SALES/Commissions vs. ETHICS

[Secret!]

SALES/Commissions vs. ETHICS

Ya know, the more I read Internet industry discussion boards, and traditional industry publications - the more I see people describing WHAT was at the core of the current business wide crisis; that issue I tried to fully address in ournewsletter - The Mortgageland Journal lead article last month, I trust you read it.

The one screaming issue that I don't see too much coverage on, is this point which I covered in that piece (the Shovel people) and above. Every day I ask myself how long is it going to take for this generation of industry employed originators and others, to conclusively discover that what they do is NOT selling, it’s more like 'solve a problem or help the customer make a decision!'

I also wonder about most of the industry vets who I see say things about originators & AE's etc. It's almost like they have amnesia and have forgotten that this 'Big Commission' paradigm is a recent concept and only 9 years deep in our history ... and clearly at the center of most problems we face.

When you remove ethical behavior from the formula on how to treat a customer, and replace it with 'Big Commissions' ... you get what we all see today ... an industry in crisis. This fact simply cannot be refuted and YOU need to change this concept with all who you have influence over.

[florida man]

peter

your scathing indictment is old, and rerun .

We all know this, but you FAIL to mention over and over again that having the loan officer on a $5 per hour 'salary' and small maximum commiss will NOT MEAN A BETTER INTEREST RATE TO THE BORROWER.

Just in case someone doesnt understand , let me put it ANOTHER WAY.

IT WILL NOT MEAN A BETTER INTEREST RATE FOR THE BORROWER.

The deal will be the same, BUT , the BANK OWNER will get all that profit, not the guy who actually has to SELL the loan.

Ysee, folks, Secret comes from 'the good ol daze' of banking, when the BANKERS made all the profit, there was NO DISCLOSURES, and they could charge 10% in CLOSING COSTS, and the loan officer made $5 per hour.

It was a high and mighty OLD BOYZ CLUB.

Secret misses the 'monopoly' that banks had , which of course meant harder terms for the borrower, cause they had nowhere else to go.

[Secret!]

Thanks for your viewpoint floridadude, unlike your assumptions what I describe worked for my first industry employer for 60 years before they hired me. It then worked for me, as I hired and trained people for my office there for the next 14 years, then - on my own it worked for another 20 years, then 6 more years as a consultant teacher/mentor ... so this concept surely isn't mine, just one I watched work time and time again ... not some half-assed theory, or a GUESS at what it would be like, as your opinion appears to be.

[Secret!]

For those of you who read this, please understand I know who this floridadude is, he chases me from board to board to take his cheap shots. So don't mind him, I do what I can to avoid him as much as possible.

Those of you interested in my viewpoint, I want to say what I mean this way (I also think it bears mentioning I have been an employer and mentor teacher consultant and owner/operator lender and a broker too, in this biz for several decades, so my viewpoint comes from that range of experiences. If I'm new to you, visit our site): Here's what I've learned during my career, it's NOT theory.

Commission jobs attract sales people who are ‘transaction’ focused, salaried jobs attract people who are career focused and want to be trained so they can succeed, the commissioned ones don’t choose or need training, all they want are the ‘short-cuts’ to get their client “closed” – major difference in the mindset.

Now, do I mean ALL ? No I mean 99% of those groups of folks.

[Erik]

Care to respond to Tom's point about interest rates, Secret? I'm curious to read your take on that part of his post, because I think he makes a good point.

[Secret!]

Happy to do that Erik. A couple of things he's said don't fit with what I know about this business (tom's an Apex net branch operator/LO working from his home office according to his website and things he's said before - so that's his point of view - maybe 2 years in this industry = means his opinions are narrowly focused due to limited exposure).

First of all, LO's don't SELL loan programs and they are NOT 'salespeople' - that widespread view today snuck into this industry just since the "correction of '98" - when the biz notion of commissions pretty much started with LO's & AE's in the industry. I have written many times on the differences in treats between customer service/help desk mentality people (what LO's actually are) vs commissioned salespeople. You can check out the SHOVEL people for more details on that (the example I use) here: Secret! University August 2007 Newsletter

On the next point, rates for programs should be set by employers, not by YSP crazed commissioned people. People who are trying to be politically correct assert "I add YSP to help defray the closing costs to borrowers" - if they were, the then they should have the lender put it on the HUD-1 as a borrower closing cost credit, instead of what we see all the time, and that is obvious -- more commission for the LO! ... "yes Mrs Jones, that MARGIN is what your credit score earned you" (BULL)!

Consequently, employers setting pricing does indeed make borrower rates better.

[power broker]

That statement was amazing. Well put my friend I am going to cut and paste your message and send it abroad. The sooner we as people in the mortgage business get back to putting people before profits. The sooner our industry will turn around for the better and longevity in a thriving business will take place. Keep up the good work. Your on to something good.

[Secret!]

Originally Posted by power broker

That statement was amazing. Well put my friend I am going to cut and paste your message and send it abroad. The sooner we as people in the mortgage business get back to putting people before profits. The sooner our industry will turn around for the better and longevity in a thriving business will take place. Keep up the good work. Your on to something good.

Thank you very much for those kind words. I'm happy you can see my motive is not to insult anybody, merely explaining this issue to an audience that probably hasn't seen both side to this issue as I have.

The punch line is that Ethics is at the Bottom of everything in this business; if you got 'em, you'll last 40+ years in the industry like I have.

[Erik]

Originally Posted by Secret!

Consequently, employers setting pricing does indeed make borrower rates better.

Well, if this is true, why do brokerages with commissioned sales people outperform (in originations) those who have one guy or gal setting rates for an entire company? Just playing devil's advocate a bit here.

[Secret!]

Originally Posted by Erik

Well, if this is true, why do brokerages with commissioned sales people outperform (in originations) those who have one guy or gal setting rates for an entire company? Just playing devil's advocate a bit here.

Not so sure that's true Erik, but I can tell you they get a lot more buy-back requests! And the owners get to pay out too much money for the part an LO plays in the overall machine, that takes strangers down the road to closings.

When you have are an owner/operator of a bigger company yourself for a while, with dozens and dozens of employees as I have, you'll see my points -- in fact when that day comes, I can absolutely guarantee you, that you'll hunt me down and say "I get it now Secret!"