Robert Tyler-Cook: Five Questions Help You Assess ‘Fit’ Issues that Influence Growth

Robert Tyler-Cook is Senior Vice President and Western Division Manager with Planet Home Lending LLC, Meriden, Conn.

Whether you are a branch manager seeking a new corporate partner, a sales leader trying to recruit and retain top talent, or an originator looking for a new company to hang your license at, finding the right fit is critical.

The most successful partnerships in mortgage banking come about because there’s a solid match between what the originator on the street needs and what the corporate parent (or its branch) has to offer.

How do you measure fit before you make the leap to a new company? The answers to these five questions can help you do just that:

1.         What products does your company offer?

This seems like a simple question, but it often isn’t. A company can show you their product list, and if they offer the products you use today, you might think you’ve made a good match.

However, issues can arise. Many lenders will tell you they follow secondary marketing underwriting guidelines with no overlays. Few actually do.

If you specialize in hard-to-do deals, such as consumers with lower credit scores, you’ll need to really dig in on this issue. Ask the company to provide a couple of names of folks who already close “outside the credit box” business in other markets. They can confirm the accuracies of claims about “no overlays,” no minimum credit scores or manual underwriting.

While you may be doing only conventional and government loans right now, I suggest you ask about any specialty products that contribute to your volume now or play a role in your plans for future expansion. 

2. What profit expectations do you have for me?

Every company has its own profit metrics, so it’s important to make sure the profit expectations from the initial trough, though the repayment period, and into ongoing profitability are reasonable and achievable.

To prepare for that discussion, know how much capital you need in each phase and how long you expect to take to reach profitability – whether that’s basis points or per-unit profitability.

Other items that need to be clearly discussed and disclosed before you enter in a new partnership: compensation, rates, investment, and expenses. Understand every way your success will be measured and make sure that you can meet those success metrics before you sign up.

This question and the next one often go hand-in-hand. While questions #2 is about what the company expects from you, it’s also important to understand what resources your new partner can tap to support its promises.

3.         Do you have the capacity to support my projected growth?

So often, companies are at the razor’s edge. They are making every dollar count. That is okay as long as you are both acting in good faith, and you have had in-depth conversations about profit expectations on both sides. Understanding a potential business partner’s source of funds and cost of capital can give you certainty that it can afford to fulfill its promises.

There’s more to capacity than just capital. Currently, we’re in a market cycle of rate drops and high volume that can cover up a company’s operations or financial woes. When the market turns, will the receding volume tide reveal structural problems?

Along with capital, make sure to talk about capacity of operations, training, HR and marketing. Is the potential partner staffed to accommodate the current branches or to handle a growing number of branches and originators? All those different pieces of the company have to work together to get people and branches onboarded and then to support their success going forward.

4. Can I talk to a branch manager (or mortgage loan originator) who joined 6 to 9 months ago?

There’s always a honeymoon phase when you join a new company. It typically lasts six to nine months. With that in mind, it can be enlightening to talk with others who recently joined the company and are now past that sweet spot.

Did compensation change? Did the partner invest all of the money that was committed? Were pricing and underwriting promises honored? The answers to those questions will tell you a lot about your new partner. 

Be open to considering that not all people who come to a company do what they say they are going to do. At the same time, if no one has anything good to say about a company keeping its commitments, you should expect more the same if you opt to join them. 

5. Are you willing to do your homework?

This final question is one to ask yourself when you’re hiring mortgage loan originators, rather than a potential lending partner. Are you willing and capable of doing the due diligence? Much like doing one more loan or calling one more recruit, you have to do the work to reap the rewards. 

If certain topics are important to you, have one more call. Ask one more question. Listen to your inner voice. If you have a bad feeling, keep investigating until your inner voice thinks the move is correct. 

Are you learning from each candidate to define what a “model match” is for you and your company? Hire people who match the expectations and culture of your company. If you don’t, the non-model match folks will leave. 

Seek a good fit not just in terms of product, but inclusive of financial expectations and culture. By focusing on fit, the odds of building lasting relationships are in your favor. You may grow a little slower at first, but you will be grateful you did after you have hired only the people that fit. Your staff will enjoy their work, and so will you. 

Moving around costs you in time lost, stress and profits. You want to get what you expect. When a potential partner fails to discuss the answers to these five questions fully, it’s wise to be cautious. It could be an indication that a company or branch manager is so anxious to fill seats (or a candidate is so anxious to move) that they’ll make an offer even when the fit isn’t right.

In the final analysis, whether you’re recruiting originators or searching for a new branch home, the most important characteristic to look for (and to have) is integrity. When you get honest, transparent answers to these five questions, you can truly measure fit.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)