transaction" instead of "deal," or "issue" instead of "problem." Rates took a "bounce" instead of "went up." Use "eased" instead of "went down."

• It’s crucial to thoroughly screen loans and say "no" to ones that you’re not sure you can do. Otherwise you will end up with a "toe-loan." What is a toe loan? Imagine your pipeline has 20 loans. Nineteen of them are doing just fine but it’s that 20th that dominates my life. It’s like waking up one morning feeling just great, getting out of bed and then someone takes a hammer to my baby toe. All I think about is that toe.

• Resist letting real estate agents or borrowers put words in your mouth. "When can we get approval; when can we get docs, when can we get funds?" I answer, "I don’t know," but they reword the question and ask, "When do you think? etc." So just to get them off my back I say, "We should have docs by Wednesday." Of course that’s not good enough. "But I need them no later than Monday," they say. "I’ll do my best," I say. Then Monday comes around and there are no docs. Wednesday the same thing happens. And the phone rings and I hear someone say, "But you said…" I can’t tell you how many times I’ve had this conversation.

• Remember that we represent lenders as well as borrowers. Some people have the mindset that the lenders are our adversaries, and that underwriters throw in absurd conditions just to make life hard for us. I’m not saying that this never happens, but despite the apparent lunacy of some conditions, we need to treat underwriters, funders and loan reps with respect, especially if we want them to respect us.

• I have a small shop, but our loan quality and pull through rate is better than most other brokerages. Because of this we get better pricing and service from many of our lenders.

• Finally, it’s all about using time. This is a job and as such each block of work time should be planned and logged. Weekly, perhaps every Sunday, write a detailed plan for the week, based on how many hours you plan to commit to the upcoming work week, whether it’s 20 or 60. Of course one needs to be flexible, but if an agent commits to working 20 hours then that agent should be prepared to show a log that demonstrates he/she has fulfilled the commitment. One way to do this that has worked for many successful agents is to hire a coach and be accountable to that coach. Another idea is to work on the buddy system.