Looking at the Root Causes of Challenges

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By Jeff Mandel and Steve Hamner

Part 1

RISMEDIA, March 26, 2007-Numerous mortgage operations affiliated with real estate companies and homebuilders continue to struggle. The challenge is that other than becoming frustrated over the lack of capture rates and profitability, many executives do not have a deep enough understanding of the necessary steps to impact short- and long-term changes.

The first step is understanding the root cause(s) of the underperformance, so that wasted efforts are not spent fixing symptoms. Through our evaluation of a cross-sample of many of these entities, it has become apparent that there are several common threads that can be identified as root causes of the inability of many operations to meet the expectations of the partners and the sales forces that they serve. In this issue, we will discuss the first cause-personnel.

When evaluating the staff of joint ventures or company-owned mortgage entities, quite often we find that the hiring decisions were made for the sake of expedience or relationships and not based on a determination that the individuals have the right personality, skill set and work ethic for the position. This is an area where there should be no shortcuts. The manager and loan officers will make or break the business.

In the most successful partnerships, the venture manager or company president and the office managers have developed a strong peer-to-peer bond. This bond allows the office managers to feel comfortable that when issues arise, and they always will, they have an internal ally who can shepherd the deal through to a positive conclusion.

The company manager must be a strong leader, recruiter and coach to develop the right pool of loan officers to serve the varied personalities and cultures within each of the real estate sales offices. He or she must be an active networker within the local real estate and mortgage communities so that when the need to fill a vacancy arises, the potential candidates have already been identified and the recruiting plan for each is in place.

The loan officers that are hired to support each office are a critical factor as well. Quite often the first loan officers that are considered are the highest producers that have existing relationships in the office. These folks are usually not the best candidates. Top producers will have relationships with many agents in competing real estate offices, have become accustomed to managing their work schedule around their book of business and are often the most difficult to control from a management perspective.

A significant challenge we have seen is how little training is provided to in-house and joint venture loan officers on the topic of captive lending best practices. Quite often, a good retail loan officer is placed in a real estate office without the proper coaching and training. They can rapidly become a fish out of water, as the techniques employed by a typical retail loan officer are not those that drive success in a captive environment. It is imperative to provide the necessary coaching prior to introducing loan officers to this new way of doing business so that they have a strong opportunity for success.

Next month, in Part 2, we'll take a look at the challenges of accountability and company integration.

Jeff Mandel is the founder and president of Prism Professional Solutions (Prism). For more information, please e-mail jmandel@prismprosolutions.com (www.prismprosolutions.com).

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