We are living in interesting times where fact is fiction and fiction is fact. Whether it is COVID-19 protocols or the idea that everything will go back to “normal” after this upheaval, there are a lot of assumptions and misconceptions that will impact our future course.
The new reality for mortgage bankers and all businesses for that matter is that fundamental changes have occurred and there is no turning back.
Old sales strategies will finally be replaced by new sales behaviors that are better matched to the consumer’s buying journey.
A recent documentary on what really caused the sinking of the RMS Titanic presents a classic case of how false assumptions can have disastrous results. We all know that the luxury liner sunk after hitting an iceberg on April 15, 1912. While many blame the tragedy on lack of enough lifeboats and the captain for being drunk on that fateful night, the documentary asserts that it was really a confluence of events that caused the deaths of more than 1,500 passengers.
Many passengers believed the ship was “unsinkable” and did not take advantage of the lifeboats (apparently there was room for 400 more passengers to get in). Lookouts failed to spot the iceberg early enough because weather conditions created a refraction that obscured it from view.
A ship only five miles away from the Titanic did not respond to SOS signals because the crew didn’t realize the messages were coming from a passenger vessel. If even one of these misconceptions had not prevailed, the tragedy might have been avoided.
This leads me to the current volatility in the marketplace and what this means for lenders. As a former capital markets manager, I know volatility is typically the result of two things: Changes in asset or economic fundamentals and changes in investor perceptions. When volatility occurs because of new information or developments, assets can rise and fall. More often than not, volatility is a function of investor perception about what is hot and what is not. In this instance, the fundamentals haven’t changed, but investors have grown cold to current assets.
Investment strategies are similar to the selling challenges that sales organizations must navigate. While volatility is common in the financial marketplace, those that stay the course and manage their investments well win in the long run. As an example, consider the 2008 global financial crisis. If you invested in the S&P 500 in Jan 2008, you would have lost 48% in that year. But, if you focused on the long term and held the investment for a five-year period, you would have recovered your loss and gained an average 5% per year, returning 28% in total.
Achieving Long-Term Sales Success
The bottom-line is that volatility is now constant in business because sales information is readily available and investors’ perceptions can change on a dime. Taking a long-term view based on facts and data can make all the difference in terms of a producer’s sales success as well as the overall success of the organization.
For years, mortgage executives have discussed that their selling models need to change. Some lenders have actually made changes, others have not. Many senior managers think change is just about getting a new loan origination system or other tools. Unfortunately, these measures will not be enough to ensure sales success moving forward.
Once the current crisis has passed, I think some aspects of mortgage banking will be completely different. For example, drones can conduct appraisals, virtual open houses will be the norm, and more physical branches will be replaced with employees working remotely and teleconferencing.
Without a doubt, recent events have opened the door to better ideas that can be applied to our new world of retail. In my view, the originator role is the next element to be transformed. The present model is broken for many reasons, including too much compensation for what is being delivered, and originators resistant to using new technology.
Times are changing and, in my opinion, all for the good.