Boni Lonnsburry: Tell me a little about the more unusual software you mentioned. What do you use each program for?

Randy Luebke: We use Calyx Point for processing and GoldMine for contact management and email. PaperPort is used for digitized document management and Mortgage Coach for preparing our Professional Mortgage Plans.

MyRateAlert is a very useful program developed by Majestic Consulting in Illinois. It allows us to enroll each of our clients in a rate watch program. We set an index for so many basis points above and below each loan rate. Then, each and every day, the system scans every one of the loan files. It doesn’t matter whether you have 500 or 500,000 loans in the system; it will scan them all to see if any indices have been exceeded. When I tell my clients that I am going to keep an eye on their loans every day, I can literally do it.

Move-Up Homebuyer Analysis is another Majestic Consulting product we use.

Boni Lonnsburry: How did you get started in the mortgage business?

Randy Luebke: I started 16 years ago with Cal-Fed Savings and Loan. I was in the advertising business before that and I hated it. In making a career change, I was looking around to find something that suited my personality. I very much enjoy working with numbers, and I’m pretty good at it. I love real estate and all the aspects of real estate, including negotiating the deal. I wanted to do something that was significant and important.

I was trying to decide if I wanted to become a financial planner, life insurance agent or lender. At the time, financial planners had a poor reputation in the marketplace for taking advantage of people. Mainly because they were using the guise of financial planning to sell stocks and bonds. I felt that negativity would be a lot to overcome. Selling life insurance is a terrific career, but it’s also a slow start business, meaning it takes years to get to the point where you can support yourself. Taking those things into consideration along with the fact that I love real estate, numbers and wanted to do something significant, the mortgage business was obviously the perfect choice.

Boni Lonnsburry: Were you an immediate success?

Randy Luebke: Yes. I’d just bought a new home, had my second baby, and was in a fully commissioned position. I worked the hours necessary and put in the time required to be successful from the start.

When I began, my initial sales pep talk from my manager went something like, “Randy, we really don’t want you here. You were hired through our corporate offices, so we have to take you on. And by the way, in order to give you a territory, I went to the other loan officers in the company and asked them to give you some of their real estate offices so you could call on them.” I was standing there looking at my manager and thinking, “Okay, so I’m not welcome here and now you’ve managed to alienate me from every other loan officer in the company as well by taking away part of their territory.” Of course I later found out that none of the offices they gave me had ever been visited anyway. They had given me the worst real estate offices to call on.

Long story short, I found that all the good real estate offices were taken by the other loan officers. I only got the up desk on Friday afternoons when nobody called. My CPA referred one of his other clients to me for financing and I decided to knock their socks off. Sure enough, by doing a good job and working the referral business from day one, I made over $100,000 by the end of that first year. Back then they only paid 25 basis points per loan, and the most you can make on a loan was $2000. My success was built out of desperation. I realized I had no other resources but my clients. The only way I could get more business was by doing a great job for my clients.

Boni: So you got most of your initial clients through professional referral sources?

Randy: It all started with one CPA. Through my clients I was eventually introduced to Realtors.

Boni: How did you manage to build a referral business so quickly?

Randy: I worked really hard and asked for referrals every time and all the time. I’m not an aggressive person; I think aggression is rude. My “asks” were all very subtle, but I made it easy for my clients to refer to me.

When you find a restaurant you like, you tell people about it. Most people enjoy referring others; you just need to knock their socks off so they feel like doing it. You don’t even have to directly ask. You can merely imply that you do business through referrals. I tell my clients “Don’t keep us a secret!”

Boni: When you look at other loan officers in the industry, what mistakes do you see the newer ones making?

Randy: They want to get rich quick, so they see this business as a way to make a lot of money without doing a lot of work. It’s all about them and not about their clients. Savvy clients will see right through this and resent it. You have to completely shift the paradigm to be successful. If you serve your client, and you serve them in a way that provides a ton of value to them, they keep coming back to you. I think that’s the biggest mistake newer loan officers make. They’re too short sighted, just looking for the buck.

They also aren’t committed to education. They don’t want to spend the time to learn to be a professional salesperson, learning the products and the application of the products. I still spend a minimum of five hours a week learning things, and I’ve been doing this for 17 years. You’ve got to learn in order to serve your client well.

Boni: Do you think that veteran loan officers make different mistakes?

Randy: The biggest mistake a veteran loan officer can make is to forget what made them successful in the first place. They get big headed and it gets in their way. They’ve forgotten that hard work built their success, and they think they just deserve it. So their business starts to fall off.

Another problem, that a huge percentage of loan officers struggle with, is hitting a ceiling on their income. It happens for different loan officers at different levels. I’ve seen some hit the ceiling where they’re just closing four loans a month. Others hit the ceiling at closing 20 loans a month. They hit these ceilings and don’t recognize that the cause is a lack of systems. If they’d take the time to create efficient systems for themselves, they could move on to more productive levels.

 Boni: How did you first set up your systems?

Randy: I’m a systematic person, and I like processes, so it’s in my nature to create systems. I got very busy very fast. I realized that my business was out of control, and that if I didn’t create systems to put some order into it, my clients weren’t going to be happy and I wouldn’t get any more referrals.

I did if for my clients’ sakes, because I wanted to continue to provide quality service. And I did it for my sake, because I’m a big believer in balance of life, for both myself and my employees. I work only work four days a week, and I’m trying to create a schedule where I work only every other week. I’m 51 years old, so it would be like a semi-retirement for me. Without systems, I couldn’t do it.

Boni: Do you find you are continually updating the systems?

Randy: I’m constantly updating and refining my systems. Just to enable myself to work every other week is going to take some very sophisticated systems. My clients need at least a feeling of 24-7 attention, and you can’t deliver that without tight systems.

Boni: What would you say is the biggest factor differentiating you from other loan officers?

Randy: “Professional Mortgage Planning”. First Reliance Mortgage has developed a number of processes to help our clients use their mortgages to achieve their financial goals. A typical loan officer will have a transaction with a borrower to satisfy an immediate need: they’re buying a house, they need cash, they want to lower their interest rate – it’s a transactional, one-time kind of thing. They may do some ongoing marketing to continue to stay in touch, but most of them don’t even do that. They’re just waiting for the next event to cause their client to initiate contact.

We reverse that. From day one, we try to identify all our borrowers’ long-term financial plans and goals, and show them how they can use their mortgage and their homes to help them achieve those goals. For example, imagine you have two kids, 7 and 11, and you want to send those kids to college. You’re buying a new home and your current home, which you bought for $100,000, is selling for $500,000. As a result, you have $400,000 to put down on your new home. Rather than do that, we’d advise you to set aside a certain amount of the money in a college 529 fund, where it can grow tax deferred and even be taken out tax free (if used for educational purposes). Even if you have every intention of saving for your kids’ college fund, actually doing it can be a difficult thing. If you take our advice, that college fund is done. You’ve created a way to systematically force yourself to fund it on a monthly basis.

Everybody has a goal of being financially independent or retiring. What does it take to get to that point? We have mortgage strategies to help you get there. For example, instead of taking out a 30-year fixed loan, we might advise you take out an interest only loan and invest the difference in some type of retirement fund. The idea is that mortgages are much more than just tools to obtain real estate. If they are managed properly and proactively, you can use them to obtain a wide array of different financial goals. That’s what makes us really different. It’s a lot of fun too.

Boni: It sounds like you are an invaluable asset to your clients.

Randy: We’re part of their financial future. We’ve been evolving this system for about four years and now have a terrific package to deliver to our clients. We also partner with traditional financial planners to offer even more. They become the asset manager and we become the debt manager. Between the two of us, we coordinate our work through the detailed written financial plan to achieve better results for our clients than any of us could have achieved on our own.

If you think about it, a traditional investor has to invest x amount of risk to get x amount of rate of return from assets to fill their financial bucket. The debt side is like holes in the bucket. He’s making all this money, but the debt is letting some of that money run out of the bottom of the bucket. We plug the holes! Then the client can either reduce the risk that he is taking and get the same rate of return, or continue at that same level of risk (because he’s comfortable with it) and get a greater rate of return because he’s no longer wasting money on the debt side. It’s pretty fun.

Boni: Randy, if your son decides to go into the business, what advice would you give him?

Randy: I think that the mortgage industry has a tremendous opportunity to give a lot of value to a lot of people going forward by incorporating things like our “Professional Mortgage Planning” into day-to-day practice. If my son were to choose to go to work for a commodity type mortgage company, where they basically answer the phone and fulfill an order, then he wouldn’t earn much money or get the fulfilling feeling of actually helping people. I’d advise him to work for me because we help people here every day. It used to be cool just to help people buy homes. Now we can help them retire, fund college, and help their kids buy homes.

Boni: What was your most successful marketing campaign?

Randy: People have asked me why I’m successful, why I’m able to generate the amount of business that I do. I’ve looked at them and answered, “I don’t know.” But I’ve realized that I’ve had a lot of things going on all the time. There isn’t just one thing you can do to market yourself. You need to combine good customer service and annual debt reviews with a client appreciation program (monthly gifts and a yearly party). Last year we rented a movie theater and invited 153 clients and their kids to see “The Cat and The Hat”. We bought them all hats with the First Reliance logo, hired an actor to appear at the theater as the cat, and gave away door prizes to the kids. It’s all about staying in touch with your clients and finding new ways to add value to the relationship.

Boni: And how do you use Mortgage Coach to do that?

Randy: Mortgage Coach is an analysis and presentation tool. It helps our clients to get the idea right away. They can see in simple figures what the total cost of owning a loan is, or what a debt consolidation might do. Mortgage Coach also shows them what would happen if they reinvested their savings, so it fits very nicely into our professional mortgage planning approach. We use it with every client.

Boni: Who or what was the biggest contributor to your success?

Randy: Todd Duncan, Bill Bacharach, Brian Bufini, and guy I call “Yoda” (Doug Carter). I met Todd six or eight years ago and he has become a huge conduit for great ideas from quality originators throughout the country. He has a terrific coaching program, which I’m actively involved in. So I’d have to say Bill for financial planning, Brian for Real Estate and Yoda keeps my head in the right place. I also work with a company called Synergy Solution. They have many awesome systems which I have incorporated into my business model.

Boni: If you had a magic wand, what would you change about your current business?

Randy: I’d take exactly what I’m doing, sharpen it up even better, and then blow it up times a million because it’s really good! I recently realized that January 1, 2001 was the day that the first baby boomer became eligible for retirement. They turned 55 years old on that day. 17 years of baby boomers are moving into retirement (including myself). We have had a lot of fun, and we’ve made a lot of money, but we’re not ready for retirement. And as boomers move into retirement, we want to do more of the stuff that we enjoy doing, not less. So there is this huge group of folks who aren’t ready for retirement, and I have an opportunity to help them prepare for it.

Boni: What are your current goals?

Randy: I want to continue to spread the word about “Professional Mortgage Planning”, expand my business, and touch as many people as possible.

Boni: You mentioned that part of your referral source mix was business managers. What is a business manager?

Randy: Business Managers are kind of unique to California (and maybe New York). They are the guys and gals who manage athletes and movie stars.

Boni: Is there anything you’d like to say to other originators who aspire to the same kind of success that you’ve created?

Randy: Recognize the responsibility you have in taking care of your clients’ lives. It’s not just about money; it’s not just about the size of the commission you earn. It’s about providing your clients with a valuable service – that’s why you get paid. Don’t forget it. It’s all about them, not you.

Randall A. Luebke, RFC, is a registered financial consultant at First Reliance Mortgage Corporation, Newport Beach, Calif. 949/224-4240;m email: randylue@rebiz.com