Written by: Fouad (Fobby) Naghmi, EVP

Written by: Michael Hammond, Executive Coach

As a growth coach, many originators who reach out to me want to grow their businesses. The conversation typically starts with them wanting the secret sauce, the magic button, to grow. They want to instantly start talking about lead generation tactics, incredible new social media strategies, new tech promising better outreach, and how to engage realtors to properly drive new purchase business.

The first question I ask them is: what would happen to your business if I handed you 20, 50, 100 new leads today? Invariably, the answer is almost always the same: it would blow up my business. I couldn’t handle that kind of volume. My turnaround times would increase dramatically, customer satisfaction would drop, and in the long run, I would do more damage to my business in addition to not being able to physically handle all of the new business.

My response is precise, “So if that is true, then we need to first start with understanding why your business would blow up with that kind of volume.”

Most of the time, it begins with the lack of clarity in how they are handling loan files. If originators genuinely want to grow their business and create a sustainable lending model, they must master the Manufacturing of Loans.

What do I mean by the manufacturing of loans? It is the stage in business beginning with the initial interest by the potential borrower and continuing until the loan is funded. If this stage is not mastered, originators will struggle with sustainable growth and cap their potential to significantly increase origination volumes.

So, let’s talk about how to master the manufacturing of a loan. The easiest place to start is to think of a spreadsheet. Whether the originator is handling refinances or purchases, the methodology for mastering the manufacturing of a loan is the same even if the actual steps are different.

If doing both refinances and purchases, create two separate blocks of data in a spreadsheet. On the far-left side, you will record the exact process (workflow) an originator follows from initial interest to the funding of a loan. For example, here are some of the specific items originators list in our conversations:

• Initial communication with the borrower
• Input into CRM
• Request documents via email/CRM
• Follow up/receive loan application and documents
• Pull credit
• Organize documents
• Complete loan file.

This process continues all the way to funding.

The key for each person looking to grow is to map out each step of how they manufacture a loan. Do not cut corners here. It is critical to customize this workflow to each specific business. Every lender, originator, loan officer, and broker does this a little differently. Some originators will have 45 steps, while others only have 18 steps. The number of steps doesn’t matter at this stage. What is important is the workflow being specific to the unique business flow. These items will appear in the first column.

Once this is clearly defined, we move to the first column to the right, which is the actual time it takes to complete the specific task. The purpose of this column is to start tracking and understanding how much time is being spent on each step in the manufacturing of a loan. For example, in initial communication,  most originators spend 15-20 minutes on this step. Pull credit might take 30 seconds. The amount of time on each phase is not what is essential here. What is important is starting to gain clarity and understanding of how much time is spent on these tasks because they directly impact your ability to grow.

If you are a branch manager or running a larger team, add an additional column to the right, which is the actual time it takes each team member to complete each task assigned to them. For instance, if you filled out how much time it should take for each task (i.e., initial communication 15-20 or pull credit 30 seconds) and in the actual column, it takes one of your team members twice as long, you instantly know there is a problem, and the person needs additional training on the specific task.

A subsequent column is to define a number of files the individual originator or branch manager has at each specific step in the loan manufacturing stages. For example, five initial communications, three pull credits). The magic in these steps is when you multiply the number of loan files a person is working on at each stage. In tracking the time it takes to complete each step, originators gain great clarity about where they are spending their time. This also allows them to start right-sizing their organization for growth.

Let me explain by providing a real-world example. One of the students I coach was convinced they needed another processor. This student is a producing branch manager who has one LOA and one processor. They were looking for me to approve hiring the new processor. I said to fill out the spreadsheet, and then we could discuss. Once they filled out the fields and columns we describe above, guess what they found out? Their processor worked four hours a day, and their LOA was working 10-12 hours each day. By going through this process, they identified they didn’t need to hire another processor. Maybe they needed to hire another LOA or redistribute/reassign some of the LOA items on their plate to the processor. Either way, going through this process instantly gave them clarity. It provided them with the ability to right-size their business through what the facts were telling them instead of making an emotional decision.

The other columns on the spreadsheet include what steps can be delegated and what steps can only be done by you in manufacturing the loan. Once this information is filled out, we add three additional columns: templatized, digitized, and automated. This is where we talk about how to humanize the steps in the process and which friction points can be either reduced or eliminated through templates, videos, and automation. By automating a number of these steps, originators can maximize the efficiency so they can master the manufacturing of loans.

By mastering the manufacturing on loans, they are now poised for growth. This is when we can discuss how to generate leads from post-closed loan nurturing, how to develop realtor relationships, which steps to automate correctly and how to leverage the latest strategies in social media. The key is their business is now ready to handle the increase in new leads while developing a sustainable lending model in the future.

Written by: Laila Khan

“He who cherishes a beautiful vision, a lofty ideal in his heart, will one day realize it.” ~ James Allen

Copernicus fostered the vision of a multiplicity of worlds and a wider universe, and he revealed it. Buddha beheld the vision of a spiritual world of stainless beauty and perfect peace, and he entered into it.

“Cherish your visions; cherish your ideals. Cherish the music that stirs in your heart, the beauty that forms in your mind, the loveliness that drapes your purest thoughts. For out of them will grow all delightful conditions, all heavenly environments; of these, if you remain true to them, your world will, at last, be built.” ~ James Allen

James Allen’s message continues, sharing his view of dreamers as the saviors. Every vision-driven leader knows, if the vision is compelling enough, people will apply their best thinking and efforts to figure it out, regardless of obstacles and opposition. The road map to draft out goals and strategies and pinpoint the trajectory of your organization will revolve around the vision.

But what about the adoption process of that vision, especially if it’s not aligned with the individual? How do we move forward? Do we pack up and leave in search of more alignment?

When working under leadership, one must constantly be willing to outdo oneself, to stretch, to reach out of our comfort zone and see leadership direction as growth opportunity.

No matter the weight of the vision of the company or organization, a leader is charged with the responsibility of finding a way to communicate the vision with a simplicity that triggers actions and defines the roles of others in realizing the vision. On Martin Luther King Jr., Sinek Simon writes, “He was not perfect, he had his complexities. He was not the only one who suffered in a pre-civil rights America, and there were plenty of other charismatic speakers. But Martin Luther King Jr. had a gift. He knew how to inspire people and communicate his vision which triggered massive actions”. For Dr. King, there was no website to post venues and locations for demonstrations or rallies. No group invitation was sent in email. The power, the movement came from the will and the clarity of Dr. King communicating his vision.

A powerful vision inspires enthusiasm, belief, commitment, excitement and ACTION in a company or team.

Part of working towards solidifying a vision is providing clarity on the direction you’re going. How many of us hop in the car without any destination in mind? We don’t.We have our destination in mind before we get behind the wheel. We map out our directions and allow enough time to arrive where we need to be. The same process can be applied with visionary work.

Use your dreams and desires as a roadmap or route, not a mere fantasy. Step into your power and realize the doors are open. Once you overcome your limiting beliefs saying, “you can’t” or “it’s not possible for you,” your options grow exponentially, and you give yourself permission to have that vision. Once you accept can indeed achieve what it is you’re trying to accomplish, you can create a detailed game plan to achieve your vision. Having a plan of action filled with items and small steps makes your vision seem more attainable. Having a plan formulated and clear in your mind also gives you conviction and confidence when communicating it to others.

Big goals often take a long time to realize. As a leader, it’s important every few months to focus on realignment in your team. It is essential to know the HOW– your strategy, the formula you’re going to implement to fulfill your vision. It is also essential to know your WHY–your reason for doing everything. When hardship arrives at your door as you work towards this vision and all you want to do is give up, sometimes it will be your WHY that pushes you to keep going. Get comfortable with knowing your why. Write down your reason and put it somewhere you see it often. Remind your team of it often too.

Having an idea is one thing but to really execute it, one often needs a team of people. This is why having a plan of your vision is important. When the vision is clear and the plan is shared, the team is able to bring the vision to other people and aggressively expand the reach of your vision.

Where are we headed and what are we looking to accomplish? In communicating the vision of the organization, followers follow their leaders, not because of the leaders but for themselves. Importantly, clarity deployed in communicating one’s vision should not be mistaken for sound oratory skills. Steve Ballmer, Bill Gates’ successor as Microsoft CEO, is the stark opposite of the billionaire. Ballmer deploys intense energy in communicating to the staff. On the contrary, Bill Gates is a social misfit who communicates with less energy and great clarity. This vision-sharing approach was crucial to the foundation of the company’s success. Leadership is understanding the Why and communicating both the How and the Why.

In the mortgage industry, your competitive advantage may depend heavily on the uniqueness of your services. Breaking the conventional approach in an industry through a unique style of service involves a shared goal. Harnessing the human resource in every business and attaining the desired height of the company requires a shared vision.

Notable effects of a shared vision.

• Shared vision inspires commitment and productivity

Vision provides the blueprint of an organization’s aspirations. A shared vision is a propelling force for the team, and if it is appropriately communicated by the leader, it integrates members of the organization and ensures the activities of each department are aligned towards the goal or vision of the business. The simplicity employed by a leader in communicating the vision, and the frequent reminder of the organization’s goals inspires a sense of belonging that triggers productivity. The clarity of Walt Disney’s shared vision stirred a sense of responsibility in Roy Disney and many others who laid the foundation for the company’s success. As Simon Sinek noted, a shared vision has the capacity to inspire people to contribute something bigger than themselves.

• Shared vision creates a strong sense of followership

A shared vision inspires a strong sense of following, which creates the impetus for repeated success in other areas. Great companies lay the foundation of their business by creating a picture of their goals and educating their employees on their functions. Richard Branson excelled with Virgin records, then applied a similar principle in his airline, which also became one of the famous names of the industry. He applied the same principles with his soda company, insurance company, and other huge businesses he owned. Apple has diversified successfully from computers to phones and MP3. The common feature of these companies that replicates their success is a shared vision.

• Shared vision creates momentum for explosive growth

When John Schnatter began his pizza business in 1984, he was a twenty-two-year-old trying to make ends meet and managing a lounge with his father. The following year, John named the company Papa John’s. In the early months of 1991, Papa John’s had 46 stores. Towards the end of the same year, the number of stores increased to 110, and 220 the following year. Seven years later, the number was at 1600 stores. At his early stages, Schnatter admits being obsessed with the company’s goal – he wasn’t communicating his visions, nor was he concerned about giving them the sense of belonging that created an atmosphere of excitement.

Leaders and business owners often get obsessed with the execution of their goals without feeling the necessity to share the goals and vision of the organization. A shared vision with other team members stirs up a desire to acquire the specific skill required to maximize growth in an exciting atmosphere.

Vision Inspired Action and Legacy

Successful companies with leaders who understand the need to share their vision do not experience a downturn even after the death of their CEO. When Roberto Goizueta took charge of Coca-Cola in 1981, the company’s value was around $4 billion. Under his leadership, the company‘s value became $160 billion. Despite his tremendous influence, Coca-Cola didn’t experience a downturn in value after his death in 1997. Goizueta understood the effect of shared visions as the key to efficiency and continuity. In all industries and companies, a shared vision and clarity of expression are crucial to an organization’s success to carry on the legacy and continue the momentum for years to come.

Written by: Ruth Lee, CMB

It appears the bloom is off the rose. After a year and a half of working from home, the benefits of work from home (WFH) are not quite as novel, working in your professional loungewear is not as cool, and teams find themselves missing the creative energy of working in a centralized location, and I don’t mean Zoom. But this does not mean we are going back to the way it was. I believe we are in a new phase made possible by the experience of the last two years. Executives and team leaders are weighing their options for WFH, and here are a few thoughts to help you excel in the successful implementation of your policy.

Policy.

Whether you are building a remote team, rebuilding a primarily in-office work environment, or embracing a hybrid remote practice, building a policy addressing where people work and how they meet the company’s needs from their location is essential. As a leader, you need to offer specific clarity and guidance while leaving yourself open to evolving the policy in the future as needs arise. For now, look at each position. Decide if the process can be effectively handled remotely or if it requires a deeper collaboration a Zoom meeting cannot fulfill. Consider the experience level of the team, their need for hands-on training or guidance, how productivity is impacted by working alone or behind a webcam, and whether you can successfully manage each position in a remote environment.

Make sure you have policies to address how to Zoom (i.e., faces are seen not pictures, names, or avatars) and whether a WFA (work from anywhere) policy meets your company’s or team’s needs. WFA may depend on cell phones and internet reliability, which may or may not best achieve the needs of all the roles for your staff.

Does the policy foster your short- and long-term goals? For example, if you are looking to scale, can scaling be accomplished effectively from home, or do you need to have an office environment to anchor the team as required? These questions will have an important impact on how you hire and recruit. Building a thoughtful and well-reasoned policy now will have a huge impact on both you and your employees.

Culture.

A remote online culture is hard to foster. In the office, the opportunity for impromptu lunches, meeting in the kitchen to catch up while something heats up in the microwave, or brainstorming in front of a whiteboard, are activities we took for granted. We no longer have those luxuries with WFH, and now we also must combat loneliness, feelings of isolation, and Zoom burnout. Again, start thinking about the culture and values you and your team will embrace. Have a plan for how to build your corporate culture through Zoom and/or occasional in-person meetings. While you may give up your office, you will still need to invest in retreats, group training, and other activities to hold the culture together.

The remote culture is tough, but a failure to focus on your culture will leave you with consistent employee turnover, a lack of consistency in your customer service, and a loss of brand identity. Perform a Google search and find guidance on how other companies are handling this momentous change. You are not alone. Everyone is experimenting with new paradigms. Think about specialized training for your management team focused on improving their communication, identifying employees who are struggling, holding successful and productive meetings, and distributing critical information and training to everyone.

Style Points.

Fumbling through a challenge like working from home is never a great idea. This is a sea change for many employees, and we are often still working out the finer points of doing this well. As we discussed, thinking about how you embrace, partially embrace, or reject WFH out of hand, is a corporate decision for you and your team. Whatever decision you make, own it. Your policy and the adaptation of your culture reflect you and your values. This is not something to apologize for or explain again and again.

Make the decision a benefit of working for you and your team. Acknowledge the ways you have adapted your process, technology, and culture to fit your new business model. This is now a part of your brand, and you owe it to yourself to do it with style. From town hall meetings to escape rooms to lunch and learns, make this fun. Maybe you do not have an office so now you have a corporate trip to Mexico. If you are all-in on being in the office, consider letting people bring their dog in a couple of times a week.

Written by: Megan Anderson

High temperatures aren’t the only thing setting records this summer. Home prices continue to appreciate at record levels but there is more to this story than the media often reports.

There are many misperceptions generated by the media, which are sparking fear among buyers right now. One of these is the misunderstanding regarding affordability. There is so much media sensationalism about housing currently being unaffordable, and while home prices have escalated, it’s important to look at the right metrics and calculations to determine whether home prices are truly in an affordability crisis.

Median Home Price is NOT the Same as Home Price Appreciation

When the media talks about rising home prices, they often reference the median home price and talk about the gain or decline in median price as appreciation or depreciation of home values. The median home price simply measures the middle-priced home sold in a given timeframe, meaning half the homes sold above that number and half below that number.

For example, the median home price for Existing Home Sales in May was reported at $350,300, up almost 24 percent year over year. But this doesn’t mean home values have risen 24 percent. A $350,300 median home price simply means the middle-priced home sold was $350,300, with half the homes selling below and half above that price. Since there is a lack of inventory, especially on lower-priced homes, there are fewer sales in the lower price range. Also, since the inventory of higher-priced homes is more abundant, the increased number of sales of higher-priced homes due to their availability is skewing the median home price significantly higher.

Recently, there have been 30 percent fewer sales of lower-priced homes, while sales of homes between $500,000 to $750,000 were up 122 percent, homes between $750,000 to $1 million were up 178 percent, and homes above $1 million were up 245 percent.

Real appreciation, on the other hand, measures the year-over-year increase of a home’s value. Over the past 12 months, home appreciation was reported to be up 15 percent as per the Case-Shiller Home Price Index, and while this is robust, it is still well beneath the 24 percent rise in the median home price.

In fact, there could be times when home prices could be flat or even falling and the median home price could move up simply by having more purchases at the upper end of the price scale than on the lower end.

Said another way: If there were no homes available for sale under $350,000 and all the purchases were above this amount, the median home price would move up, but this doesn’t mean home prices themselves are rising. It just means more of the purchase mix fell on the higher side.

Don’t let your clients be fooled by any myths or incorrect metrics they may hear in the media.

Are Homes Still Affordable?

After a 15 percent rise in home prices, there are many questions regarding whether homes are still affordable. This is where math can help. While home values are going up, so are incomes. A common error made within the media is the belief that incomes need to rise by the same percentage as home values. But in a relatively stable interest rate environment, you only need a fractional increase in your salary relative to the rise in home price.

For example, if a mortgage payment of principal and interest for a home a year ago was $1,000/month then your income would likely be in the range of $5,000/month. If a year later, in a stable rate environment, the home value rose by 15 percent, the monthly payment would also rise 15 percent or $150/month. If your income were to rise over the past year by the same $150/month you would effectively be at the same level of affordability as you were a year ago. Since you do not use all of your income to pay your mortgage, a $150/month rise in income would translate to a 3 percent increase. Currently, weekly earnings are rising by more than 7 percent year over year.

Is This a Good Time to Buy?

If you have clients who are hesitant to buy a home because they’ve heard talk of a housing bubble, or they’re worried the median home price is too high, you can use MBS Highway’s Real Estate Report Card to show them the strength of the market; right in their specific county or zip code.

Let’s break this powerful tool down using Harris County, Texas as an example, so you can see how you can use MBS Highway’s Real Estate Report Card to help your clients move forward with a home purchase and to gain valuable referral relationships. Again, you can use this tool for any county or zip code across the country.

Healthy Historical and Forecasted Appreciation

Let’s first take a look at the opportunity in housing and affordability. The median home price in Harris County is $222,625. We have strong appreciation with the 10-year historical appreciation rate at 4.09 percent, while the forecasted 1-year and 5-year cumulative appreciation rates are a healthy 3.56 percent and 13.01 percent, respectively!

We know these rates of appreciation are strong, but to really drive this point home to your clients, it’s important to explain what this means to them. Purchasing the $222,625 home today, given the forecasted appreciation rate of 13.01 percent over the next five years, means the buyer will gain $28,966 in appreciation alone! Being able to demonstrate this tangible gain clearly and visually for potential clients can help spur them to act now, which can certainly help you increase your production and build valued referral relationships. A similar story is happening everywhere in the country.

 You may have customers who wonder if they can afford a home in this area. You can use the Real Estate Report Card to show them affordability is very strong in this market, as evidenced by the Affordability Index of 175.09. This means a family earning the median household income for Harris County of $63,836, which is well above the national average of $55,909, can afford 175.09 percent of the median home price when putting 20 percent down.

Of course, not everyone is putting 20 percent down, but you can see how this information gives homebuyers a good gauge of what they can afford, helping you build your pipeline and build relationships with both new and trusted referral sources.

Tight Inventory Likely to Remain So

We can see there are just four homes available for every 1,000 people in Harris County. Inventory is down 6 percent year over year and 3 percent month over month.

Homes are definitely moving and it’s crucial to communicate to hesitant clients it’s probably not going to become easier to purchase a home. Here’s why:

Based on our demographics, there are currently 754,460 people who are between 27-35 years old. This number is important because those in this age range are first-time homebuyers, and our goal is to see what kind of business we can gain from this demographic and how we can help them benefit through homeownership.

Out of these nearly 755,000 people, 71,670 will either rent or purchase a home in the next year. Out of these 71,670 household formations and considering Harris County has a healthy 55 percent homeownership rate, around 39,530 will purchase a home.

To meet this demand, builders would have to build 39,530 homes each year, or this number of homes would have to become available for sale. Yet the actual number of homes being built is far below this, at just over 23,000.

This inventory and demographic data combined provide such an easy way to express to potential clients why they shouldn’t delay their purchase, which again can help you increase production and gain the trust of key referral sources.

The bottom line is we have an inventory shortage, and this is a big reason as to why now is such a good time to purchase a home before it becomes even harder if inventory tightens even more or rates move higher due to rising inflation or other reasons. Plus, there’s also the strong forecasted appreciation rates as discussed above and the fact that homes are selling fast.

Strong Job Market Bodes Well for Housing Market

We’ve seen steady job growth in Harris County over the past few years. Of course, last year with COVID-19 it was a different story as it was across the rest of the country, but we already see job growth coming back strong and anticipate that strength and growth to continue.

The current unemployment rate is at 7.01 percent in Harris County. Though this is higher than the national average of 6.1 percent, we expect to see the unemployment rate decreasing further as the economy continues to reopen.

A strong job market is another reason the housing market is expected to remain strong in the Harris County area, as people are more inclined to purchase a home when they feel secure in their job. The opposite is also true.

MBS Highway’s Real Estate Report Card can be created for any county or zip code across the country, and it’s just one of the many tools MBS Highway has and can be the crucial differentiator in turning prospects into buyers who have won their dream home, and turning originators into advisors their clients can trust. With an MBS Highway membership, you’ll have access to all of our tools, including Bid Over Asking Price, Buy vs. Rent Comparison, Loan Comparison tools, daily coaching videos, lock alerts, and much more.

Do you want analysis like this on daily basis? Try all of these tools for free with a 14-day trial and see for yourself the kind of difference they make in your business!