Tim was on the verge of bankruptcy. After the refi boom, and subsequent rate increases, and tight money supply, nobody seemed willing or motivated to do a new loan. Still, Tim didn’t want to have to start a new career. Realtors seemed to spin his wheels. While he was able to meet with CPA’s and financial advisors, they seemed more willing to receive referrals than to give them.

Tim did 5 loans in June and only 3 in July. A classic downward spiral. Not enough business even to keep the doors open. Then he decided to do something about it. He became proactive about sales instead of reactive hoping business would just call in. He became a sales focused mortgage broker instead of one waiting for the phone to ring.

This month, Tim put 25 loans in the pipeline. He hired another 5 sales pros, instead of standard cookie cutter loan officers waiting for the phone to ring. Tim is on track to originate 400 loans this year while many other brokers are closing their doors. How did Tim do it? How did he turn his company around from a money loser to a cash cow?

When your clients first approached years ago, they shopped your fees. If you had the lowest rate suitable for their credit score, you got the business. Often prospects would even call, ask your rate, and then hang up without even saying thank you. Prospects haven’t changed but you should.

According to the University of Ct., 87% of your past borrowers care more about a relationship with you than about the price or rate. That seems illogical if you only consider why they bought in the first place. Al was like that. He refinanced my house in 1999 and didn’t even so much as dial the phone to say thank you for the business. Although I did get a postcard telling me how much his company has grown. I have refinanced once since then, with another lender. 2 years ago, I added 3500 square feet to my home, did a new 1^st for $1 million with a 3^rd lender. I didn’t use Al. Why? Didn’t Al do a good job? Yes. Didn’t he lower my monthly payment? Yes. Why did I use the competition? Al lost the relationship. He didn’t keep in touch. While Al did send a postcard every 6 months, he made me a transaction, instead of a client.

What Clients Want

According to the Mortgage Bankers Assn., only 17% of the loans over the past year were originated by the lender who did the borrower’s last loan. This means that most brokers and LO’s have lost contact with their clients. Brokers and LO’s are still waiting for the phone to ring. But when borrowers were asked if they would do their next loan with the last lender, 89% said yes, if their lender had bothered to follow up on the relationship. According to Forrester Research, the 3 key items your clients want most are:

1) An understanding of the product they have.

Your clients really want to know the difference between an ARM and a fixed rate loan. Between an interest only program and a fully amortized one. They don’t want to become experts. They depend on you for that. But they do want to know what they have and what is available.

2) They want you to monitor their loan as if it was your own. You are constantly looking for a program that will lower your monthly payment. You are privy to the most current loans on the market. Your clients want the same consideration.

3) They want frequency in a relationship. They want to hear from you at least every 3 months. I mentioned this to one LO who told me he sends a newsletter every quarter, didn’t that make a difference? The answer is, would you rather hear from a trusted advisor personally or see her name on a sheet of paper every once in a while?

How to Originate 300 Deals a Year

Peter in Atlanta has 3000 clients from business he has refinanced over the past 4 years. A treasure chest in future business. Lately he has been striking out calling realtors who are also suffering. The problem is they are sometimes rude and often flaky. So Peter started calling his past borrowers. At first it was awkward. He felt guilty calling a borrower who hadn’t heard from him in the past 3 years. But he sucked up his call reluctance and did the dials. Surprisingly, nearly everyone seemed glad to hear from him. They asked about his family and even expressed gratitude for the great job Peter did on their last loan. Peter is now using a 3 step process that is earning him a 21% closing rate on all past borrower calls. He is closing 21 applications out of every 100 phone calls to past borrowers. Here is his 3 part strategy:

Catch Up, Update, Referrals

• Catch Up. Peter calls the client and catches up on their family. He asks about little Johnny’s soccer schedule and did Dad volunteer this year again to be Johnny’s coach. Is Mom working or did she realize her dream of being a stay at home Mother.

• Update. Peter then tells the client where rates are right now and how that will effect their home value. This appraisal estimate is the silver bullet for Realtors helping them motivate sellers to list their home. But even when the client doesn’t want to sell, they still want to hear about their home’s value and what is likely to happen over the next year. Peter did some research on their rate before the phone call. He also knows ahead of time if he can save them money. He asks them if they would like to save another $500 a month on their mortgage. Most say yes.  But even when he can’t offer savings, he knows how to follow up with a product they can’t say no to.

The average American household has $18,000 in credit card debt. Peter pitches that for effect. He then asks if the client has more or less than $18,000 to get the conversation started. He then trial closes by asking if they could write off the interest payments on their credit card debt and save 30%, would they be interested. At that point, Peter starts the discussion about a home equity line of credit and/or a 2^nd mortgage. 21% of all past borrowers ask to start an application.

• Referrals. After the questions about loan programs and consolidating debt, Peter asks for referrals. He knows that every client knows 250 friends, relatives and neighbors they could refer. So he expects to get 3 referrals on every phone call. In fact, 55% of all his clients will refer at least 5. All Peter has to do is ask. But he doesn’t make the mistake of advertising for referrals as most LO’s do. He doesn’t say, “If you know anybody, please tell them about me.” He says, “Who do you know who could benefit from the kind of relationship we have had so far.”

500 Committed Relationships

The American homeowner makes a home purchase every 8 years. They refi every 4.2 years (more often over the last decade). All Peter wants is to be there when they do their next loan. He knows that if he only keeps in contact every 3 months, talking to those he has a relationship with, he will automatically originate 125 new loans a year. More if he keeps in contact with a greater number of past borrowers.

Peter’s formula is 10-2-10. 10 contacts a day, 2 appointments a day, and 10 closed loans a month. The math is simple. The results are spectacular. Peter can’t hire enough new loan officers. The ones who will make the outgoing phone calls are hard to find. But the ones who do are now making $200,000 a year. Even in a bad mortgage rate market.

Getting To The Next Level

Making the mortgage business profitable is all about relationships, rapport, and trust. That is easy to agree with. But would you like to get an even better return on your time than Tim and Peter. Then see your borrowers face to face. David did that. At first he started the 3 month call script. He was also shy about forcing himself on those who didn’t have a mortgage need. But through coaching, we encouraged David to try to book appointments to get to know his borrowers. Then magic happened. Even those who didn’t have a need for a new loan on the phone decided to start an application when David met face to face with them. While Peter was able to close 21% of his past borrowers on the phone, David closed 36% of those he saw face face. His closing rate on referrals was even higher.

But why would you see someone in person when you can save time on the phone. Would you rather see your Realtor face to face or would you be able to gain the same level of trust only on the phone. Would you  rather see your lawyer face to face on an important case or is the phone just fine. The answer is obvious. Your closing ratio face to face will always be higher than on the phone.

The mortgage business has changed. No longer will you be able to stare at the telephone hoping it will ring. There are strategies you can use to even double the business you were able to snare over the last 3 years. But the mortgage business now is all about relationship, rapport and trust. The better you can manage them, the more business you will gain.

Dr. Kerry Johnson is a best selling author and frequent speaker at Mortgage Industry conferences. Peak Performance Coaching, his one on one coaching service, promises to increase your business by 80% in 8 weeks. To see if you are a candidate for this fast track system, click on www.KerryJohnson.com/coaching and take a free evaluation test. You will learn about your strengths and what is holding you back. Or call 800-883-8787 for more information.

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