1 00:00:00,000 --> 00:00:09,720 Welcome, and thanks for joining me today on Mortgage Manager Playbook, a podcast for sales leaders who want to improve their team's sales performance and originate more loans. 2 00:00:09,920 --> 00:00:11,560 I'm Pat Sherlock, your host. 3 00:00:11,760 --> 00:00:26,520 Today's topic is such an important one. What metrics should senior sales leaders use today? And I have the perfect expert coming from the Housing Wire annual conference talking about this very issue. 4 00:00:26,520 --> 00:00:33,120 And that's Jay Promisco. Jay was Chief Production Officer at Sierra Pacific before that. 5 00:00:33,120 --> 00:00:39,160 He's with Stearns and Well and had a long career in mortgage banking and certainly is the perfect person. 6 00:00:39,160 --> 00:00:41,680 And I'm excited to have you today, Jay. Hi, Jay. 7 00:00:41,880 --> 00:00:44,760 Hey, thanks for having me, Pat. I'm excited to join. 8 00:00:44,960 --> 00:00:51,040 I listened to all of your stuff and I was pretty pleased to get asked to be on with you today. 9 00:00:51,240 --> 00:00:52,640 So hopefully I can provide some value. 10 00:00:52,640 --> 00:00:57,080 Well, I'm thrilled to have you because this is such an important topic, as I said. 11 00:00:57,280 --> 00:01:03,920 And once I saw your video of the housing conference, I knew I had to have you on the podcast show. 12 00:01:04,120 --> 00:01:09,600 And so before we kind of jump into the topic, let's talk about how did you get into the world of mortgage banking? 13 00:01:09,800 --> 00:01:15,320 Well, like most mortgage bankers, I went to college and got my degree in mortgage banking. No. 14 00:01:15,520 --> 00:01:17,600 I just talked about that the other day. 15 00:01:17,600 --> 00:01:24,640 I mean, my mother was one of the production leads at Green Point Mortgage back in the day. 16 00:01:24,840 --> 00:01:26,200 I was an institutional banking. 17 00:01:26,400 --> 00:01:31,880 I worked for Barclays Global and she said, you know, Jay, you don't have to get up at four in the morning. 18 00:01:32,080 --> 00:01:37,760 You can kind of come be in this call center and do loans and you can actually play a lot of golf and make the same amount of money. 19 00:01:37,960 --> 00:01:44,000 And so I went down that road and I ended up as a call center load officer for Green Point. 20 00:01:44,000 --> 00:01:48,760 Amazing company. SA was our CEO, learned so much from that firm. 21 00:01:48,960 --> 00:01:52,360 Really amazing organization really taught me that how to be a loan officer. 22 00:01:52,560 --> 00:01:57,320 I ended up being one of their top loan officers on the staff and it just kind of fell in love with the business. 23 00:01:57,520 --> 00:02:02,240 And it take 20 years later, here I am doing the same thing. 24 00:02:02,440 --> 00:02:06,080 I don't know how to do anything else, Pat, except so. 25 00:02:06,280 --> 00:02:11,640 Well, I'm glad you joined us because we all fall into the same boat that once we get in it, 26 00:02:11,640 --> 00:02:16,280 we are loving it and stay in it forever, which is really says something about the industry. 27 00:02:16,480 --> 00:02:20,360 So talk about, especially this is difficult year, has been a difficult year. 28 00:02:20,560 --> 00:02:23,000 Some of the challenges that you're having your current position. 29 00:02:23,200 --> 00:02:24,680 It hasn't just been this year. 30 00:02:24,880 --> 00:02:29,200 It's been two years and I don't have 30 or 40 years in the business. 31 00:02:29,400 --> 00:02:36,880 I've got 20 and this has been a different kind of hard, like even going through 0708. 32 00:02:37,080 --> 00:02:39,360 You know, that was hard, but for a different reason. 33 00:02:39,360 --> 00:02:43,400 Just the contraction, you know, the highs and lows of the business, so to speak. 34 00:02:43,600 --> 00:02:46,880 And we went through 2021 and everybody thought they were really smart. 35 00:02:47,080 --> 00:02:51,760 And then, lo and behold, interest rates start ticking up and all the free money went away. 36 00:02:51,960 --> 00:02:58,560 And we actually had to do loans again and like real loans and hard loans and actually get back to focusing on purchase business. 37 00:02:58,760 --> 00:03:06,320 And the challenges were such that, you know, when you're riding the wave, so to speak, 38 00:03:06,520 --> 00:03:08,400 it just came crashing down all at once. 39 00:03:08,400 --> 00:03:11,760 It was just, I remember, you know, all of a sudden, like, hey, there's, you know, 40 00:03:11,760 --> 00:03:14,200 the lock activities, half the size, what's going on. 41 00:03:14,400 --> 00:03:19,800 And really, you know, the Federal Reserve's thought process and the last two administrations 42 00:03:20,000 --> 00:03:22,760 just continuing to issue debt finally caught up to us. 43 00:03:22,760 --> 00:03:24,840 And so we had to get back to basics again. 44 00:03:25,040 --> 00:03:27,440 And so the difficulty was making that shift. 45 00:03:27,640 --> 00:03:33,920 And thankfully, I've always run the business such that, you know, we don't get ahead of ourselves. 46 00:03:34,120 --> 00:03:36,480 So we were already kind of managing to that. 47 00:03:36,480 --> 00:03:39,880 And in the industry, I'm a little bit of the resident bearer. 48 00:03:40,080 --> 00:03:43,920 So I always, you know, when it feels too good to be true, it probably is. 49 00:03:44,120 --> 00:03:50,160 And so we had already tried to start managing our staffing and thought process around cost 50 00:03:50,360 --> 00:03:52,600 well in advance of it coming down. 51 00:03:52,800 --> 00:03:56,440 Now, the difficulty was, you know, nobody thought that it would last this long. 52 00:03:56,640 --> 00:04:00,480 And so it is really, it's the people aspect. 53 00:04:00,480 --> 00:04:06,480 It's it's not getting caught up in in hope and thoughts and prayers. 54 00:04:06,680 --> 00:04:08,880 And, man, I just wish this would get better. 55 00:04:09,080 --> 00:04:11,600 And if it does, everything's going to be great. 56 00:04:11,800 --> 00:04:15,960 The difficulty is manage your business such that you're looking at today and tomorrow. 57 00:04:16,160 --> 00:04:19,960 And that's it. Making sure your capital position is strong. 58 00:04:20,160 --> 00:04:24,440 You're making really tough decisions at the top of the house as far as staffing, 59 00:04:24,640 --> 00:04:28,520 making really tough decisions as far as vendors you use. 60 00:04:28,520 --> 00:04:32,800 And more importantly, making tough decisions around your production staff 61 00:04:33,000 --> 00:04:38,560 and making sure the best people you have are being supported and the ones that aren't 62 00:04:38,760 --> 00:04:42,800 going to make it, you know, you get them onto a different opportunity. 63 00:04:43,000 --> 00:04:47,640 Well, I think that leads into the next question that I'm curious about your thoughts about. 64 00:04:47,840 --> 00:04:53,560 What do you think managers should be addressing, but they're not addressing? 65 00:04:53,560 --> 00:04:58,600 Yeah, this industry is funny that way because it's a real personal business 66 00:04:58,800 --> 00:05:06,480 and not to sound like a crass capitalist, but people get caught up in the personalities, 67 00:05:06,680 --> 00:05:10,160 in the stories, with people they've worked with for a long time. 68 00:05:10,360 --> 00:05:16,960 And at the end of the day, if you have people that aren't producing, aren't working 69 00:05:17,160 --> 00:05:22,600 what they should be working on or simply figured out this industry is not for them, 70 00:05:22,600 --> 00:05:23,920 they don't address the problem. 71 00:05:24,120 --> 00:05:28,000 And so one of the tragic flaws, I think, in the industry is 72 00:05:28,200 --> 00:05:30,440 everybody's got all this magic data. 73 00:05:30,640 --> 00:05:36,080 Right. So, you know, with all the technology we have, all the reporting we have, 74 00:05:36,280 --> 00:05:38,320 everybody's got data. 75 00:05:38,520 --> 00:05:40,360 And I think they make one of two mistakes. 76 00:05:40,560 --> 00:05:43,640 Either they don't look at the data often enough. 77 00:05:43,840 --> 00:05:48,600 So they might look at the data once a month and then they figure out they have a problem. 78 00:05:48,800 --> 00:05:51,320 Or two, they look at the data all the time. 79 00:05:51,320 --> 00:05:53,480 And they just hope that the data gets better. 80 00:05:53,680 --> 00:05:58,800 As in they don't actually act on the data set in front of them. 81 00:05:59,000 --> 00:06:04,560 And I think, you know, the industry is slow to react when they realize they have a problem. 82 00:06:04,760 --> 00:06:06,640 And they can have all the data points in the world. 83 00:06:06,840 --> 00:06:10,240 But unless you make a decision on that data, the data is worthless. 84 00:06:10,440 --> 00:06:15,080 And so I think that's two things that I think managers have missed. 85 00:06:15,280 --> 00:06:19,320 You could have seen this thing coming a mile away if you were actually looking at your data. 86 00:06:19,320 --> 00:06:23,080 And a lot of people just, you know, they just thought, well, 87 00:06:23,280 --> 00:06:24,760 it'll get better six months from now. 88 00:06:24,960 --> 00:06:27,000 Well, it didn't. And here we are. 89 00:06:27,200 --> 00:06:28,880 I agree with you 100 percent. 90 00:06:29,080 --> 00:06:35,200 And as an ex-wall street person myself, I just find it incredible that senior leaders 91 00:06:35,400 --> 00:06:39,120 and this is coming from the top of the house just didn't read the tea leaves. 92 00:06:39,320 --> 00:06:41,680 And it just is shocking that they didn't. 93 00:06:41,880 --> 00:06:44,000 They seem so caught off guard. 94 00:06:44,200 --> 00:06:45,160 But that makes me too. 95 00:06:45,360 --> 00:06:48,920 How do you see 2024 and what priorities 96 00:06:48,920 --> 00:06:51,480 will you have as a sales leader? 97 00:06:51,680 --> 00:06:55,080 Yeah, I think the priorities again is not again. 98 00:06:55,280 --> 00:06:56,840 I said, don't get ahead of yourself. 99 00:06:57,040 --> 00:06:58,800 Interest rates are going to come down a little bit. 100 00:06:59,000 --> 00:07:01,160 Some people will be able to refinance. 101 00:07:01,360 --> 00:07:06,920 I think the purchase market will continue to stay at or about the same. 102 00:07:07,120 --> 00:07:11,520 Now, the benefit, I guess, for those who are able to make it through 103 00:07:11,720 --> 00:07:14,880 is that there will be less competitors in the space. 104 00:07:14,880 --> 00:07:20,280 Right. So the industry is completely still to this day over capacity for the amount 105 00:07:20,480 --> 00:07:21,680 of volume that's out there. 106 00:07:21,880 --> 00:07:24,920 And you look back when the industry was four or five trillion. 107 00:07:25,120 --> 00:07:28,600 This year will be lucky if we hit two and, you know, 108 00:07:28,800 --> 00:07:33,440 we might still be at two this next year and there's still way too many competitors 109 00:07:33,640 --> 00:07:36,960 in the space. So I think it'll be a better year. 110 00:07:37,160 --> 00:07:39,240 It looks like just over the last few weeks, 111 00:07:39,440 --> 00:07:40,680 interest rates have leveled off. 112 00:07:40,880 --> 00:07:44,600 It feels like, in my view, and it's, you know, again, being the bear. 113 00:07:44,600 --> 00:07:46,480 I think we're in a recession. 114 00:07:46,680 --> 00:07:52,040 I think the thought process around the soft landing is again, a hopeful thought 115 00:07:52,240 --> 00:07:56,280 process, but we'll know more in the next couple of weeks with some more data points. 116 00:07:56,480 --> 00:07:58,960 The consumer, as you know, is completely tapped out. 117 00:07:59,160 --> 00:08:03,200 All the COVID amazing stuff that happened as far as free money is gone. 118 00:08:03,400 --> 00:08:08,240 People's credit cards are maxed out, but they are still sitting on a ton of equity 119 00:08:08,440 --> 00:08:12,360 in their home and equity in the home is something they can use to kind of get 120 00:08:12,360 --> 00:08:13,320 out of the pickle there. 121 00:08:13,320 --> 00:08:16,560 And so I think I think there'll be some refinance activity this year. 122 00:08:16,760 --> 00:08:18,680 I think purchase market will stay strong. 123 00:08:18,880 --> 00:08:23,720 There's a whole bunch of pent up demand in kind of that millennial generation. 124 00:08:23,920 --> 00:08:28,320 Affordability is still not where it needs to be to make that happen. 125 00:08:28,520 --> 00:08:32,880 But if you have a little bit normal market, you don't see gigantic appreciation. 126 00:08:32,880 --> 00:08:36,360 Maybe some of the home prices and some of the markets go down a little bit. 127 00:08:36,560 --> 00:08:37,600 And interest rates come down. 128 00:08:37,600 --> 00:08:39,800 Maybe it maybe it becomes a better purchase market. 129 00:08:40,000 --> 00:08:41,000 So. 130 00:08:41,000 --> 00:08:45,200 Well, I think that's a great jumping off point to talk about our main topic today 131 00:08:45,200 --> 00:08:47,000 about the metrics that you looked at. 132 00:08:47,000 --> 00:08:51,760 What I was so impressed with your housing market presentation, as you discussed, 133 00:08:51,960 --> 00:08:56,040 how you start your day and what your day looks like and what type of metrics you're 134 00:08:56,040 --> 00:08:57,960 looking at. So let's start from there. 135 00:08:58,160 --> 00:08:59,520 So what are you looking at? 136 00:08:59,720 --> 00:09:01,400 Let's say first thing in the morning. 137 00:09:01,600 --> 00:09:06,120 First of all, I think looking at your data needs to be a daily exercise. 138 00:09:06,320 --> 00:09:10,600 And I've always, you know, I've learned this from my CEO. 139 00:09:10,600 --> 00:09:14,400 When it starts, when I was there, Brian Hale, I learned from my current CEO, 140 00:09:14,600 --> 00:09:18,640 Jim Caprini, that if you look at your data every day and you have a problem, 141 00:09:18,840 --> 00:09:20,600 you end up with a small problem. 142 00:09:20,800 --> 00:09:24,000 And if you look at the data once a month or once a quarter, 143 00:09:24,200 --> 00:09:27,120 you can wind up with a gigantic problem that you can't fix. 144 00:09:27,320 --> 00:09:31,160 So every morning, I mean, it's it's it's pretty basic, you know, we're we're 145 00:09:31,360 --> 00:09:32,320 looking at our hedge position. 146 00:09:32,520 --> 00:09:34,760 I mean, am I long? Am I short? 147 00:09:34,960 --> 00:09:36,480 Where did the locks come in? 148 00:09:36,680 --> 00:09:38,520 How many locks came in? 149 00:09:38,720 --> 00:09:39,640 What part of the country? 150 00:09:39,640 --> 00:09:40,960 What channel did they come in? 151 00:09:41,160 --> 00:09:42,720 Same thing with our applications. 152 00:09:42,720 --> 00:09:45,960 You look at credit pools when I see if our loan officers are active. 153 00:09:46,160 --> 00:09:49,880 That and then trending that over kind of your month to date. 154 00:09:50,080 --> 00:09:54,760 You know, so yesterday was good, but is it better than it was for the other parts 155 00:09:54,960 --> 00:09:58,680 of the month and then looking at where you were at the month before and then 156 00:09:58,680 --> 00:10:01,960 looking at where you were at, you know, your to date and where you were last year 157 00:10:01,960 --> 00:10:05,280 at this time. One single data point doesn't do anything for you because you 158 00:10:05,280 --> 00:10:06,480 could have a really great lock day. 159 00:10:06,680 --> 00:10:09,560 That doesn't mean anything unless you're comparing it against 160 00:10:09,560 --> 00:10:10,720 another set of data. 161 00:10:10,920 --> 00:10:15,040 So production data is super important, but companies are size. 162 00:10:15,240 --> 00:10:19,920 You really need to manage your cash position in a big way. 163 00:10:20,120 --> 00:10:25,120 You need to know every loan that's being sold, how what it's getting sold for. 164 00:10:25,320 --> 00:10:27,360 How's your warehouse looking? 165 00:10:27,560 --> 00:10:28,680 Do we have curtailments? 166 00:10:28,880 --> 00:10:30,800 Do we have trap cash somewhere? 167 00:10:31,000 --> 00:10:32,440 Do I have repurchase activity? 168 00:10:32,640 --> 00:10:36,920 I heard at housing where a lot of people really sad about having repurchase. 169 00:10:36,920 --> 00:10:39,120 And I was like, well, that's it's kind of part of the game. 170 00:10:39,320 --> 00:10:43,080 But if you found out that you had a whole bunch of repurchase, well, 171 00:10:43,280 --> 00:10:47,400 that's a little bit of an indicator that your manufacturing process isn't settled. 172 00:10:47,600 --> 00:10:49,680 And you would know that if you were looking at it daily. 173 00:10:49,880 --> 00:10:55,520 So I think for me, it's looking at the entire business in a holistic way 174 00:10:55,720 --> 00:10:59,760 daily and it doesn't have to take a long time if you have good reporting. 175 00:10:59,960 --> 00:11:06,200 And you're looking for trends and you're looking for ways to either 176 00:11:06,200 --> 00:11:09,840 generate more revenue for the company or be cut expense. 177 00:11:10,040 --> 00:11:14,560 That maniacal focus on data on a daily basis, all of the data, 178 00:11:14,760 --> 00:11:16,880 whatever data you have available, look at it. 179 00:11:17,080 --> 00:11:21,000 More importantly, your production data will tell you a lot of things. 180 00:11:21,200 --> 00:11:23,720 What parts of the country are succeeding and why? 181 00:11:23,920 --> 00:11:27,600 Down to the loan officer level, down to the rock level. 182 00:11:27,800 --> 00:11:30,360 We're looking at underwriting capacity. 183 00:11:30,360 --> 00:11:32,280 We're looking at underwriting productivity. 184 00:11:32,480 --> 00:11:34,520 We're looking at all the different factors. 185 00:11:34,520 --> 00:11:40,280 One part that's missed right now is during the boom times, it was real easy 186 00:11:40,280 --> 00:11:44,080 to add a vendor that you thought was cool and they promised you the world 187 00:11:44,080 --> 00:11:45,480 and they were going to save you a bunch of money. 188 00:11:45,680 --> 00:11:50,760 But one, I guess one exercise I'd encourage all executives to look at is 189 00:11:50,960 --> 00:11:55,600 every single vendor you have that you are paying, are they actually providing you 190 00:11:55,800 --> 00:12:00,400 value today? And if not, you should cut ties with them because the cost 191 00:12:00,400 --> 00:12:06,480 of manufacture of loan has done nothing but go up mostly because of adding 192 00:12:06,680 --> 00:12:08,680 vendors to your stack. 193 00:12:08,880 --> 00:12:13,960 And we left, we were talking as a company, we were talking about loans per employee. 194 00:12:14,160 --> 00:12:19,200 And golly, when I didn't have all this technology, my loans per employee were 195 00:12:19,200 --> 00:12:23,040 phenomenal. I was using the trans box and had a stack of files in my office. 196 00:12:23,040 --> 00:12:25,080 But we could really crank through those things. 197 00:12:25,280 --> 00:12:29,920 So I think managing your vendor stack and making sure vendors are providing value 198 00:12:29,920 --> 00:12:33,400 and being a creditor to your business, another super important thing to look at 199 00:12:33,600 --> 00:12:34,880 from a metric standpoint. 200 00:12:35,080 --> 00:12:41,320 So, Jay, did you develop the data analysis or you are just using, 201 00:12:41,520 --> 00:12:44,640 certainly actually using what vendors already provide you? 202 00:12:44,840 --> 00:12:49,320 We use Power BI as a platform, but then I have two exceptionally talented 203 00:12:49,520 --> 00:12:52,160 analysts that are mortgage bankers at heart. 204 00:12:52,360 --> 00:12:56,600 Chief Financial Officer, our entire accounting team, I mean, we hard data 205 00:12:56,600 --> 00:13:01,120 junkies, all of us and developing your own data, it's not hard. 206 00:13:01,320 --> 00:13:04,800 I mean, you can take, go on YouTube and watch some Excel videos. 207 00:13:04,800 --> 00:13:06,400 You guys can figure it out. 208 00:13:06,600 --> 00:13:07,920 It's not overly complicated. 209 00:13:08,120 --> 00:13:10,520 I have the benefit of being an institutional banking. 210 00:13:10,520 --> 00:13:11,480 I looked at spreadsheets. 211 00:13:11,680 --> 00:13:16,440 All I did was look at commingled trust funds for six years. 212 00:13:16,440 --> 00:13:17,920 So I kind of know the gist there. 213 00:13:18,120 --> 00:13:21,440 But whatever data, it doesn't have to be pretty either. 214 00:13:21,640 --> 00:13:24,320 I mean, you're looking at some basic information. 215 00:13:24,320 --> 00:13:26,520 You need some kind of repository to put it in. 216 00:13:26,720 --> 00:13:28,240 We use Power BI. 217 00:13:28,440 --> 00:13:29,600 It's very functional for us. 218 00:13:29,800 --> 00:13:36,200 There's a lot of other tools you can use, but an abacus or a calculator and a 219 00:13:36,400 --> 00:13:38,960 spreadsheet and kind of get all the information I need. 220 00:13:39,160 --> 00:13:43,560 So talk about this issue of what would be out of the data that you're looking at. 221 00:13:43,560 --> 00:13:46,480 And you've mentioned a lot of things on the production side, the head side, 222 00:13:46,680 --> 00:13:51,440 all of that, but what would be something that would be like your red flag? 223 00:13:51,440 --> 00:13:57,400 You know, in other words, I'm seeing X and I know I have to do something today. 224 00:13:57,600 --> 00:14:00,720 What what's some of your red flags that you have? 225 00:14:00,920 --> 00:14:05,480 Productivity is one of the metrics that's really, really super important. 226 00:14:05,680 --> 00:14:11,120 You can, by trending your data over time, you can figure out if your head count is correct. 227 00:14:11,320 --> 00:14:16,920 If you're forecasting correctly and conservatively, your head count should always be about right. 228 00:14:17,120 --> 00:14:18,880 That's something you should look at. 229 00:14:19,080 --> 00:14:20,720 And you should look at it by every position. 230 00:14:20,720 --> 00:14:24,760 So, for example, we have a lot of the industry focuses on underwriting a lot. 231 00:14:24,960 --> 00:14:28,480 But there's other things that touch the loan that should be managed as well. 232 00:14:28,680 --> 00:14:33,000 So how many how many files do you does your processor have in the drawer? 233 00:14:33,200 --> 00:14:35,480 Is it 20 is it 25 is it 30 is it 40? 234 00:14:35,680 --> 00:14:37,560 They have 10. That's not enough files, right? 235 00:14:37,760 --> 00:14:43,280 And down to your funder to your doctor are the productivity of every single person 236 00:14:43,280 --> 00:14:46,920 in your operational franchise is going to make or break your organization. 237 00:14:47,120 --> 00:14:49,400 Some other data points for sure that are red flag. 238 00:14:49,400 --> 00:14:55,320 So back to that point, if you find that all of a sudden, based on the amount of production 239 00:14:55,320 --> 00:15:00,320 coming in the door that, you know, your underwriters and processors don't have much to do, 240 00:15:00,520 --> 00:15:02,240 red flag, you got to go right away. 241 00:15:02,440 --> 00:15:05,040 And it wouldn't be if you let it get that far. 242 00:15:05,240 --> 00:15:07,480 That's that's on you because you should have been watching that. 243 00:15:07,480 --> 00:15:08,600 You should have known it was coming. 244 00:15:08,800 --> 00:15:14,120 The production side of the house has been really hard because, again, back to the stories, 245 00:15:14,120 --> 00:15:19,520 we've had loan officers and brokers that have been very successful for years. 246 00:15:19,720 --> 00:15:24,800 And a year into this this market, we've there were some loan officers that just 247 00:15:25,000 --> 00:15:31,400 weren't going to make it and you you can either see it by somebody has a bad month 248 00:15:31,600 --> 00:15:33,160 and so they don't take any applications. 249 00:15:33,360 --> 00:15:34,760 Well, that's bad. 250 00:15:34,960 --> 00:15:37,480 Two months of that, that's a big problem. 251 00:15:37,680 --> 00:15:42,560 You can see if your loan officers are working kind of by checking out how many times 252 00:15:42,560 --> 00:15:43,800 did they pull credit last month? 253 00:15:44,000 --> 00:15:44,960 You know, the story as well. 254 00:15:45,160 --> 00:15:48,160 I was working real hard and I talked a lot of realtors. 255 00:15:48,360 --> 00:15:51,440 Well, you didn't take you didn't pull credit once in 30 days. 256 00:15:51,440 --> 00:15:52,720 That's that's a problem. 257 00:15:52,920 --> 00:15:54,160 That would be a red flag for me. 258 00:15:54,160 --> 00:15:56,680 That would that would make me want to go to that loan officer and figure out what's 259 00:15:56,880 --> 00:16:03,720 going on. I think the industry has done a horrible job about taking people that aren't 260 00:16:03,920 --> 00:16:08,520 producing no fault of their own, by the way, because, you know, when it's a refi boom, 261 00:16:08,720 --> 00:16:10,240 everybody can do loans, right? 262 00:16:10,240 --> 00:16:14,960 When it's purchased, it takes a specific originator that can handle that business. 263 00:16:15,160 --> 00:16:21,760 And for us, unproductive salespeople get in the way of your highly productive salespeople 264 00:16:21,760 --> 00:16:23,560 from doing a good job for their customers. 265 00:16:23,760 --> 00:16:28,160 And so a lot of organizations, they carry and they'll say, well, this guy's not costing me 266 00:16:28,160 --> 00:16:30,160 any money. He's not doing it alone. 267 00:16:30,360 --> 00:16:34,680 Except for the time he finally does bring in a loan and the system because you already 268 00:16:34,880 --> 00:16:39,640 forgot how to use the LOS and files kind of put together correctly. 269 00:16:39,640 --> 00:16:42,160 It gets in the way of your top producers. 270 00:16:42,360 --> 00:16:47,400 So red flags for me are our loan officers that aren't doing the activities for sure. 271 00:16:47,600 --> 00:16:50,480 They're not being successful in their activities for sure. 272 00:16:50,680 --> 00:16:55,400 And is this salesperson and or employee 273 00:16:55,600 --> 00:16:58,640 preventing us from being successful in other parts of the organization? 274 00:16:58,840 --> 00:17:02,360 So you can do that only if you have data, right? 275 00:17:02,360 --> 00:17:03,640 You actually do something with it. 276 00:17:03,840 --> 00:17:09,080 And again, the hard part about this job for all executives and everybody struggles 277 00:17:09,080 --> 00:17:13,000 with this is you know what you have to do? 278 00:17:13,200 --> 00:17:17,720 You don't want to do it because of all the personal stories that you have with 279 00:17:17,920 --> 00:17:21,280 your organization. And so, unfortunately, I guess, you know, 280 00:17:21,480 --> 00:17:24,680 my Wall Street background kind of lets me go when I get it. 281 00:17:24,680 --> 00:17:26,400 It's a problem. It's not my problem. 282 00:17:26,600 --> 00:17:27,720 We need to fix it. 283 00:17:27,920 --> 00:17:34,160 So I guess the red flags, looking at your data, you if you're an executive, 284 00:17:34,360 --> 00:17:37,960 you know, you know whether the person's going to make it or not. 285 00:17:37,960 --> 00:17:41,200 And sometimes you have to make a decision you don't want to make, but you got to do it. 286 00:17:41,400 --> 00:17:43,600 Well, I agree with you 100 percent. 287 00:17:43,800 --> 00:17:47,520 And unfortunately, over all these years that I've been in the business, 288 00:17:47,720 --> 00:17:52,640 that same problem is the source of why the lenders are not making money in this 289 00:17:52,840 --> 00:17:56,560 environment. They haven't, they didn't really right size fast enough. 290 00:17:56,760 --> 00:18:01,280 And now they're right sizing and the market's coming back to them. 291 00:18:01,480 --> 00:18:03,040 And it's almost like what? 292 00:18:03,240 --> 00:18:07,120 I mean, you did it in the wrong sequence. 293 00:18:07,120 --> 00:18:10,720 And so, but talk about and this is something that I've seen. 294 00:18:10,920 --> 00:18:17,320 I don't see lenders really doing an individual P&L for every loan officer. 295 00:18:17,520 --> 00:18:22,360 I see that they have the data, but they're still stuck on really old measurement 296 00:18:22,560 --> 00:18:24,800 techniques, which really don't apply. 297 00:18:25,000 --> 00:18:26,240 What are your thoughts on that? 298 00:18:26,440 --> 00:18:28,600 Yeah, the industry is famous for this, too. 299 00:18:28,800 --> 00:18:30,880 The volume uberolus. 300 00:18:31,080 --> 00:18:35,080 Well, yes, no, shoot, I, you know, you look at some of the public companies, too. 301 00:18:35,080 --> 00:18:38,560 And I laugh, I have to laugh just because I know how that world works. 302 00:18:38,760 --> 00:18:42,480 But somebody has an earnings release and they're like, look, you know, 303 00:18:42,680 --> 00:18:47,680 we funded $12 billion this last quarter and we lost seven cents a share. 304 00:18:47,880 --> 00:18:49,680 And my thought is, why the heck did you 305 00:18:49,680 --> 00:18:53,120 originate all those loans with with a bunch of tail risk on it so that you can 306 00:18:53,320 --> 00:18:55,640 lose money that makes zero sense at all? 307 00:18:55,840 --> 00:18:59,360 Would you be better off funding a thousand loans and making a million dollars? 308 00:18:59,360 --> 00:19:01,640 Or would you be better off funding 10,000 309 00:19:01,640 --> 00:19:03,040 loans and losing $10 million? 310 00:19:03,040 --> 00:19:04,120 I don't understand the math. 311 00:19:04,120 --> 00:19:08,720 Mortgage banking is not such that you hear the term fintech thrown around like 312 00:19:08,920 --> 00:19:12,760 some public company is going to have some kind of 50 multiple on it because it's 313 00:19:12,960 --> 00:19:14,920 a fintech, it's not true. 314 00:19:15,120 --> 00:19:16,640 The only thing that matters in mortgage 315 00:19:16,840 --> 00:19:20,720 banking is a, if you're profitable or not, if the business is not profitable, 316 00:19:20,920 --> 00:19:25,800 you should take your capital, go put it in a in a T-bill and go earn yourself 317 00:19:26,000 --> 00:19:27,040 5% and call it a day. 318 00:19:27,240 --> 00:19:31,560 So long-winded way of answering the question. 319 00:19:31,760 --> 00:19:32,800 But that's true. 320 00:19:32,800 --> 00:19:38,320 I mean, so back to my, I guess, where I was getting that is you could have a 321 00:19:38,520 --> 00:19:43,120 loan officer that's quote unquote crushing it and funding five to six million 322 00:19:43,320 --> 00:19:47,720 dollars a month, but then you look at your data and every single loan's got 323 00:19:47,920 --> 00:19:49,520 100 basis point concession on it. 324 00:19:49,720 --> 00:19:51,040 They've got trade cures. 325 00:19:51,240 --> 00:19:55,760 They had EPOs and I did, you know, I spent all this time manufacturing these 326 00:19:55,960 --> 00:19:57,760 loans and this loan officer cost me money. 327 00:19:57,960 --> 00:19:58,960 That's problem. 328 00:19:59,160 --> 00:19:59,600 Right. 329 00:19:59,600 --> 00:20:05,200 So I come from a train of thought, the only reason for me to do a loan is for 330 00:20:05,400 --> 00:20:08,880 me to either offset my cost to do a business or be makes money. 331 00:20:09,080 --> 00:20:13,040 If it starts costing me money to originate loans, that's not a productive loan 332 00:20:13,240 --> 00:20:13,840 officer for me. 333 00:20:14,040 --> 00:20:19,000 And so, and that's another hard, hard conversation to have this loan officer 334 00:20:19,200 --> 00:20:21,800 that's used to getting the best price on the street. 335 00:20:22,000 --> 00:20:24,280 All of a sudden they're not the best price on the street. 336 00:20:24,280 --> 00:20:26,080 We'll see how good of a loan officer they are. 337 00:20:26,080 --> 00:20:31,600 If the only reason somebody's successful is because of price, 338 00:20:31,800 --> 00:20:35,080 my view is I don't need the sales costs associated with that. 339 00:20:35,280 --> 00:20:39,760 I'll just put out a good price and customer can play online and we'll go from there. 340 00:20:39,760 --> 00:20:43,800 And that's what a lot of kind of the online lenders thought process is. 341 00:20:44,000 --> 00:20:50,040 But me, my view is a loan officer should be able to generate some value for the 342 00:20:50,040 --> 00:20:53,000 company with every transaction because they're good at their job and their 343 00:20:53,200 --> 00:20:54,640 customers trust them. 344 00:20:54,640 --> 00:20:59,520 And what that needs to be some sort of profitability metric around every single 345 00:20:59,720 --> 00:21:01,280 salesperson in your organization. 346 00:21:01,480 --> 00:21:04,840 Well, I agree with you 100 percent, which leads me to my next question, 347 00:21:05,040 --> 00:21:10,640 which is the real test is how long does an underperforming or a non-profit 348 00:21:10,840 --> 00:21:15,680 loan officer should be allowed to stay at a lender? 349 00:21:15,880 --> 00:21:19,440 I don't know if there's a good answer there because you have to have some sort 350 00:21:19,640 --> 00:21:22,800 of, I sound very not empathetic, but I am. 351 00:21:22,800 --> 00:21:24,920 Because some people have some things going on in their life. 352 00:21:25,120 --> 00:21:26,000 Everybody's got a story. 353 00:21:26,200 --> 00:21:28,480 Everybody's got some life. 354 00:21:28,680 --> 00:21:32,200 I think past history on the loan officer tells me a lot. 355 00:21:32,400 --> 00:21:37,000 You can have shoot when I was a loan officer, there would be these times. 356 00:21:37,200 --> 00:21:38,720 Remember seven or eight for sure. 357 00:21:38,720 --> 00:21:42,520 Like I was really good, but there were some months where everything fell out and 358 00:21:42,720 --> 00:21:45,600 you know, customers canceled, dealers got mad, all these things. 359 00:21:45,800 --> 00:21:47,640 Couple months with no loans. 360 00:21:47,840 --> 00:21:52,280 But what I could see though, my managers could see that I was still trying. 361 00:21:52,280 --> 00:21:57,360 And the rules happening and I was just you go through a string. 362 00:21:57,560 --> 00:22:03,920 But I would tell you, I guess my view is if I got 60 days with zero activity, 363 00:22:04,120 --> 00:22:05,520 it's never going to work. 364 00:22:05,720 --> 00:22:09,760 Right. So if you thought, we saw this back in June, July, 365 00:22:09,960 --> 00:22:13,800 if you can't make it in June, July, how are you going to make it in November, 366 00:22:14,000 --> 00:22:16,600 December, January, which are historically slow? 367 00:22:16,800 --> 00:22:19,480 Sixty, like 30 days and no activity. 368 00:22:19,480 --> 00:22:23,520 You're having a conversation with the salesperson at 60 days. 369 00:22:23,520 --> 00:22:25,160 You're having a different conversation. 370 00:22:25,360 --> 00:22:29,640 I agree with 100 percent, which leads to my next question, which is 371 00:22:29,840 --> 00:22:34,480 it's common thinking and you've really touched upon it a little bit that the 372 00:22:34,680 --> 00:22:40,400 equation to be successful mortgage banker, many executives think is more loan 373 00:22:40,600 --> 00:22:42,800 officers equals more volume. 374 00:22:43,000 --> 00:22:47,640 I was just at the NBA and I'm not going to say who said this, but I've heard this 375 00:22:47,640 --> 00:22:49,560 from many lenders even today. 376 00:22:49,760 --> 00:22:53,560 So they look at the solution set as being, well, I got to hire more. 377 00:22:53,760 --> 00:22:55,400 What are your thoughts on that? 378 00:22:55,600 --> 00:23:00,040 I'm a quality over quantity guy any day of the week. 379 00:23:00,240 --> 00:23:02,640 And again, I just operate the business differently. 380 00:23:02,840 --> 00:23:08,120 Like I have no aspirations to having my name on a baseball stadium. 381 00:23:08,320 --> 00:23:09,920 I don't need a leader jet. 382 00:23:09,920 --> 00:23:11,480 I don't need any of these things. 383 00:23:11,680 --> 00:23:15,880 What I need to do is sleep really good at night and run a great organization 384 00:23:16,080 --> 00:23:17,080 where people like working here. 385 00:23:17,080 --> 00:23:18,920 That's that's like my main goal. 386 00:23:19,120 --> 00:23:27,520 I found in my career that sometimes this high producing branch or loan officer 387 00:23:27,720 --> 00:23:30,400 is costing you more than they're worth. 388 00:23:30,600 --> 00:23:35,800 Right. And I can tell you I've seen other companies do this. 389 00:23:36,000 --> 00:23:40,240 They'll put branches, you know, two blocks away from each other and have them go 390 00:23:40,240 --> 00:23:40,800 kill each other. 391 00:23:41,000 --> 00:23:42,480 That doesn't make any sense. 392 00:23:42,680 --> 00:23:45,480 What kind of message is that send to the community that you're in? 393 00:23:45,480 --> 00:23:53,000 Me, it's I would rather have 20 really good branches than 60 with 40 of them being 394 00:23:53,200 --> 00:23:58,880 average, because again, I want my organization for top performers and top 395 00:23:59,080 --> 00:24:01,080 performers expect the best out of you. 396 00:24:01,280 --> 00:24:05,200 And top performers see when you hire somebody that's not very good, they go, 397 00:24:05,400 --> 00:24:06,120 why did you do that? 398 00:24:06,320 --> 00:24:09,000 And I think the cream rises to the top. 399 00:24:09,200 --> 00:24:12,480 And in this business or even this next year, it's still going to be hard. 400 00:24:12,480 --> 00:24:13,800 I don't care what anybody says. 401 00:24:13,800 --> 00:24:19,080 You need the absolute best sales force you can put together and whether that's 402 00:24:19,280 --> 00:24:23,320 50 or 100, if they're top quality and all doing business, that's better than 403 00:24:23,520 --> 00:24:26,240 having a thousand knuckleheads any day of the week. 404 00:24:26,440 --> 00:24:31,480 It's just I agree with I agree with you a thousand percent, but it's a message 405 00:24:31,680 --> 00:24:34,040 not often heard by many people. 406 00:24:34,240 --> 00:24:38,240 And obviously kind of what I see some of the fundamental issue and I'm interested 407 00:24:38,440 --> 00:24:43,400 in this thought is that the chief sales officer or whatever position you're 408 00:24:43,400 --> 00:24:49,280 talking about ends up being measured actually on number of people recruited 409 00:24:49,480 --> 00:24:52,400 versus actually the real P&L. 410 00:24:52,600 --> 00:24:55,960 And this is common within our business. 411 00:24:56,160 --> 00:25:01,400 And it's kind of incredible that that scenario hasn't changed over 412 00:25:01,600 --> 00:25:06,640 like all these years of greater analytics that we should actually be measuring P&L. 413 00:25:06,840 --> 00:25:08,360 Yeah, I struggle with that too. 414 00:25:08,560 --> 00:25:11,920 And, you know, I'm known to not not be very politically correct. 415 00:25:11,920 --> 00:25:14,680 So I'll try to try to be unpolitically correct right now. 416 00:25:14,880 --> 00:25:20,040 But you can see it where I see these organizations and they hire a new sales 417 00:25:20,240 --> 00:25:23,680 leader who has been at four different companies in the last four years. 418 00:25:23,880 --> 00:25:27,280 And I don't know what they tell this new owner. 419 00:25:27,480 --> 00:25:30,000 Like, well, the last three companies, it was all their fault. 420 00:25:30,200 --> 00:25:34,280 No, there's a chance that this this this person wasn't really good at their job. 421 00:25:34,480 --> 00:25:37,520 But unfortunately, they keep it higher because they have this. 422 00:25:37,720 --> 00:25:40,320 I've talked to them and they're like, well, I can bring all these people over. 423 00:25:40,320 --> 00:25:43,440 Really? Well, what kind of people are you bringing over? 424 00:25:43,640 --> 00:25:46,640 And I'll be the first one to admit I've made some really bad hires in my life. 425 00:25:46,840 --> 00:25:49,800 I have. I think the difference is I've corrected the behavior. 426 00:25:50,000 --> 00:25:51,200 I corrected the problem. 427 00:25:51,400 --> 00:25:57,080 I think for me, how I structure my salespeople is you can hire people all day long. 428 00:25:57,280 --> 00:25:59,080 If they're successful, great. 429 00:25:59,280 --> 00:26:01,360 If they're not, I need you to fix it quickly. 430 00:26:01,560 --> 00:26:05,720 Right. And I, you know, you give people their rope, you give them a chance to 431 00:26:05,920 --> 00:26:07,480 succeed if it's not there, you got to go. 432 00:26:07,480 --> 00:26:15,040 And recruiting today, even in the last two years, where years past, you could kind of 433 00:26:15,240 --> 00:26:17,920 be a little bit, it was easier to succeed. 434 00:26:18,120 --> 00:26:19,800 Now you have to. 435 00:26:20,000 --> 00:26:23,160 There were people that were successful a year ago, they're not going to be successful 436 00:26:23,160 --> 00:26:25,480 today. And so you have to look at your batting average. 437 00:26:25,480 --> 00:26:27,240 Like, am I batting 300 on hires? 438 00:26:27,240 --> 00:26:28,440 That's probably pretty good right now. 439 00:26:28,640 --> 00:26:33,920 I think I think you'll find and at some point it'll peter itself out. 440 00:26:33,920 --> 00:26:38,560 This happened in 07, 08, where one of the best times as in the business is 10 and 11, 441 00:26:38,760 --> 00:26:42,120 because all of the people that should not have been in the business, we're not the 442 00:26:42,120 --> 00:26:46,040 business anymore. And all we had was professionals again, we're kind of at that 443 00:26:46,040 --> 00:26:49,120 level again, where you're seeing an exit of loan officers. 444 00:26:49,320 --> 00:26:52,200 You can see it in the animal S registry, whether or not renewing their license. 445 00:26:52,400 --> 00:26:58,120 That's good because the industry deserves top quality talent that understands the 446 00:26:58,120 --> 00:27:02,160 financial implications of what we do every day and not somebody that's, you know, 447 00:27:02,160 --> 00:27:04,480 driving an Uber and doing loans on the weekend. 448 00:27:04,680 --> 00:27:07,080 So it's really isn't higher. 449 00:27:07,280 --> 00:27:10,920 It's really hard to hire good and then, you know, 450 00:27:11,120 --> 00:27:12,800 fix your mistakes when you make a bad hire. 451 00:27:13,000 --> 00:27:14,000 No, I agree with that. 452 00:27:14,200 --> 00:27:16,960 That is, I couldn't have put it any better. 453 00:27:17,160 --> 00:27:19,000 We only have a few minutes left today. 454 00:27:19,200 --> 00:27:21,520 Could you share a couple of takeaways for our listeners? 455 00:27:21,720 --> 00:27:26,640 Yeah, look, there's three things I think if you're a business owner, you should be 456 00:27:26,840 --> 00:27:30,720 focused on number one, if you're in charge of somebody's capital base, 457 00:27:30,720 --> 00:27:35,360 somebody's network, you're working for public company or something. 458 00:27:35,560 --> 00:27:38,040 Your job is to deliver return to the shareholder. 459 00:27:38,240 --> 00:27:39,880 That's just your job. 460 00:27:40,080 --> 00:27:44,160 Now, that requires you to look at data. 461 00:27:44,360 --> 00:27:45,200 That's your job. 462 00:27:45,400 --> 00:27:50,080 It's not to, you know, sit on a podium and talk about, you know, how great you are. 463 00:27:50,280 --> 00:27:53,520 It's to look at data and more importantly, act on the data. 464 00:27:53,720 --> 00:27:57,200 So again, it's it's easier said than done. 465 00:27:57,400 --> 00:27:59,400 You have data that you know you need to address. 466 00:27:59,400 --> 00:28:00,680 Go address it today. 467 00:28:00,880 --> 00:28:05,280 There's never been a time where I've waited and a problem got better. 468 00:28:05,480 --> 00:28:09,000 I'm like, well, if I just wait long enough, the problem will resolve itself. 469 00:28:09,200 --> 00:28:10,880 It doesn't, it just gets worse. 470 00:28:11,080 --> 00:28:16,520 So quick, decisive, radical decision making today. 471 00:28:16,720 --> 00:28:21,640 And one of the things I've heard is, well, what happens if I'm wrong? 472 00:28:21,840 --> 00:28:24,720 And like, what happens if you're wrong? 473 00:28:24,920 --> 00:28:29,120 Well, if you go where you make your organization really efficient and you 474 00:28:29,120 --> 00:28:32,240 have more loans, all that means is you're going to be more profitable. 475 00:28:32,440 --> 00:28:37,360 That's that's that's the only downside risk of making proper decisions in your 476 00:28:37,560 --> 00:28:42,560 business. Then more importantly, your job, I guess, as an executive, as I said, 477 00:28:42,760 --> 00:28:47,800 housing wire is to think about your future and you need to figure out you should 478 00:28:47,800 --> 00:28:50,480 be spending your days not worrying about the Smith loan. 479 00:28:50,480 --> 00:28:54,480 You should be worried about where's my organization going to be 1224 months from now. 480 00:28:54,680 --> 00:28:57,560 And you can't do that if you've got a bunch of problems that you're not 481 00:28:57,560 --> 00:28:58,840 addressing your organization. 482 00:28:59,040 --> 00:29:05,200 So I guess the takeaway is get your data, but then do something with it so that 483 00:29:05,400 --> 00:29:10,600 you can have time to figure out where you're going to take your company into the future. 484 00:29:10,800 --> 00:29:12,520 Well, Jay, I couldn't have said it any better. 485 00:29:12,520 --> 00:29:13,680 You're exactly right. 486 00:29:13,680 --> 00:29:16,080 And I'm so glad that you shared all your thoughts today. 487 00:29:16,080 --> 00:29:20,080 I have to have you come back and I want to thank you again for spending the time 488 00:29:20,080 --> 00:29:23,720 with us and I want to thank all our listeners for listening to our podcast today. 489 00:29:23,720 --> 00:29:31,000 You certainly can catch up on our other episodes by going to www.patshowelloc.com 490 00:29:31,200 --> 00:29:33,200 and subscribe. Thanks so much, Jay. 491 00:29:33,720 --> 00:29:34,680 Thank you, Pat. 492 00:29:34,880 --> 00:29:35,680 Pleasure being here. 493 00:29:35,880 --> 00:29:38,240 Thanks for listening to Mortgage Manager Playbook. 494 00:29:38,440 --> 00:29:43,760 You can catch up on all our episodes by subscribing to receive each week a new show. 495 00:29:43,960 --> 00:29:47,440 Don't forget to share this podcast with your friends and team members. 496 00:29:47,640 --> 00:29:51,440 If you're looking to increase production, call me to discuss my prospecting 497 00:29:51,440 --> 00:29:55,360 sales training program, ramping up realtor referral sources. 498 00:29:55,360 --> 00:30:21,840 Check out my website, www.patshowelloc.com.