Episode 1
Pretending to be human with the O.G. of digital mortgages, Garth Graham
Leading off season 2 of Batting 1,000 with Dale Vermillion is one of the most-trusted experts in the space and a Senior Partner at STRATMOR Group, Garth Graham.
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Credits
Batting 1,000 is a production of Mortgage Champions
The show is produced and edited by Jake Vermillion
Music by Envato Elements
Transcript
You are listening to Batting 1000 with Dale Vermilion, where heavy hitters from
Speaker:mortgage, Real Estate and Business share their secrets for lasting success with
Speaker:your host industry icon, Dale Vermilion.
Speaker:All right.
Speaker:Well, Garth, it is great to have you on, uh, the first episode of season two.
Speaker:I can't think of a person I would rather have than you kicking off this season.
Speaker:And I'm gonna, I'm gonna toot your horn a little bit here, if you don't mind.
Speaker:Um, you know, they've given the buy already, but I'm gonna give you a title.
Speaker:You're the OG of digital mortgage in the mortgage arena, as far as I'm
Speaker:concerned you're kind of the patriarch.
Speaker:Uh, you know, you and I met each other way back in the 1990s and worked together
Speaker:at mortgage.com when you ran that company and you took that thing and it
Speaker:was the first internet based originated loan ever in, in mortgage history.
Speaker:So, Man, you got some serious history and you've done amazing things since then.
Speaker:You know Stratmore Group is the premier consulting group and merger and
Speaker:acquisition group and information group in the industry, and I'm just honored
Speaker:to have you here, and not only that, we're we've good friends for a long time.
Speaker:It's just great to have a good friend and old friend and somebody that
Speaker:I've worked with for a long time.
Speaker:So welcome, glad to have you embed a thousand.
Speaker:Yeah, thank you.
Speaker:I appreciate that.
Speaker:I'm gonna have to live up to a lot because, you know,
Speaker:that was a heck of an intro.
Speaker:So I'd like to, I do a lot of public speaking, Dale, and if you don't mind
Speaker:just coming along and you could do the one minute intro, that's why people read
Speaker:from a bio, it's not that interesting.
Speaker:So you get up, say that, and then, you know, you can fly back to Florida.
Speaker:We're good to go.
Speaker:Anytime you want me to tag along, you just let me know.
Speaker:I'll be there.
Speaker:All right, cool.
Speaker:I appreciate that.
Speaker:So, Here's what I want to talk about, know, we, the reason I thought it was
Speaker:so vitally important to have you on, other than the fact that I just love
Speaker:you to death, is you are, you just spoke at the LendingTree Summit that
Speaker:you and I both spoke at, um, And you brought in an incredible presentation
Speaker:that I just absolutely love that talked about where the industry's at.
Speaker:We're in one of the tougher times we've seen in, you know, you've
Speaker:been in the business over 30 years.
Speaker:I've been in the business next year, be 40 years.
Speaker:So we've done this for a while, and we've never seen rates rise as fast.
Speaker:We've never seen these kinds of challenges, but and I'm gonna say
Speaker:it very clearly, You know, there's a lot of talk about the bad news,
Speaker:but there's an awful lot of good news in the mortgage industry too.
Speaker:There's a lot of opportunity out there if you know how to attack it and
Speaker:some of the things that you covered, I thought were just so spot on.
Speaker:The thing I've always liked about your presentation style is you just say it
Speaker:like it is and, let people, you know, understand what they need to do to succeed
Speaker:and I love that kind of transparency and just forthright approach.
Speaker:I just say it like it is with jokes.
Speaker:That's right.
Speaker:Usually do.
Speaker:So then once, once people, they laugh a little bit, then they
Speaker:suddenly go, Hey, wait a minute.
Speaker:That's not funny.
Speaker:That was painful, what he just said.
Speaker:So, you know, whatever you do.
Speaker:It's tough.
Speaker:Tough.
Speaker:It's tough to do jokes through a virtual thing, but I'll do my best.
Speaker:Yeah.
Speaker:Well, good.
Speaker:Well, let's talk about, I, I know there's six or seven points
Speaker:that you had talked about.
Speaker:In that session and I wanna start with the first one, and you know, we
Speaker:know this is a purchase heavy market and we know that consumer direct
Speaker:companies in particular have had a more difficult time in the purchase market.
Speaker:I know you've got some stats on that I'd love for you to share and I'd love to
Speaker:hear you gave a great analogy during the presentation as to why, loan officers
Speaker:are not succeeding and companies are not succeeding in the purchase world
Speaker:when they could share a little bit about kind of sure where we're at as an
Speaker:industry, where the purchase market is at, and then I want you to talk about
Speaker:how it's such an episodic business and really units are the key thing we
Speaker:should be looking at, not just dollars,
Speaker:cuz that was really important information.
Speaker:Yeah, well, I mean, we always read the headlines.
Speaker:You know, the NBA Forecast Training, Fannie Mae Forecast, Freddie Mac Forecast,
Speaker:Stratmore, we're in the numbers business.
Speaker:Yep.
Speaker:We look at all those numbers.
Speaker:I think the one number that gets missed when we talk about that we're
Speaker:gonna drop from a 4 trillion dollar market to a 2 trillion dollar market.
Speaker:I T, trillion is a big number, so it's kind of absurd how big that number
Speaker:really is, and you think, wow, that's a 50% drop if you actually look at
Speaker:it on a unit basis, which is really where the hand-to-hand combat has one
Speaker:loan officer beating another to try to help this family get into a home.
Speaker:It's even more acute because our average loan amount has gone up so much.
Speaker:So, that's really one of 'em.
Speaker:Last year there were 13 and a half million transactions, first mortgage
Speaker:transactions in our industry.
Speaker:Next year there'll be maybe five.
Speaker:Wow.
Speaker:So we're down a lot of units and it's way bigger than the 50% that you see in
Speaker:the dollar number because the average loan amount has gone up so much on the
Speaker:purchase side and, normally, refinance transactions are smaller than purchase.
Speaker:You take the smaller refis out, you're left with a lot of big loan amounts,
Speaker:but that means there's really, you know, 5 million opportunities to
Speaker:compete and last year there were 13.
Speaker:Wow.
Speaker:So you better be very sharp.
Speaker:Yep.
Speaker:And able to compete.
Speaker:And I think you were looting.
Speaker:One of the other stats I wanted to share is last year over 50%
Speaker:of refinance transactions units were done by consumer direct.
Speaker:So, you know, first let's pause, that's a big number, when I started mortgage.com in
Speaker:1996, Dale, that you know, it's all refi.
Speaker:We were referencing, we weren't anywhere near.
Speaker:Yeah, but we don't know.
Speaker:We're near 50%.
Speaker:That's right.
Speaker:So 50% of people last year who refinance their homes did it
Speaker:through a consumer direct operation
Speaker:and that's what created kind of a windfall year for the industry.
Speaker:The number on purchase is 15 percent.
Speaker:And once again, this is units not dollars.
Speaker:So, Uh, what that means is last year, in consumer direct, I'm looking on my
Speaker:other screen so I nail this number, um, there were 5 million refinance
Speaker:transactions last year and, um, you know, our total transactions rather in
Speaker:CD last year, this year there'll be 1.6
Speaker:wow.
Speaker:And that's assuming that the consumer direct lenders keep
Speaker:only doing 15% of the purchase.
Speaker:So really the challenge for CD, you can't do the 15%, you have to
Speaker:start stealing, share from retail.
Speaker:Um, you have to steal share from the other CD lenders.
Speaker:So it is really a function of competing at that level
Speaker:and by the way, I started as a retail loan officer and then became a call
Speaker:center guy, so I kind speak both angles and you know, you can do it,
Speaker:it can be done, but you have to have the skills that are very similar to a
Speaker:purchase lender, uh, loan originator while also, you know, leveraging the
Speaker:skills that the CD lenders have long perfected, you know, centralization,
Speaker:lower cost, strong technology.
Speaker:Um, but you know, a key part of it is those humans, those loan officers
Speaker:have to be able to sell purchase.
Speaker:So you had a quote on one of your slides that I absolutely loved,
Speaker:and the quote was, purchase is about life, not about loans.
Speaker:I love that quote.
Speaker:It's a quote, but I wrote an article and even the article
Speaker:doesn't, has a couple jokes in it.
Speaker:So that was August, 2021 and one of the analogies I put there, and I said this in
Speaker:the speech last week, said, I appreciate you bringing it up and you guys could
Speaker:share the article if you like, but if somebody, if you were at a cocktail
Speaker:party, you know, and somebody said to you, Hey, I'm thinking about buying a home.
Speaker:If you're a human being, what's the first question you say?
Speaker:The first question is, wow, statement.
Speaker:Why?
Speaker:And the reason is, the why is the motivation for the entire transaction.
Speaker:I'm expanding my family, my family's getting smaller, I wanna be closer
Speaker:to work, I don't care about being close to work cuz I now work remote.
Speaker:I want a better school system, my kids are older, I don't
Speaker:care about the school system.
Speaker:Uh, a bigger house, smaller house, uh, later in life, early in life.
Speaker:Move up.
Speaker:Move down.
Speaker:There's something going on.
Speaker:Yep.
Speaker:That's actually what they're pursuing and if you do not engage on that
Speaker:level, You are likely to lose it to a retail guy or gal because they do.
Speaker:So the natural inclination for a consumer direct lender because of the muscle
Speaker:memory from refi that we've learned is you just jump into the transaction.
Speaker:So you'll say, oh, terrific, you're buying a home.
Speaker:How much money are you putting down?
Speaker:Do you have a property yet picked out?
Speaker:How much money are you putting down?
Speaker:So the loan amount is okay, that's great.
Speaker:Um, you know, we, I can go ahead and qualify you for blah, blah,
Speaker:blah, and it's like, what are you, dude, that's way too fast, right?
Speaker:And so when you do that, the customer naturally gravitates to the only thing
Speaker:they have in common interest with you.
Speaker:What's your rate?
Speaker:Yep.
Speaker:And the shame of it is they can't have the rate anyhow.
Speaker:They can't lock it in, they haven't found a house, they don't yet
Speaker:have a contract normally, right.
Speaker:So it's like you literally put yourself on the least advantageous playing field
Speaker:that you didn't even have to play at.
Speaker:Yep.
Speaker:Because you weren't willing to engage with them on what really matters to them.
Speaker:So now you don't have to read the article, but you know it's a four
Speaker:pager and you probably should.
Speaker:Well, that's so incredibly powerful, and it's so funny because it jives so
Speaker:much with what we've taught at Mortgage Champions forever, is that yeah, you've
Speaker:gotta have conversation when you start that conversation with qualifying
Speaker:questions, which is the most common thing that loan officers do, by the way.
Speaker:What you're really saying to the borrower is, let me see if you're good
Speaker:enough for me to spend time with you.
Speaker:That's really the message you're relaying to them when you really
Speaker:think about it, and that is not the message I think we wanna relay.
Speaker:I think the message we wanna relay is, man, I wanna help you with that house.
Speaker:I'm honored to have the opportunity to work with you today.
Speaker:Tell me why you're moving into that house.
Speaker:Tell me what's going on in your life, and there you go, bam.
Speaker:You're in a conversation that absolutely works, and you're right,
Speaker:the, a lot of the retail guys that I trained, they're very good at that.
Speaker:Um, and many of the consumer direct guys who are top producers, All of
Speaker:those who aren't producing right now, it's because they're going back to
Speaker:either they're asking those qualifying questions or they're talking about rate,
Speaker:or here's the big one that I can't stand.
Speaker:Let me send you a link so you can fill out your information and I'll let you know if
Speaker:you qualify, I'll get your pre-approval.
Speaker:Wait a minute, hold on.
Speaker:You're, you can't, you cannot solve a problem for a borrower you don't
Speaker:understand, and if you don't talk to them, you don't understand them,
Speaker:an application isn't gonna tell you what you need to know about them.
Speaker:So you and I are on the same mindset about it, I think he, you
Speaker:know, you said in your presentation, the most important question we ask
Speaker:a borrower is the why question.
Speaker:I think that's so true and so wise.
Speaker:Yeah, and you can get, you can really, you know, obviously when they ask the
Speaker:rate question, they might be concerned about rate cause rates are really high
Speaker:and, rates are high versus before, but historically they're not that high, and
Speaker:by the way, if you figured out on an after tax basis, they're not nearly as
Speaker:high as people say, that's exactly right.
Speaker:Now you can get to that conversation, but you need to acknowledge they
Speaker:had just asked a right question and then start to counsel them on how
Speaker:to think about what the rates are.
Speaker:And of course, Over the next, from June of last year until June of next year, if
Speaker:the forecast holds the 5 million balloons that you're gonna have to fight for, a
Speaker:big chunk of them are gonna be refis.
Speaker:Let's say half of them are refis.
Speaker:That's two and a half million refis coming off a year, when in that same span
Speaker:where there's hardly any refi at all.
Speaker:So suddenly our market could suddenly get 50% bigger.
Speaker:As soon as rates start dropping and, you know, so as hard as you're willing to work
Speaker:to establish that relationship with that six and a half percent borrower right now,
Speaker:you're buying yourself that opportunity to help them at a 5% borrower next year.
Speaker:So it's worth the fight.
Speaker:Yep.
Speaker:It's just a lot tougher.
Speaker:Yep.
Speaker:Well, and, you know, the thing that I think a lot of times we forget to
Speaker:talk about in today's marketplace is the offsetting factors you just
Speaker:mentioned one of those tax benefits, that's a huge offsetting factor.
Speaker:You know, buy downs are a huge offsetting factor.
Speaker:Um, the fact that today, you know, you hear people talk, consumers talk today
Speaker:about, well, you know, it might not be a right time to buy because rates are high.
Speaker:Yeah.
Speaker:But wait a minute.
Speaker:Let's think about when rates were low, you had to compete with
Speaker:92 other people on that house.
Speaker:Yeah, that's right.
Speaker:And then you had to offer $40,000 over asking price in order to get it,
Speaker:so if you can get it below asking price and you're paying a higher
Speaker:rate at the end of the day, aren't you really kind of in the same boat?
Speaker:And many times you are, many times you're even better off at the end of the
Speaker:day, depending on how big that variance is so there's plenty of opportunity
Speaker:out there today if you look for it.
Speaker:Yeah.
Speaker:I mean, and if you can drop, you know, your sales price, By 10, 15%
Speaker:as the market softens where you can be in a position to do that.
Speaker:Yep.
Speaker:By getting pre-approved and being ready to pounce.
Speaker:Yep.
Speaker:Your monthly payment is dropping by virtue of the fact that
Speaker:the sales price is going down.
Speaker:So, and you should know those numbers, you know, so for every 25,000 it can
Speaker:drop your monthly payment as, you know, serve $150 or whatever the number is.
Speaker:You know, you know that and then they begin to say, oh, so run
Speaker:that by me again, boom, now you're having a quality conversation.
Speaker:Yep.
Speaker:So you made two statements and you had two bullets on your PowerPoint that Levy
Speaker:said, "pretend to be human" number one and second was "get used to not yet".
Speaker:So, talk about that for a minute cause I think that was a really important
Speaker:point that you covered at the summit.
Speaker:Yeah, I mean, a vast majority of refinance, I mean a purchase
Speaker:transactions, if you're buying leads or if somebody happens to call off
Speaker:your website, a vast majority of them have not yet written a sales contract.
Speaker:That's right.
Speaker:In some cases, they may not have even put their current house up for sale where
Speaker:they may not have even gotten their down payment together, and you don't want to
Speaker:jump into the qualification questions to figure that out, but you need to
Speaker:figure out where they are in the cycle.
Speaker:Yep.
Speaker:So the not yet means this is really an opportunity to spend quality
Speaker:time and develop a relationship.
Speaker:You're not gonna close them, right?
Speaker:It's an incremental close.
Speaker:I mean, a refinance is a close and you know, if you can't close them in
Speaker:a week or two, probably move on to another one, there's another opportunity
Speaker:and it's a wasted opportunity to treat it that way, but it's true.
Speaker:Yep.
Speaker:And by the way, last week we also had, um, Greg Olson spoke and, right
Speaker:before me, and by the way I just want everyone to understand Greg Olson is
Speaker:much larger than I am, but we got the same amount of time up there, so in
Speaker:20 minutes, one of the things that he said was, he said, you become your
Speaker:worst when things are the easiest.
Speaker:Yeah.
Speaker:And he didn't quite understand, I don't think, how prophetic that was
Speaker:for a bunch of people who come out of a refi bone.
Speaker:Yeah.
Speaker:I mean he was talking about how he reacted when, you know, he started making all pro
Speaker:as a football player, that type of thing.
Speaker:So, you know, go see Greg Olson.
Speaker:I can't paraphrase it, but I was like, man, you just nailed what our industry is.
Speaker:Yeah.
Speaker:This, the soft skills have gotten soft.
Speaker:They have, um, because we didn't have, you didn't have to do it as much.
Speaker:You worked a lot of hours, so, nowhere should someone listen
Speaker:to this and say, ah, this guy didn't get what I'm talking about.
Speaker:I understand you worked a lot of hours.
Speaker:Okay.
Speaker:I understand.
Speaker:It's stressful.
Speaker:It's extraordinary what we accomplished as an industry doing 13 million
Speaker:transaction, but it's a different skill.
Speaker:Um, by the way, I would say that pretend to be human, like if you're in a call
Speaker:center in a refi, you could almost watch, and I managed hundreds of these
Speaker:people you could almost watch when they thought they had a good one on the line.
Speaker:They'd lean forward.
Speaker:Yeah, and they begin to lean forward.
Speaker:They get their pen and they start doom boom.
Speaker:I think I can close it on a refi.
Speaker:It's almost like in a purchase you need to lean back because if you go
Speaker:too fast, they're gonna say, You're not hearing where I am in this cycle.
Speaker:Right.
Speaker:You're intimidating me with a bunch of jargon and my realtor
Speaker:kind of told me I should probably go with her friend locally anyhow.
Speaker:So you're almost creating your own objections.
Speaker:Just lean back Yeah.
Speaker:And let them tell the story because if you can become part of that story,
Speaker:you can become part of that solution.
Speaker:Slide nine that I sent you is that pie chart.
Speaker:Yep.
Speaker:And that pie chart is why are you buying a home?
Speaker:So the point I would make there is a loan officer,
Speaker:whether they hang that in their cube or put it in front of them
Speaker:or learn it, the customer they're talking to is one piece of that pie.
Speaker:They're in one of those buckets, maybe more than one, but if you don't know, you
Speaker:gotta know why you don't have the W H Y.
Speaker:That's exactly right and if you don't understand why they're buying,
Speaker:you can't educate them properly.
Speaker:And that, I think that's the biggest challenge that I see today is loan
Speaker:officers just aren't educating because they don't really need to
Speaker:think they need to because of 2020 and 2021 when it was just like people
Speaker:lined up out the door for loans.
Speaker:Yeah.
Speaker:That's not the case when rates are six and a half or six That's right,
Speaker:or seven or whatever the rates are.
Speaker:You're always gonna get resistance to the rate, so what you've gotta do is be able
Speaker:to educate that borrower on how it makes sense, how they can afford to buy this
Speaker:home today, that they're looking at how they can qualify in a way that's gonna
Speaker:get them the home that they want and, What their motivation is behind all of that.
Speaker:I mean, you and I both are from that same background, we've come up through the
Speaker:ranks over the years where we sold in high rate markets and you couldn't do it by
Speaker:quoting rates, you did it by talking about what the motivation of your buyer was.
Speaker:When I entered the mortgage business in 1987, straight outta college, it was
Speaker:booming cause rates had fallen to 11.
Speaker:Yep.
Speaker:So, you know, late eighties, that crazy late eighties.
Speaker:Uh, yeah.
Speaker:Yeah.
Speaker:When I started 1983, it was 17 and a half.
Speaker:Yeah.
Speaker:Well, I was refinancing several years.
Speaker:I was in 87.
Speaker:I'm refinancing your 17 and a half, so Dale, so that's exactly right.
Speaker:All right, so let's talk for a few minutes you know, you talked about units A moment
Speaker:ago you talked about focus on units
Speaker:or don't focus on units, but when you do focus on families, not units,
Speaker:so think of them in family terms.
Speaker:I love that mindset that instead of thinking in units, we should be
Speaker:thinking in this every time we help somebody with a transaction that's a
Speaker:family that we're putting into a home.
Speaker:That's a individual that we're helping change your life in a powerful way.
Speaker:But you also talked about something else that I thought was important
Speaker:and that is our obsession with basis points and how volume really
Speaker:takes our focus off what matters.
Speaker:Yeah.
Speaker:Talk a little bit about that.
Speaker:Yeah, so I mean, it's like anything, right?
Speaker:You, uh, if you pay people a certain way, it drives the behavior.
Speaker:So if you pay in basis points, you are saying the dollars more important than
Speaker:the person because you're not paying them to close the Jones loan, you're
Speaker:paying them to close a $300,000 loan, and I don't even want to get into the
Speaker:distortion and incentives that are created by the fact that the $200,000 loan
Speaker:isn't worth as much as the $300,000 loan.
Speaker:So I'll give you one very interesting stat where we actually got an article
Speaker:coming out on this in 2010, Dodd Frank came and changed our world and it changed
Speaker:our world cause we said, Hey you need to change away from our compensation
Speaker:model and you can't be paid on the terms of the loan, and the industry battled
Speaker:and got the CFPB through Dodd-Frank to acknowledge and make an exception
Speaker:for basis points for a loan officer.
Speaker:And I'd literally come back and say, and now this is ancient history,
Speaker:it was 12 years ago, but we almost screwed ourselves right there because
Speaker:the average loan officer in 2010 was making $2,000 a loan in compensation,
Speaker:and if you adjust that for inflation, it should be roughly $3,000 a loan.
Speaker:Right now, the average loan officer is making $4,000 a loan.
Speaker:So we are literally paying more because the average loan amount is so high.
Speaker:By the way, retail's average loan amount is significantly higher than
Speaker:consumer direct, partially because retail, brick and mortar, etc.
Speaker:, chases big loans, so they, it's less competitive on the small loans.
Speaker:So because of that, we don't, we just do away with any pay driven
Speaker:on quality, it's basis points.
Speaker:Everything's like the bigger the loan the better, and the more you do or
Speaker:the bigger volume you do, the better.
Speaker:So what I'm advocating for people, and this is not a popular concept, or people
Speaker:will say, that's really interesting,
Speaker:someday we should do that and let me just go ahead and keep paying
Speaker:basis points in the meantime.
Speaker:But to sit there and say, look, I'm gonna pay you a thousand dollars on a refi, but
Speaker:$2,000 on a purchase, you're saying it matters and it's harder and I recognize
Speaker:it's harder and I want to pay you.
Speaker:I'm gonna pay you more,
Speaker:if you do a fully verified, or I'm gonna pay you some of it up front, if you do
Speaker:a fully verified pre-approval and make contact and develop a relationship with
Speaker:the realtor, I'll pay you more for that.
Speaker:I'll pay you more if your lock pull through is higher, because, you know,
Speaker:that helps me from a capital market, you can literally just start paying for
Speaker:the activity that you're trying to drive
Speaker:and instead what we do through training and management is try to
Speaker:drive the behavior and then pay them on something completely different.
Speaker:So that was really the point I was trying to challenge people with is
Speaker:saying, now's the time, frankly, as we're contracting, to really think through
Speaker:what culture am I trying to create?
Speaker:Focus on families, and how do I really want to pay people?
Speaker:Maybe focusing on the unit part of the pay and customer satisfaction and all
Speaker:the other elements that drive, you know, a better culture within your company.
Speaker:Yeah.
Speaker:You know, it's funny because I'm gonna go back all the way to 1983 to 1995,
Speaker:the 12 years that I managed in this business, and, you know, I managed
Speaker:up to as many as 900 loan officers at one point, and I had a common saying
Speaker:that I said to my loan officers, it was this focus on units not dollars,
Speaker:yeah.
Speaker:Focus on units not dollars, focus on units, not dollars.
Speaker:And here's why, because units create habits, dollars create elephant
Speaker:hunters, that's what they do.
Speaker:So I'm sure now from lenders who are watching this podcast right now,
Speaker:they're thinking, Ooh, wow that's kind of radical that we're talking
Speaker:about changing compensation, but it's gonna happen at some point.
Speaker:That's right.
Speaker:It has to, because of the structure of businesses today.
Speaker:For the loan officers, you're probably like, Whoa, wait a minute.
Speaker:I like my basis points.
Speaker:I get it, and our advice is focus on units, do more of those.
Speaker:Focus on who you're helping.
Speaker:You'll make a lot of money down the road, but if you focus on the basis
Speaker:point percentage, put simply, this is a saying I use all the time,
Speaker:focus on your customers, not your commissions, and your commissions
Speaker:will be much higher, right?
Speaker:It's that simple, right?
Speaker:It's all focusing on the end result of the consumer you're helping, the
Speaker:family you're placing into that home, the people you're saving the money for,
Speaker:that's what your focus has gotta be.
Speaker:And the more you focus it on units, both as a lender and as a loan officer,
Speaker:the more successful you're gonna be.
Speaker:And I love the idea, I've always advocated this, just like you,
Speaker:Garth, is compensation plan should be designed to reward for the activities
Speaker:you're looking for, so if you're looking for higher conversion, you
Speaker:should be compensating for that.
Speaker:If you're looking for higher quality, you should be compensated for that.
Speaker:If you're looking for your surveys to come back and you want customer
Speaker:satisfaction, you should be given a spiff for that because now people will
Speaker:work towards those things that are paid for, that's why incentives work so well.
Speaker:Exactly.
Speaker:And by the way, we see this in the retail side when we do analysis on
Speaker:the retail side, we'll have banks in the south, mortgage companies in the
Speaker:southeast and their are loan officers, average six loans a month, and then
Speaker:you talk to somebody in their, during, you know, one of the big loan amount
Speaker:states like California, Washington, DC up in the northeast, they do four.
Speaker:Yep.
Speaker:Duh.
Speaker:And make a lot more money.
Speaker:Yeah.
Speaker:Well, well the four is because they kind of, you know, once again, I was a
Speaker:loan officer too, so I was out pedaling rate sheets and chasing realtors
Speaker:but you are, you know, at four, you're making a really good living.
Speaker:So am I gonna fight hard for five and six?
Speaker:Yeah.
Speaker:And whereas down, you know, down south, and by the way, and if you get down into
Speaker:the southeast where they do an average of six, they also have higher governments.
Speaker:So it ain't like they're easier loans, it's like they're probably
Speaker:harder loans than anything.
Speaker:Well, and it's interesting.
Speaker:I'm training people in today's marketplace in this high rate market,
Speaker:I'm training a lot of loan officers across the country doing
Speaker:20, 25, 30 loans a month still.
Speaker:Yes.
Speaker:In this marketplace, because they're doing the right things, they're a
Speaker:hundred percent, they're building relationships, having proper
Speaker:conversations, so on and so forth.
Speaker:Yep.
Speaker:All right.
Speaker:Let's talk about efficiencies for a minute.
Speaker:If we can and let's talk about the importance of creating efficiency within
Speaker:your business and also talk a little bit about the cost of having people who are
Speaker:not productive and what that looks like.
Speaker:This is fun, and I know you talked about on the stage that I thought
Speaker:was very beneficial to lenders
Speaker:and I think there's a lot of value in here too, for any loan officers
Speaker:who might be watching this to understand the importance of your
Speaker:productivity and what that looks like.
Speaker:Yep.
Speaker:So I think what's really interesting here is in 2021, there was about
Speaker:350,000 loan officers, a third of them did less than three loans.
Speaker:I mean, that's so part-time, it's like, why?
Speaker:Why would you do that?
Speaker:Why?
Speaker:How is that possibly worth it?
Speaker:If you're managing a company, and I know that the theory is it's a variable
Speaker:cost, but is it really you have to maintain their licensing Many times,
Speaker:the part-time people are the ones, who are the least able to package a loan
Speaker:together or provide the high level of service, they lose the muscle memory of
Speaker:how to do the business if they're only doing a loan like every couple months.
Speaker:So really think about whether that's really the right thing for you to have
Speaker:some people that's small, that part-time when maybe the approach is put that
Speaker:money towards the real producers and the real people focused on their career.
Speaker:The other is 80% of the volume in our industry is done by 40% of the LOs.
Speaker:So in the, so you get the bottom, you get the bottom 30, hardly do any,
Speaker:but the next 30 doesn't do very much either, so at some point you're do
Speaker:I really want so many low producers?
Speaker:And I understand it is tough when we're in this climate, every
Speaker:single loan is worth something.
Speaker:Right, but in a consumer direct operation, isn't it another one of your loan officers
Speaker:who's used to doing maybe 35 and now only doing 25, who could do the 26th
Speaker:loan for you if you gave them that lead?
Speaker:You know, maybe that's where you should think about instead of the approach that
Speaker:a lot of lenders seem to be taken is, well, I'll retain all my salespeople
Speaker:because they don't cost me anything, and they bring in extra business.
Speaker:I just say, rethink that, are you sure they don't cost you something?
Speaker:By the way, they're also the ones likely that have to negotiate lower rates,
Speaker:maybe cause they're not as good selling or their locks expire, or they're a
Speaker:little sloppy with the paperwork and the processor has to clean up behind them.
Speaker:I mean, it takes real analytics to know the cost of this and we help lenders
Speaker:do that, but, um, it ain't free.
Speaker:Yep.
Speaker:And it's interesting cuz you know, I trained so many loan officers across
Speaker:the country along with leaders and lenders and all of that, and I have this
Speaker:conversation with a lot of loan officers where I'll see them doing these 1, 2, 3
Speaker:a month and I'll ask them the question, why is it all you're doing right?
Speaker:And their answer's one of two things; well, that's all I need
Speaker:to do to make what I want to make.
Speaker:Yes.
Speaker:Or, well, you know what?
Speaker:There's other things that I want to do too, and if the first answer is,
Speaker:that's all I need, I go, well, all right, think about this, you know, you
Speaker:gotta make hay while the sun's shining right in, in anything that you do.
Speaker:And if you can close five or six or seven instead of three
Speaker:or 10, Why wouldn't you do that?
Speaker:Because we have no idea what the, and we saw this year how much the market
Speaker:shifted from 2021 to 2022, right?
Speaker:So people are now looking back, going, boy, I wish I'd have done more in
Speaker:2021 when it was really available and I wouldn't have given up so fast.
Speaker:So that's a message for all loan officers out there but on the other side
Speaker:of that equation is, look, if you're doing other things, this is an industry
Speaker:where if you put a hundred percent of your effort in, you can be incredibly
Speaker:successful and make an awful lot of money.
Speaker:Why would you choose another side
Speaker:gig, if you've got the opportunity to be successful in lending,
Speaker:because this is the one industry that's always gonna be a need.
Speaker:Home ownership will always be the American dream and people always need
Speaker:money to refinance and money to buy home.
Speaker:So I would encourage loan officers, if anybody's listening to this as a loan
Speaker:officer and they're watching this, you want to tap out on every opportunity
Speaker:you can within the marketplace.
Speaker:And I know when people hear things like 25 loans in this
Speaker:marketplace are like, Wait a minute.
Speaker:What I'm doing, two or three.
Speaker:Well, it, it's a process of understanding that is a product of your network,
Speaker:your lead base, your approach, your style, all these things you and I
Speaker:have been talking about will determine what that outcome is on your results.
Speaker:It's not working longer that's gonna make you successful, it's working smarter
Speaker:that's gonna make you successful in this marketplace, that's really what it takes.
Speaker:And I think the key part of is honing the skills and so, you know, It's
Speaker:having the right technology, sure, it's buying the right leads, great, but it's
Speaker:also getting the training necessary to make yourself the best you can be
Speaker:with every opportunity you're given.
Speaker:I mean, we get calls all the time, we do some, you know, work around,
Speaker:uh, lead management and CRMs and things like that, and we get called,
Speaker:Hey, what's the best lead source?
Speaker:I'm like, come on, it depends, and you know, it depends on what
Speaker:you're buying, how you're buying it.
Speaker:But by the way, That, that's the wrong answer because the, uh, the wrong question
Speaker:because how good are you converting leads?
Speaker:Right.
Speaker:You know, and if you're not good converting pre-qual, um, purchase
Speaker:leads right now, then it doesn't matter how good the lead is.
Speaker:Because that's mostly the purchase leads that you're gonna get right now.
Speaker:Yeah.
Speaker:Not last year, but right now.
Speaker:That's exactly right.
Speaker:So focus on the skills necessary to convert those before you start worrying
Speaker:about, you know, whether a particular lead source happens to be better or,
Speaker:you know, different than the next one.
Speaker:Yeah, and it's interesting, you know, one of the, one of the strategies that I've
Speaker:been employed with every single lender I've ever worked with is you need to
Speaker:have, uh, with every single one of your leads or your referrals that come in,
Speaker:you need to have a secondary call process in that where, you know, if that first
Speaker:loan officer can't sell that deal, there should be a second person talking to them.
Speaker:Yep.
Speaker:Sometimes just a different voice, sometimes you know may, maybe just a
Speaker:different personality or a different approach is gonna get a deal, and
Speaker:it's always been interesting to me how many times you'll have a loan
Speaker:officer take a lead, they say, nah, there's nothing here this guy's not
Speaker:gonna buy from me, won't pay our rates,
Speaker:you hand it off to another loan officer and son of a gun if they don't turn
Speaker:that thing in, you know, five minutes flat, they've got that customer
Speaker:eating out of the palm of their hand because of the challenge that's there.
Speaker:It's a process of understanding that if we educate properly and
Speaker:do the right things, we're gonna get the results we're looking for.
Speaker:Absolutely no question about it.
Speaker:All right.
Speaker:You had a quote, and I want you to kind of embellish on this, you said,
Speaker:um, "Satisfaction is measurable, But not if you don't measure it."
Speaker:Yeah.
Speaker:So help the audience understand that.
Speaker:Yeah.
Speaker:So we do customer satisfaction research for the industry, we surveyed
Speaker:about 300,000 consumers last year.
Speaker:We do it for, wow, many of the top lenders on their behalf, and we do it, um, and
Speaker:by the way, JD Power, you know, surveyed about 5,000 people last year, so it's
Speaker:a very deep data set, um, some of the top performing customer satisfaction
Speaker:lenders use the service and really the key is that it not only says, Hey, would
Speaker:you give me a five star review as an example, but it asks about the process
Speaker:and how they experienced the process and what they felt about the process.
Speaker:It's really the full consumer experience, and I'll give you, we break down, there's
Speaker:like seven major drivers of customer satisfaction, many of which do not have
Speaker:directly responsible for loan officers.
Speaker:So the challenges, how as a loan officer do I deal with it but the
Speaker:other challenges as a company, how do I make sure customer satisfaction is
Speaker:all the way through the process, not just make love on the phone up front.
Speaker:So let's say you do the great why experience, W H Y, and you get it and
Speaker:you convert them, That's amazing, so in consumer direct, in 2022 through October,
Speaker:looking at my right screen, I should have this slide with you too, 46% of consumers
Speaker:in our survey say they were asked for the same information more than once.
Speaker:That's really frustrating.
Speaker:So once again, pretend you're human to stop with thinking about, well,
Speaker:the problem is the tax return or the second bank statement, or the missing
Speaker:page of the bank statement, or all this arcane thing that we deal with in our
Speaker:industry, the underwriter's fault, think about it as a human, you're asked for
Speaker:the same information, more than once.
Speaker:It's frustrating.
Speaker:I already gave this to you, so, what do you do about it?
Speaker:Our industry is rife with, Hey, if you have a loan in the pipeline as
Speaker:a preapproval, you are gonna have to probably ask for another pay stub.
Speaker:Or maybe the borrower didn't understand, or maybe they only sent
Speaker:you their bank statement for their checking, but not their savings.
Speaker:The point is, you have to communicate at their level to make sure they understand
Speaker:and also you have to know that 46% of the time that they feel this happens,
Speaker:you need to be prepared to overcome it so they don't think it happened,
Speaker:and one way to do that is to not, once again, act like it's a transaction.
Speaker:And the one that I'll do, I'll just give you the one example here, Dale,
Speaker:I know we're running short on time, but if you, if somebody calls you and
Speaker:says, I need a letter of explanation, or I need an additional piece of
Speaker:documentation, that is already a failing conversation because nobody wants
Speaker:to have to explain anything, right?
Speaker:That's wife, parent, you know, that doesn't sound good, right?
Speaker:If you have a conversation, hey, uh, wanted to touch base on a
Speaker:couple things, um, you get your pay stubs every other week, right?
Speaker:Oh yeah, that's right.
Speaker:I got your April here.
Speaker:Yeah.
Speaker:Awesome.
Speaker:So your, is your pay still the same or, you know, when do you get a raise?
Speaker:It doesn't matter, I'm simply talking about their life.
Speaker:Oh, actually, I might get a raise next year.
Speaker:Oh, that's awesome.
Speaker:Congratulations.
Speaker:That's amazing.
Speaker:You get 'em every two weeks.
Speaker:You get 'em in your, um, you know, like a PDF in your email.
Speaker:Oh, no, there's got a, we got a website.
Speaker:We download 'em.
Speaker:All right.
Speaker:Could you just download a couple more of those for me?
Speaker:Yeah.
Speaker:Okay.
Speaker:I'll hang on the phone, by the way, while you do it.
Speaker:So how are things going anyhow?
Speaker:I've just had a conversation and asked for two additional pay stubs.
Speaker:That's right.
Speaker:I didn't say I need two additional pay stubs, and the guy's probably
Speaker:not gonna realize you asked for the same information more than once
Speaker:because it was just pleasant.
Speaker:So, you know, but credit inquiries, everything like that can be a
Speaker:conversation if you think about what is, how's the consumer gonna decode
Speaker:what I'm saying and how do I get on their side of the table, so to speak?
Speaker:So I get passionate on that one, dale.
Speaker:So this is what I love about you the most, Garth, is you've been in this business
Speaker:like I have for a long time, and you started as a loan officer just like I
Speaker:did, and worked our, you know, we both worked our way up through the business
Speaker:and what you're really revealing to people today is the secret to success
Speaker:in today's market; it's going back to the basics of, relationship,
Speaker:conversation, we've mentioned several times, Be a human being, think like
Speaker:a human being, Think about them as a human being, Yeah, quit thinking of it
Speaker:transactionally, think of it relationally.
Speaker:You know, Peter Drucker has a great quote that I love, he said, "The biggest problem
Speaker:in communication is that we don't listen to understand, we listen to reply" yes.
Speaker:That is such a true statement In today's world I watch loan officers every day
Speaker:that are on the phone and they're thinking about the next question they're gonna ask,
Speaker:they're looking at their computer screen, they're not even hearing what that
Speaker:borrower's saying to them, and they're missing that golden moment of conversation
Speaker:and relationship and connection and trustworthiness, it's so powerful.
Speaker:Look, this business is not rocket science, we try to make it rocket
Speaker:science, but it's really people are gonna buy no matter what the rates are,
Speaker:that's right, and they're gonna pick from the person they like the most and who they
Speaker:think is looking out for their interests.
Speaker:Yeah.
Speaker:So I, I think everything that we've talked about really goes back to
Speaker:conversational tone, treating people like human beings, and understanding
Speaker:that these are not transactions, these are not even units, these are families
Speaker:and people we're dealing with, and we're changing our life in an incredible way.
Speaker:Yeah.
Speaker:And the, and you know, the purchase is so exciting, it's really
Speaker:way more exciting than a refi.
Speaker:So it might be harder, yeah.
Speaker:But it's way more rewarding.
Speaker:Um, you know, and of course if you do a great job on a purchase,
Speaker:they're gonna tell people because you don't go to a cocktail party and
Speaker:say, damn it, I had the best refi,
Speaker:I saved $187 a month, how much did you save on your refi?
Speaker:But you're gonna go to a cocktail party and say, I bought that new
Speaker:home and the next human's gonna say, wow, why did you want a new home?
Speaker:And if you're part of that solution, you've earned the right to be part of,
Speaker:you know, getting a referral or whatever that next piece of business might be.
Speaker:Well, and the purchase is so much more emotional of a transaction than a refi
Speaker:is to the consumer cause this is the new house, it's the new thing, it's
Speaker:where they're gonna create their future memories, there's a whole lot that
Speaker:goes into that, it's really powerful.
Speaker:Yeah.
Speaker:Yep.
Speaker:If you were to give one piece of advice to the people listening today to
Speaker:succeed in, you know, the rest of this year in 2023, in a high rate market,
Speaker:what would that piece of advice be?
Speaker:Uh, empathy.
Speaker:Um, and one is it's empathy for the people that you work with, some of
Speaker:whom will probably need to have an opportunity to succeed elsewhere.
Speaker:We're gonna go through a big contraction.
Speaker:It's unfortunate.
Speaker:Yeah.
Speaker:Um, and I hate it when, you know, we're hired by people, a lot of mortgage
Speaker:companies to tell them how to, you know, get more efficient and optimize
Speaker:and I never forget that the spreadsheet of, you know, maybe you need to
Speaker:reduce your expense in a department or people, so you need to be empathetic.
Speaker:It's really, it's tough as it is for the loan officers trying to scrap
Speaker:to get from four to five to six to seven to eight loans a month, it's way
Speaker:tougher for the processor, the loan officer assistant, or the underwriter
Speaker:who really is waiting for you to do enough business to justify their job.
Speaker:It's a tough, that's tough.
Speaker:That's right.
Speaker:And the other empathy is it's a really tough purchase market and the customers
Speaker:will act odd because they're under stress.
Speaker:I mean, it's more expensive than it was a year ago, but let me help you
Speaker:understand how much more it really is, and let's see if we can come
Speaker:up with some solutions for you,
Speaker:or it's more stressful for the realtor, there's a lot less deals
Speaker:to go around, they're gonna act odd, you know, and frenzied about their
Speaker:transaction, which might be, you know, last month's Jaguar payment.
Speaker:So it's, you just have to have empathy for how difficult it is and be, you know, uh,
Speaker:Somewhat satisfied or appreciative that you have an opportunity to have such a
Speaker:meaningful role in it on an ongoing basis.
Speaker:I love it.
Speaker:Sage advice right there.
Speaker:Yeah.
Speaker:Let me close up my final question.
Speaker:I'd love to ask all my guests.
Speaker:I'm a firm believer that one of the keys to success for all of us is having mentors
Speaker:in your life and people that you can learn from, can you give an example of or just
Speaker:tell us in your words how important you think mentorship is for people watching
Speaker:this podcast, and maybe you have an example of a mentor in your life who
Speaker:made a difference that you wanna share.
Speaker:Yeah, I think I've had a, I had a few, I mean, I certainly had one in the
Speaker:production, um, uh, area when I came up.
Speaker:I got promoted pretty quickly at Chase, I was a very high producer.
Speaker:I kind of went from branch to regional manager very quickly, and I had a lot of
Speaker:bad habits, and most of it was around a level of arrogance and a lack of humility
Speaker:and I had a manager who beat that outta me, and he was
Speaker:right at every step of the way.
Speaker:Um, he's, and if he's watching, I'll send him a link cuz I've told him this myself.
Speaker:Um, I've also had ones, you know, where I did a lot of mergers and
Speaker:acquisition and strategy work at my latest job before we sold mortgage.com
Speaker:and AB Amer got sold to Citi group.
Speaker:I had a pretty meaningful job there and I had two very good mentors.
Speaker:One of them really at his core as a production guide too, so we saw eye
Speaker:to eye on a lot of things, but he was far more strategic and analytical.
Speaker:And another who was really a finance guy and he was, um, you know, taught
Speaker:me a lot of things that I hadn't really thought about at a very deep level
Speaker:and he was a very good manager, tough manager.
Speaker:The pattern for me, by the way, is it's the tough managers, uh, tough,
Speaker:but empathetic I think is probably the best mentors that I've had.
Speaker:Awesome.
Speaker:I love it.
Speaker:Well, think back to our coaches and our teachers.
Speaker:The tough ones were the ones that made us the best.
Speaker:There's no question about that.
Speaker:That's right.
Speaker:So, So, um, how can people reach out to you?
Speaker:Tell us a little bit about Strat Moore.
Speaker:I mean, you guys are such an incredible organization.
Speaker:Um, you know, if, do you wanna share for just a minute?
Speaker:Sure.
Speaker:You know, what you guys do and how it can help the audience.
Speaker:Um, we get a lot of people watching this podcast, so, uh, and what they,
Speaker:how they would reach out to you if they wanted to get your advice.
Speaker:Yeah, sure.
Speaker:No problem.
Speaker:Um, by the way, I'm blessed with a very, uh, Uh, not a common name.
Speaker:So I'm like, you Dale, just go to LinkedIn and type Garth Graham and you'll pop and
Speaker:I'll pop up or you can even Google me.
Speaker:So yeah, I'd love to engage with people on that level.
Speaker:Strat More really is a data-centric consulting firm, so really what
Speaker:we are helping is the c-suite on how to invest and improve the
Speaker:performance of their business.
Speaker:We do a lot of M&A activity, we didn't talk about that either.
Speaker:In fact, I'm kind of buried with M&A right now, but, um, really it's, you
Speaker:know, whatever those challenges might be, we give, you know, strong insights back
Speaker:by data and help people make decisions to improve their business, so that's
Speaker:really the core of what Strat Moore is.
Speaker:Um, and you see our stats that come out and if anybody wants to sign up on our
Speaker:website, we send out a monthly insight that I think is pretty darn powerful.
Speaker:Our databases, oh, 10,000 people get it in our industry, so we're welcome
Speaker:to share our insights that way as well.
Speaker:Well, Garth this has been great.
Speaker:You've been such a great ambassador to the business for so many years.
Speaker:I love when I get to see you at conferences.
Speaker:That's generally when we get to see each other at conferences, but we're gonna have
Speaker:to make a habit of making it more than that seeing we're both down in Florida and
Speaker:we're not too far apart from each other,
Speaker:love to get together for lunch or dinner or one of these, uh, things
Speaker:pretty soon, but thank you for being on, Great advice, great, um,
Speaker:information as always, appreciate you greatly and look forward to the next
Speaker:time we get to see each other again.
Speaker:Yep.
Speaker:All right, Dale.
Speaker:I appreciate the opportunity.
Speaker:All right, Garth.
Speaker:Thank you.
Speaker:God bless you.
Speaker:Thank you.
