Extreme Industry Make-Over
This is what seems to be going on right now, more than I’ve ever seen. As close to this as I can recall, was back about two decades ago, when the Chairman of Salomon Brothers (a 100+ year old Wall Street firm) invented the Mortgage Back Security (MBS) and the subsequent trading of the MBS. Prior to that significant paradigm shift, portfolio lending and modest volumes of whole loan sales were predominant in our industry. This gave way to easy access to virtually unlimited funds available for mortgage lending.
Abandoning their more traditional role as ‘deal-makers’ and businesses involved with securities underwriting; sales and trading; investment and merchant banking; financial advisory services; investment research; venture capital; correspondent brokerage services; and asset management – more than a decade ago we saw the beginning of the Wall Street invasion into our industry when DLJ bought First Franklin, and from that several Wall Street firms became more and more involved as owners of mortgage companies, warehouse providers and etc. Due to their relative short time-line horizon thinking, today as a major part of industry turmoil we’re seeing those more recent roles of theirs disappearing.
Another noteworthy transformation that came about a little more than a decade ago, as I recall, was the notion that retail originators – mortgage brokers, loan officers, loan agents, loan associates (or whatever label you chose to select) should be ‘commissioned sales/closer’ types. This shift created a new culture and attitude revolution, apart from the long-established character of the position as customer service, trusted advisor, underwriter/processor thinking individuals. This newly created commissioned concept, has given rise to a need for nationwide fiduciary duty legislation being considered, and the absolute return to good faith and fair dealing standards necessary to help protect the public.
Contrary to all the “Me Too” articles I see by most supposed industry Guru’s these days, it’s not all about ‘selling,’ it’s more like solve a problem or help the customer make a decision! Originators should not be taught to be a ‘closer’ – don’t kid yourselves, customers trust their interests are being considered first, not being handled by a commissioned sales/closer like the guy that sold them their last used car!
So last week-end I go to the local Garden Center and up comes a fresh faced twenty-something year old young man who asks “How may I help you Sir” – I go on to explain I’m think of tackling several projects in my yard and need to a buy a shovel! With a big grin he begins to ask me several probing questions, like what do I want to accomplish? I explain one thing I need to do is to dig a small 6″ deep trench for a sprinkler system I want to put in. His product knowledge kicks in, and he explains I need a flat nosed narrow shovel for that sort of a task, and shows me one. Also I tell him I’m going to plant a few fruit trees, he shows me a medium sized pointed nose shovel or easy hole digging. Then I mention, I’m going to pour some concrete for a small side patio and I pick up a wide flat nosed shovel for that! Three different shovels for three different situations. In fact, he’s the perfect candidate to hire as an LO! I just explained precisely what a retail originator does with a potential mortgage loan customer; needs good product knowledge and common sense coupled with a friendly customer service oriented helpful attitude. Customer interests are ahead of originators commission check and no selling necessary.