I remember walking through the mall (remember those), back in the 90’s, thinking any day now Fannie Mae was going to install a kiosk so home buyers could walk up and get a mortgage instantly at a gloriﬁed ATM machine.
Why you ask?
At the time the mortgage industry had begun to rely strongly on credit scoring which naturally led to the ability of the GSE’s to develop automated underwriting engines. The world of push button mortgages began to take ﬂight followed closely by widespread fear within the industry about the changes afoot. As a loan officer, I remember beginning to think about whether I’d have a job in the future.
Fast forward to 2019 and I’m still in the mortgage business and loans are largely being done the same way by the same people as they were back then. All that fear was unwarranted.
When you look back on it, that makes a lot of sense. The technology was really not ready to handle our business and the public, GSE’s and government agencies weren’t ready to handle the technology. As we sit on the doorstep of a new decade it seems that all of that may have now lined up and this time some big changes in how mortgages are made may be upon us sooner rather than later.
The stage is now set for signiﬁcant change and that’s going to require today’s MLO’s to change or risk being perfectly equipped to live in a world that no longer exists. As my friend, Mike Hardy says, “Growth sets the stage for a bigger future.”
Areas of Growth so MLOs Thrive
Commodity – that’s right. Stop allowing yourself to be pigeonholed as a commodity. Most MLO’s I know walk easily into the commodity trap. Heck, the entire industry is pushing itself on the public as a commodity – it’s all about the rate. Think about this: when someone calls the only thing they know to ask is ”what’s your rate?” Why is this? Because we, as an industry, have programmed them to focus on rate alone.
You must make the move from being just a commodity. But if you must move away from being a commodity, where do you go?
This is the process that has worked for me: Commodity – Unique Product – Exceptional Service – Unique Experience – Meaningful Transformation.
Being able to make a meaningful transformation in the lives of your customers is the key to developing a customer that’s not only loyal in the face of all the noise in our industry, but who will also send others your way.
Focus on Relationships
You must be willing to engage in a relationship with your customers by getting to know them and allowing them to know you. The hopes, dreams, concerns and fears we all share are points of connection that can open the door of relationship.
The MLO of the future must become less transactional. Don’t get me wrong, you still need to be an expert on the technical aspects of your profession, but most of that will be either automated or outsourced. The relational, human to human part is your single biggest opportunity to separate yourself from the crowd.
I recently heard from Ryan Grant, a top producing MLO, about how most treat their customers is “a lawn mower without a bag.” Most MLO’s jump from deal to deal without taking the time to engage in relationship with their customers and don’t have a process or system to maintain that relationship for a lifetime. Their customers are just like those grass clippings being scattered across the yard, ultimately dying and blowing away. That can’t continue to happen for the successful MLO of the future.
Capacity to Remain Competitive
It was Jeﬀ Bezos that said, “Your margin is my opportunity.” The tech giants are coming for that margin in droves and have the mortgage industry in their crosshairs. No doubt the MLO of the future will have to be part of the ﬁnancial equation to maintain competitiveness. That means reduced compensation on loans.
The good news is that through automation and outsourcing, there will be fewer tasks to complete so that per loan reduction can be more than made up in number of transactions, but you’ll have to have the personal capacity to handle the increase. We’ve seen much of this already, but more will be coming.
The Bottom Line – Add Value
What lies beneath all of this is you must bring more value to the table – more value to your customers, more value to your employer and more value to your referral partners.
The thing about value is the recipient must deem it valuable. As Andy Andrews says, “The degree to which you will ever be ﬁnancially compensated is inexorably linked to the obvious greater value that you create for someone else.”
If your value proposition is “great rates, great service, cool app/website, speedy closings, etc.,” then you will lose. Tech giants will squash you like a bug because they can do all that stuﬀ better than you can and they will own the obvious greater value ground in those areas.
You must do the things they can’t or won’t do – the good news that isn’t hard to do. Focus on truly engaging in relationship with your customers. Develop the expertise and knowledge to provide a meaningful transformation in their lives and be ready to do it for lots of people. Working on these areas can help MLOs prepare for the future changes the mortgage industry will see in the next decade. Moving away from being a commodity, building strong customer relationships and managing capacity to stay competitive will position MLOs for success but none of these will matter if value is not being provided. Become a valued partner and the future for MLOs will be bright.
Jim McQuaig is Senior Vice President of Churchill Mortgage, a full-service and financially sound leader in the mortgage industry. The company provides conventional, FHA, VA and USDA residential mortgages across 46 states. For more information about Churchill Mortgage, visit www.churchillmortgage.com or follow the company on Twitter @ChurchillMtg, Instagram @ChurchillMortgage, LinkedIn at https://www.linkedin.com/company/churchill-mortgage/ and Facebook at www.facebook.com/churchillmortgage.