Do You Know the Top Three Myths in Mortgage Banking?

Fifteen days from now Fall will officially start, but for me, the kickoff of the season is always the first football game. Our town is excited that for the first time in a long time, our Eagles will be competitive and might go deep in the playoffs. Coach Chip Kelly has turned football upside down with his innovative plays and approach to the game, especially his willingness to go against the norm in practice routines. Based on new scientific research on player recovery times, Kelly changed how the team prepares for games by having players become physically active sooner during the week than other teams. It is common NFL practice to wait until the latter part of week to train athletes under the assumption that it takes longer for players to recover from the previous week’s game. In a league where each player is a million-dollar investment, a poor decision by the coach on this issue would have significant ramifications. Kelly’s courage to go against conventional wisdom by using research made me think about some common myths in mortgage banking and why they don’t make sense in our new world of origination.

Myth Number 1: Anyone can sell. By far, this is the Number One myth that many managers believe when it comes to selling and origination. The thinking goes, “If we have the lowest price or a product that sells itself, the quality of the originator doesn’t matter.” Many banks in particular seem to have this view that only their brand matters, not necessarily how well the brand is executed by the sales staff. They seem to believe that “more feet on the street” is the way to go and that sales success is a function of simply hiring more originators. That strategy may have worked in the past, but not in today’s marketplace where originators must have top-notch sales skills to meet the needs of an ultra-informed customer base.

The “anyone can sell” thinking is further debunked when you consider that research shows only 25% of the total population has the personality characteristics to be effective in developing relationships and presenting value to a customer. (For more details on this issue, read my MBA article, “Why Johnny Can’t Originate.”) This data also reinforces that hiring is too important to be a random, haphazard effort. Originators are the quarterbacks of loan demand and exemplary sales skills are mandatory to win.

Myth Number 2: Buyers make purchase decisions based primarily on price. You would think that this myth would fade away in the 21st century. Unfortunately, I still hear and see originators citing pricing as the main reason why they are not making their sales numbers. The pricing argument simply doesn’t hold water. Extensive research on why buyers did not select a particular lender revealed that the seller did not seem trustworthy or did not successfully show the value of their products or services. Pricing is not the reason why originators fail.

Myth Number 3: Top originators make good managers. This is a corollary to the first myth except the belief is that if the originator can sell, they can manage. Wrong. Top originators are highly self-motivated individuals who are focused on the customer, often to the detriment of their relationships with co-workers. It\’s not unusual for a top performer to irritate the people in the operational side of the business with a demanding attitude. After all, they think, “I\’m extending myself to take care of my customers, why shouldn\’t I expect everyone else to do the same?”

When they become sales managers, top sales performers expect all of their salespeople to be just as hard-driving and achievement-oriented as they were. Unfortunately, the reality is that most of their salespeople don\’t share the same degree of drive and perfectionism that they had. That means that the sales manager is often frustrated with the performance and attitudes of his or her employees, and is uncertain how to change them. By promoting top originators to managers, companies lose on two fronts: they lose the production of the star performer (who now has to handle other people, which takes away from their production time) and they lose in terms of employee development because top producers often have poor managing competencies.

What common myths have you bought into and what are you doing to revise your thinking?