Originators must earn the trust of their clients and provide sound advice beyond considering factors such as the interest rate or the loan term. Understanding clients’ finances and short- and long-term goals is critical for providing effective advice and ensuring affordability in the community where the borrower desires to live.

“Mortgage companies are recruiting the top-producing and most talented professionals, a fundamental reminder that relationships and service are still at the core of corporate success.”

Facing a highly competitive home purchase market, lenders and originators are diversifying their product mixes and updating their tech stacks to capture additional market share. Mortgage companies are recruiting the top-producing and most talented professionals, a fundamental reminder that relationships and service are still at the core of corporate success.

Lenders face a substantially different recruiting and retention landscape as the baby-boomer generation, a large segment of the mortgage labor pool, begins to reach retirement age. Even as talent is becoming more indispensable than ever before, current employees and potential recruits are seeking positions based on changing criteria.

The nationwide lockdowns fueled by the COVID-19 pandemic significantly impacted how many younger generations perceive employment and their careers. Specifically, their goals and standards for job satisfaction have changed.

Suddenly, commuting to a downtown office wasn’t simply a matter of fact but an option alongside remote or hybrid employment. This was a seismic shift of the workforce’s fundamental perception of job satisfaction. And it’s something that mortgage companies seeking to thrive through the remainder of the current market cycle — and into the eventual rebound — must account for in their business models.

Evolving management

Mortgage lenders still depend on qualified originators to act as front-line specialists and decisionmakers. Even as the industry discusses concepts like “automating everything possible” or advanced technology like natural language processing, the reality is that most borrowers still desire a trained, professional expert when the time comes to select and commit to a mortgage.

While technology is essential, its role is to assist and empower mortgage professionals, not replace them. This inherent demand, combined with the significant change in how the labor pool views potential employers, has started to mean a need for more flexibility in the workplace and greater empowerment for the employee.

“Highly recruited top producers will consider how well they’ll be able to perform their jobs with a new employer, especially if they fear they’ll be hamstrung by a lack of technology or poor tools.”

Performance management has long been a popular strategy for all types of employers. In essence, this requires the collection of measurable results to determine how efficiently and effectively a particular employee has been performing their role. The employee then receives performance-based feedback, meriting increased compensation and/or promotion for success (or accountability for mistakes or shortcomings).

Today, many executives and supervisors are moving past performance management and toward an enablement-based coaching and empowerment approach. With this method, the manager accommodates reasonable errors as employees perform their jobs and uses these mistakes as instructional examples.

Of course, this approach also requires that an employer cede more decisionmaking authority to front-line employees than they might have traditionally done in a performance management environment. Many studies show that today’s employees — and not just those in the mortgage industry — increasingly base job satisfaction not solely on compensation but on the pride they take in performing their roles.

In the mortgage industry, there is some disagreement over the effectiveness of the work-from-home approach. Its popularity is a strong indicator that employees value flexibility. This includes flexibility in where and when they perform their duties. Although the efficacy of a hybrid approach can vary dramatically based on what the business does and how it operates, it’s clear that the flexibility (and inherent trust) that comes with such an environment is often considered by current and potential employees.

Office culture

Management must provide the most effective tools for their teams to perform their duties — including practical, real-world training. Highly recruited top producers will consider how well they’ll be able to perform their jobs with a new employer, especially if they fear they’ll be hamstrung by a lack of technology or poor tools.

Finally, leadership and management are about much more than coaching or measuring metrics. The availability and presence of executives and decisionmakers at all levels is something that employees notice.

In office cultures where managers and leaders are willing to explain critical decisions or receive constructive feedback, employees tend to feel more empowered and ultimately more loyal. Trust is a powerful motivator for productivity and employee satisfaction.

Similarly, employees are aware of the communication styles of their leaders. Do they only hear from the CEO once a year via an all-hands teleconference? Do interactions between executives and front-line employees tend to be one-way communications, or do decisionmakers legitimately accept and interact via two-way conversations? Again, the most robust cultures and desirable employers tend to feel like comprehensive, collaborative teams that pull in the same direction.

Like many industries, the mortgage business is undergoing massive change in many ways. As a result, the most successful mortgage companies will build upon a team mentality that fosters empowerment, coaching, adaptability and effective communication. These companies will attract the top talent and, even more importantly, retain it. ●

The post The Seismic Shift Occurring in Your Workplace appeared first on Scotsman Guide.

It’s highly recommended to dedicate these 14 minutes a day to reading. Knowledge is transformative, and reading is one of the easiest and best ways to begin improvement in your life and business. It’s remarkable how such a seemingly small commitment can lead to significant growth over time.

“Through reading, we can learn from the triumphs and failures of others, gaining insights that can propel us further on our own journeys.”

Whether it’s a captivating novel, a thought-provoking nonfiction book or even an informative article, reading can take you on a journey of discovery, opening your mind to new ideas, perspectives and possibilities. For commercial mortgage professionals, books can both broaden and deepen your understanding of real estate investment strategies, as well as loan variables and guidelines. Combined with the ongoing learning you do already — by reading industry news and taking professional development courses — the right books can help you predict industry trends, improve service and strengthen your knowledge.

Book benefits

When thinking about the vast array of books that exist, it’s awe inspiring to realize that almost any topic you can imagine has likely been explored and written about. These literary treasures enable readers to tap into the wisdom and experience of others, providing invaluable inspiration, guidance and life lessons.

One benefit of reading is that it doesn’t have to break the bank. You can access many of these resources for free; your local library likely has dozens of books on commercial real estate available in physical, e-book and audiobook formats. Librarians can also assist you with research if you want to dig deeper into a specific topic. If you find a book you’d like to keep, head to the bookstore and purchase it for your personal library.

Through reading, we can learn from the triumphs and failures of others, gaining insights that can propel us further on our own journeys. Instead of reinventing the wheel, we can stand on the shoulders of those who have come before us, absorbing their knowledge and applying it to our own lives. Essentially, you’re starting at a higher level of learning and accelerating the progress toward your goals.

Remember, alongside book reading, it’s crucial to stay up to date on industry news, regulations and trends. It’s helpful to regularly follow reputable financial publications, stay engaged with industry websites, and participate in seminars, classes and conferences. Pair these resources with a commitment to learning via reading and you can provide exceptional service, anticipate market shifts and elevate your expertise as a mortgage professional.

The impact of reading goes beyond professional growth: It benefits our communication skills, empathy and overall well-being. By engaging with different writing styles and diverse perspectives, vocabulary expands, critical thinking skills sharpen and the ability to connect with others deepens.

Reading also promotes relaxation and stress reduction. Especially when reading for fun, it can be a form of escapism, allowing you to immerse yourself in captivating stories and explore new realms. Moreover, reading before bed can improve sleep quality.

Spare moments

If you ever find yourself thinking that you don’t have enough time to read for just 14 minutes a day, consider the wonders of audiobooks. With their growing popularity, building an audiobook library can enable you to immerse yourself in captivating stories during your commute, during household chores or any time you have a free moment.

Speaking of commutes, that journey (whether it’s 15 minutes, 30 minutes or more) presents a valuable opportunity to absorb knowledge through audiobooks. Even brief daily sessions add up to a wealth of information over time, allowing you to explore a vast range of subjects and acquire new skills.

The brain is like a computer that functions based on what we program into it. By consciously choosing to fill our minds with positive, enriching content, we pave the way for personal growth and become more well-rounded individuals. Learning is a continuous process and every bit of knowledge gained adds to your overall understanding. So, embrace your commute as an opportunity to engage in self-improvement and expand your horizons through the power of audiobooks.

As author and motivational speaker Zig Ziglar said, “Your input affects your outlook, your outlook affects your output and your output affects your destiny.” Embrace this quote in your growth journey and understand how the books you read can get you to where you want to be.

Reading list

As a mortgage professional, it’s crucial to understand the importance of continuous learning and being informed about this ever-evolving industry. If you’re looking for books to enhance your knowledge and professional growth, here are some recommendations:

• “The Mortgage Encyclopedia: The Authoritative Guide to Mortgage Programs, Practices, Prices, and Pitfalls,” by Jack Guttentag. This comprehensive guide is a go-to resource for expanding your understanding of mortgage programs, regulations and industry terminology. It’s an invaluable companion for navigating the complexities of the field.

• “Commercial Mortgages 101: Everything You Need to Know to Create a Winning Loan Request Package,” by Michael Reinhard. This book offers a comprehensive overview to understanding the intricacies of commercial mortgages. It covers topics such as loan request preparation, underwriting, risk assessment and the overall process of securing a commercial real estate loan.

• “The Handbook of Commercial Real Estate Investing: State of the Art Standards for Investment Transactions, Asset Management, and Financial Reporting,” by John McMahan. While not exclusively focused on lending, this handbook provides a wealth of insights into commercial real estate investments, including financing strategies and the financial aspects of the industry at large. It’s a valuable resource for gaining a holistic understanding of the commercial real estate landscape.

• “Mastering the Art of Commercial Real Estate Investing: How to Successfully Build Wealth and Grow Passive Income from Your Rental Properties,” by Doug Marshall. This book explores various aspects of commercial real estate investing, including financing options and strategies. It offers practical advice for navigating the financing side of commercial properties, making it useful for those interested in mortgage lending.

• “The Real Estate Game: The Intelligent Guide to Decision-Making and Investment,” by William J. Poorvu. Not solely focused on mortgages, this book offers a broader perspective on real estate. Understanding the broader landscape and investment strategies can allow you to offer more holistic advice to clients.

There are many other books that are well worth the read. You can find further recommendations online, at the library, and in the collections of your industry peers and mentors.

● ● ●

Embrace the power of reading and let it transport you to uncharted territories within yourself, your business and the vast realms of literature. Enjoy it, and remember, it only takes 1% of your day. ●

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Given these events and their impacts on today’s commercial real estate landscape, it’s not surprising that investors are now prioritizing stability and downside protection in their portfolios. As a result, commercial real estate companies are increasingly looking to their asset managers — those who make high-level leasing, budgeting and operating decisions for properties within a company’s portfolio — to find innovative ways to cut costs and drive operational efficiency and value for their properties while lenders pump the brakes for a while.

“A rising emphasis on the role of asset managers can make all the difference for brokers and lenders when considering where to place debt in commercial real estate.”

Asset management positions are in much higher demand than they were just a year ago. A recent RETS Associates survey of midlevel and senior asset management professionals revealed these jobs as the commercial real estate industry’s most critical hiring need in 2023. In fact, an overwhelming 73% of survey respondents reported an increased company focus on their responsibilities this year.

These findings have distinct implications for those in the mortgage origination and debt spaces. A rising emphasis on the role of asset managers can make all the difference for brokers and lenders when considering where to place debt in commercial real estate. A borrower who has invested in a solid asset management team may prove to be the most reliable borrower — and that may be the difference between performing and nonperforming loans in the coming months and years.

Driving revenue

With many asset classes being affected by the pandemic, asset managers are being relied upon to develop new strategies and create solutions to improve property performance. These strategies and solutions are driving revenue for owners, increasing cash flow and enabling them to more easily meet their debt obligations. This, of course, is exactly what financial institutions look for when granting loans.

From reducing utility expenses to eliminating unnecessary spending and implementing improvements that raise occupancy rates and rental income, asset managers affect measurable change on net operating income. A borrower with a robust asset management platform strengthens their position when approaching a lender and increases their chances of closing a deal as they mitigate risk for these institutions.

As investors have shifted their focus from short-term gains to long-term sustainability, asset managers are playing an increasingly important part in helping them achieve their objective. This is also good news for those who place commercial mortgage debt during times of instability.

Portfolio profitability

Investment companies are tasking asset managers with significantly higher levels of accountability in their jobs. According to the RETS survey, in addition to their existing responsibilities, 20% of respondents also handle dispositions and portfolio management. Up to 15% of asset managers cover property management, market-facing acquisitions, risk management, sustainability, technology, fundraising and investor relations, or other categories. These statistics represent a vast expansion of the traditional asset management job description.

Fortunately, along with added responsibilities has come a rise in compensation. According to data from the 2022 National Real Estate Compensation and Benefits Survey by CEL & Associates, asset managers saw the highest growth in total compensation among industry peers in both 2021 and 2022.

The RETS survey found that compensation was the No. 1 reason why asset managers would consider making a career move this year. It’s encouraging, however, that the majority of respondents reported being happy where they are — another stabilizing factor for investors who are leaning into asset management. These findings indicate that asset managers are becoming more deeply tied to portfolio profitability than ever before, making their role in property performance increasingly significant.

Firms that are making greater investments into their asset management teams and asking them to assume additional responsibilities are taking a more holistic view of this role. They recognize that strong asset management leads to greater profitability. At a time when debt underwriting has become especially strict, looking for deals that include broader asset management involvement could help mortgage brokers and lenders identify winners in a crowded marketplace.

Mitigating risk

When considering where to place debt during a downturn, mortgage originators will obviously lean toward the most promising and least risky opportunities. Taking asset manager experience levels into account can help with risk mitigation.

The four main “food groups” of commercial real estate asset classes still lead the way when it comes to expertise in asset management. Respondents to the RETS survey reported having the most experience in the office sector (29%), followed by industrial (21%), retail (17%) and multifamily (16%). Meanwhile, respondents had relatively little experience in alternative asset classes such as health care, life sciences, student housing, self-storage and single-family rentals. Given this feedback, traditional asset classes may be safer bets for mortgage originators in the current climate.

Asset managers identified offices, mentioned by 30% of respondents, as the most challenging property type to oversee in 2023. Retail followed closely behind at 25%, while multifamily and health care accounted for 13% and 11% of responses, respectively.

While some investors may prefer to stick with less challenging property types, borrowers with a successful track record in some of the more demanding asset classes may represent a better risk profile among deals in these product categories. With investment firms increasingly turning to asset managers to improve portfolio performance, assessing a team’s level of expertise in a particular deal’s asset class — as well as its ability to manage some of the more challenging property types — can help mortgage brokers and lenders make more informed decisions.

● ● ●

The shift toward asset management prioritization is a significant trend in commercial real estate that’s driven by the need for stability and downside protection in a volatile market. As investment companies increasingly turn to asset managers to drive value and cut costs, they are providing those in the debt space with greater reassurance and a clearer pathway toward financing transactions that are beneficial to both lending institutions and borrowers. ●

The post Seeking Stability in a Volatile Market appeared first on Scotsman Guide.

Leaders put themselves in front of staff to give them direction and purpose when facing difficulties. The mortgage industry experienced a lot of challenges in 2022, yet there is reason to be optimistic that the tide is turning ever so slightly in the opening months of 2023.

“Leadership is a privilege and since you desire this position, earn your team’s respect with consistency in your management style.”

Management’s role in facilitating growth and skills is crucial for retail mortgage originators this calendar year. It will likely be the difference between success and failure. Managers should review key sales tips and, if they’re a producing manager, lead by example in fielding calls with Realtors or builders.

Managers who fail to lead by example will leave their people to their own peril without proper direction. Training is vital to getting originators in the proper frame of mind to sell, but just as important is to follow up. Without consistent check-ins, people revert to their old habits, and they fail to use the new skills that will make them and their company successful.

This is a time when more people are competing for fewer available dollars. A manager’s role is not to be a friend to their loan officers. Instead, truly be the person who can consistently help them learn the industry and understand how to separate themselves from the competition.

Developing staff

In assessing your organization, one of the first crucial tasks a manager needs to determine are the skills they need to provide so their team can overcome market challenges. This could mean bringing in an outside training consultant to help establish a strategy, or it could involve utilizing their personal experience as a seasoned manager to run coaching scenarios with tips and tools.

The first obstacle in doing it yourself is understanding whether you have the time to commit to the true development of your staff. If you are still producing loans and calling on Realtors or builders, time may be stretched thin, and you may not be able to devote the necessary time to truly develop your organization with sales tools and techniques. Having a mentor on your team who can be a team lead or sales group supervisor will help in spreading the workload. This person should be capable of leading by example with salespeople in the field as they work with referral partners.

As a leader for your team, look to focus on specific areas to develop your staff. These include prospecting skills; appointment-setting skills; conducting a professional interview; handling the personality attributes of a Realtor or builder; managing the anti-buying attitudes of some clients; and following up to secure consistent referral relationships. By providing tips and tools in each of these areas, you lay the foundation for a quality purchase loan environment for your team, and your production will correspondingly grow.

Ask your individual originators about their current relationships with referral partners. Who has sent them a buyer in the past 90 days? How do your originators maintain their relationships with these business partners? When seeking an appointment with a Realtor or builder, never ask for more than 15 minutes of time. A good sales call is done within 10 to 20 minutes, depending on whether it is a new relationship or an existing one that needs to be reactivated.

On the call, always use “needs-based selling” to understand why a Realtor should work with you before sharing what you have to offer them. Without need, there is no sale. Learn other techniques by looking to outside trainers or reviewing trade publications. Realize that no sale is ever made on the first call.

Team accountability

Once you have established techniques, the next step is to hold your team accountable for the necessary field activities that will yield the results you expect in a purchase-oriented market. This requires a disciplined follow-up plan for a manager to make sure their staff is doing what is expected to attract valued referral partners in 2023.

Mortgage originators, with the help of their managers, should aim for a strong mix of maintenance activities and business- development calls when it comes to reaching Realtors. This goal of maintaining past relationships and developing new ones can help your sales team land the leads they will need in this environment. The aim is to build a base of approximately 15 agents who work with you on a rotational basis by the end of first-quarter 2023.

Without accountability on these activities, there will be little to no change in sales staff production. Consequently, you, your reports and your company will struggle to meet goals for the year. The key is to have a high number of calls early in the year — certainly before the home purchase season picks up.

Sales managers should do a semimonthly review with each originator. Around the mid-month mark, look at what they’ve done during the first two weeks of the month. The second review at month’s end should focus on the activities each originator has completed in growing their Realtor footprint. Maintaining this focus earlier in the year offers the best chance for originators to be in the right place from April through October, the period that historically is the busiest time of the year for real estate purchase transactions.

Consistent approach

In the mortgage business, you drive a sales force through two clear methods: compensation and accountability. Compensation is a worthy topic to discuss another time, but accountability is proven and true. When salespeople make a minimum of two business-development calls per week to grow their pipeline and do the necessary follow-up with existing Realtor relationships, their volume will naturally grow due to the increased activity level.

Leadership is a privilege and since you desire this position, earn your team’s respect with consistency in your management style. Do not be on one month and off the next. Drive their high level of activities and guide them through their one-on-one accountability sessions twice a month, and you will see them implement your strategy for success.

Quality managers drive their people to achieve their potential. Poor managers leave their reports alone, which can lead to their demise. If you embrace what you do and do it at a high level in the early stages of 2023, you and your team will reap the rewards of your management approach during a challenging time in the industry. ●

The post Rally Your Sales Force During This Difficult Stretch appeared first on Scotsman Guide.

Prime prospects

• There are 16 million self-employed individuals in the U.S., according to the Pew Research Center. These people may not have the employment documentation required for a traditional mortgage, but they may have alternative documentation to qualify for a non-QM loan.
• Investors are buying up homes for rental or fix-and-flip purposes. These buyers are typically candidates for debt-service-coverage ratio (DSCR) loans, a subset of non-QM. Redfin noted that 18.4% of all U.S. homes sold in fourth-quarter 2021 were bought by investors, compared to 12.6% a year earlier.
• Many high net worth individuals routinely purchase and sell homes to rebalance their portfolios of assets. Non-QM loans that offer higher amounts than agency-backed mortgages provide them with the liquidity to do so.
• About 8% of all mortgage applications are declined at any given time. These prospects fall out of the manufacturing line for various reasons, but this doesn’t necessarily mean they’re not creditworthy. If an originator has already put time and money into these leads, they may have the ability to help close a sale by using a non-QM option.

Develop expertise

Technology and resources

Look to lenders

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Initial preparation

Obtain licensing

Next steps

Smooth transition

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Consumer demand

• My clients don’t utilize and/or trust technology.
• Part of my value proposition is packaging and structuring the loan for my clients.
• I don’t want to release control of the transaction.
• Our digital tools are inferior to the competition.

Close communication

The post A New Mindset to Overcome Inertia appeared first on Scotsman Guide.

Many mortgage companies use the same toolkit when connecting with real estate agents, which can include everything from printed handouts to lunches purchased in exchange for brief presentations. These strategies often become less effective over time. Real estate agents can see these individuals as pushy and sales driven, instead of valued and knowledgeable.

Valuable knowledge

Required education

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If you can persevere, your worst year in the mortgage industry will still be a better year than in many other jobs that exist.

Help yourself

Define yourself

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Personal growth

Tracking goals reflects your desire to pursue excellence. Yes, the granularity of tracking can fog up your perspective as you focus on smaller tasks. … In reality, tracking is about the end goals.

Upward trajectory

Goal setting

Consistent monitoring

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