Using culture to battle mortgage industry headwinds

The December holidays are right around the corner and for some of us, watching the 1946 classic "It's a Wonderful Life" has become an annual family tradition. To me, the concluding scene is especially relevant for our industry this year: bank president George Bailey (Jimmy Stewart) must come up with $8,000 in lost deposits or face certain ruin.

The townspeople rush to the rescue. Standing near his Christmas tree, they shower him with their precious, hard-earned dollars until he and the bank are saved.

The moral? As George's guardian angel, Clarence, says, "No man is a failure when he has friends."

Though mortgage bankers are thriving during the refinancing wave — and far from failing — we all know there are headwinds aloft.

We will feel the effects of a depressed economy, all-time-low home inventories, and a reduction in first-time buyers. While recent predictions keep interest rates at record lows for the next 18 months, the Federal Housing Finance Agency's 50-basis-point fee for refinancing may also compound the slowdown.

Bailey determined his bank's culture by being a server-leader and putting the interests of his family, friends and community before his own. It was this culture that, in turn, compelled everyone to put their own financial self-interest aside to bail George and the bank out. What goes around, comes around.

A leader's most powerful asset

As the economy slides, industry leaders won't need a holiday miracle.

All they will need is a culture based on the simple mantra, "Treat people like family, and the money will take care of itself."

I've seen this demonstrated — or should I say battle tested — numerous times at Incenter during COVID-19. For example, within three days of one customer's cry for help with an overflowing loan pipeline, a small group created an onsite, no-contact, socially distant closing service (Front Porch Closings). In addition, we've received numerous, unsolicited client accolades praising team members who have pulled off their own mini-miracles (aka worked their tails off) to get to closing and keep borrowers happy.

Ripple effects

A great culture builds on itself. It just takes a little steering from leadership to show employees how to put it into action. For example:

· Rethink your approach to local real estate agents. What they really need is a good professional friend who can share ideas and experiences. Remember that these "referral agents" are also your customers.

· With borrowers, go back to old fashioned Sales 101. Spend less time with technology and more time literally sitting in their kitchens (virtually during COVID-19, of course). Help them fill out that loan application so they don't get frustrated and give up. Plan to attend every single closing — your final chance to make a lasting, positive impression and establish a customer for life.

The driving philosophy

Mapping strategic initiatives to your culture will ensure both employees and customers support the company as the headwinds pick up. Right now, we're focused on diversification and actively building out product and service lines to offset projected contractions in refinances. An employee-first culture, one that rewards them for always taking great care of clients, will ensure your teams embrace new products and services that will help them make more customers happy.

For example, home equity loans for additions and renovations — targeting the people who've stayed in their houses during COVID-19 — are especially promising. These are call center products — inexpensive to produce — and represent the next cash influx. Reverse mortgages are another opportunity as the burgeoning baby boomer generation seeks ways to ensure a comfortable retirement. (Reverses aren't just for the cash-strapped, 65-year-old-plus widow anymore.)

Leveraging mortgage relationships with parents who have college-bound children into student lending is a natural service line extension, as well. You'll help solve a huge financial burden facing many families these days and, at the same time, originate long-term relationships with the next generation.

Lenders who go beyond the initial transaction and continue to "touch" young borrowers with new repayment options will be their first pick when it comes to getting a mortgage for the largest purchase of their adult lives: a new home.

At the same time, college loans can provide additional and stable revenue streams that will help offset the refinance contraction. Focusing on markets that tend to be less impacted by economic swings such as the high net worth customer will also help keep the pipeline flowing.

In short, the best holiday gift that mortgage lenders can give themselves is a culture that prioritizes relationships above everything else. It will lead to service obsessed people, a diverse lineup of innovative products, and profitable, decades-long friendships.