Alec Hanson - Bypassed: A Modern Guide for Local Mortgage Pros Left Behind by the Digital Customer

Copyright 2020 Alec Hanson

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher, addressed Attention: Permissions Coordinator, at the address below.

Modern Spartan

PO Box 10994

Costa Mesa, CA 92627

ISBN: 978-1-7345783-0-0 (print)

ISBN: 978-1-7345783-1-7 (ebook)

Ordering Information:

Special discounts are available on quantity purchases by corporations, associations, and others. For details, contact Alec at 949-500-8062

Alec Hanson

Dedication

This book is dedicated to the men and women who decided to turn the camera around and share their stories and to the men and women who serve our great country and protect and defend our freedoms every day. I chose the first group because they step into discomfort to change their lives and the second group because they step into danger so we can change ours .

Id also like to thank my beautiful wife Erica, who somehow finds a way to love a driven, competitive, sometimes annoying and nerdy introvert. Love you, babe!

And to my wonderful mom, dad, and sister (Dan, Durene, and Kristin). Im who I am today because of the foundation of love (even the tough kind), support, and encouragement you give me even to this day!

W orking in the mortgage industry can often be compared to riding a roller coaster blindfolded. Sometimes you think you know where you are going only to experience a dramatic turn, a sharp drop, or a full on loop the loop. I began my personal journey to re-arm and re-train the local mortgage professional back in 2018, never knowing it would turn into an amazing training program known as the Modern Lending Playbook for loanDepot. Now, on the cusp of publishing this book, I find myself once again on the roller coaster ride of a lifetime.

Back in 2018, the mortgage industry was shrinking. Rates were moving upward, margin compression was very real, and the industry was about to go through a major consolidation even though the general economy was doing very well. Fast forward to 2020 and we find ourselves in the midst of a major industry and national economic crisis. The coronavirus pandemic is sweeping the globe. The major markets in the United States and all around the world are trying to navigate this unprecedented market chaos and the mortgage industry, well, lets just say the comparison to a roller-coaster is dead on.

Interest rates plummeted. Mortgage companies, on the cusp of going out of business, suddenly had more loan applications than they could handle. The entire industry ballooned as more and more customers applied for a re-finance or a purchase loan than ever before. This, of course, is introducing different and more complex problems for the mortgage industry, both due to the increase in volume and due to the global economic crisis we are all facing.

I felt compelled to address these dramatic events in the prologue of this book as a warning. In 2018, the dominos were starting to line up, forecasting a very real threat to the local mortgage professionals way of originating business. Up to 2020, that threat was increasing, making it even more imperative that local mortgage pros change their mindsets and skill sets in order to remain relevant. This influx of new business, this wave of refinance loans hitting the market right now is only masking this very real and very dangerous threat. With full pipelines and irrational short-sightedness, many mortgage pros will take their eyes off the ball. They will get complacent and lazy. They will start acting like gluttons at an all-you-can-eat buffet, ignoring the fact that closing time is coming. And when it does come and the patrons are shuffled, full and bloated, out into the streets, there will be a price to pay.

Those who heed this warning, those who remain diligent to evolving their businesses and paying the price to learn new skills and master new tools, those amazing local mortgage professionals will inherit this amazing industry, the rest will simply be bypassed.

Part I

I f homebuyers want to look for a home today, where would they start?

The answer to this question is very different today than it was 15 years ago. In the past, homebuyers had to turn to a real estate agent. Back then, the general public, including the mortgage professionals, didnt know all of the homes that were for sale in the community. Listing services, like what Zillow and Realtor.com use today, were locked down and exclusive to real estate agents, so mortgage professionals had no idea what was for sale unless they drove around town, looked for yard signs, or checked a newspaper to see what open houses were happening that weekend. The way they got customers in the mortgage business was to prospect, partner, and solicit real estate agents and try to develop a relationship. So when that customer went to that real estate agent to find that house, that real estate agent referred them to a mortgage professional to do their loans.

Fast forward 15 years, and now the potential homebuyer doesnt need to go to a local real estate agent first. They can go online and get tons of information, often a lot of misinformation, about homes that are for sale and the mortgage process. Currently, the number one lender in the country is internet-based (their ads usually run during the Super Bowl). The reason that company is the leading lender in the country right now is because it exists where potential homebuyers are searching for information on homes and mortgages. Whats interesting about internet-based companies is that their mortgage professionals are likely to have fewer than five years of experience in the business. Thats not a knock on those young professionals; its just reality.

Heres the scary thing about the world moving toward this internet-first type of experience: The professional mortgage experts, many with 30 years of experience, who live in their local communities, have become virtually invisible to the local homebuyers. Those veteran salespeople seem to have lost their relevance. Many are sitting around asking, Where did my business go? The local real estate agents they partnered with are losing their ability to refer people because the customer is starting to drive the real estate transaction. In the past, a real estate professional drove 99 percent of the transaction by referring, controlling, and encouraging the customers down their path with their preferred lender and title and escrow company, along with ancillary services. These veteran mortgage professionals who are slowly becoming invisible work for 100-percent commission, so if they dont close a loan, they cant feed their families. And that puts them under a lot of pressure.