Interview with a Winner:
Mark Klein
Speaks Out on Creating a Blockbuster Origination Business
Mark Klein, Pacific Coast Lending, Agoura Hills, CA
1999 Volume: $100 Million
2000 Volume: $65 Million
2001 Volume: On track to hit $120 Million
Average Loan Amount: $400,000
Software: Point, ACT and The Mortgage Coach
Mark Klein: I will start off by saying, last year I had a pretty bad attitude quite honestly. For some reason I was in a rut. I didn't want to work to hard; I was only working 20-25 hours per week. I just didn't want to work that hard and my attitude actually became pretty poor. In about September I started going to seminars again, I had gotten away from that stuff. Once I started hitting the seminars, listening to positive motivational stuff, it's amazing - everything in my office changed, my attitude changed, and everything around me changed.
Even with having a pretty poor year and not working a lot, I still did about $65,000,000 last year. The year before I did about 100,000,000. And then in '98 I did about $120,000,000. This year I am on pace to do about another $120 million.
Boni Lonnsburry: Mark, how is your business divided among your referral sources?
Mark: 40% of my business is from business managers/CPA's/financial planners. About 30% of my business is from past clients and 20% is from realtors. And another 10% is from people I know - from clubs, friends, etc.
Boni: I want to come back to how you got that 40% CPA/financial planner business, but first let's talk about how you got started in the mortgage business.
Mark: In 1992, I was a CPA (I had been for about 6 years) and I hated it. People in the mortgage business do not realize how good they have it. I came out of school expecting to make a $100,000 or so as a CPA. But I was working 60 hours a week hating what I did, for around $20-30,000.
My roommate was making twice the money I was making working for a bank and doing mortgages and was home by 5 o'clock every day. I didn't understand that - I am astute, I am a professional, I am going in everyday and busting my hump, and this guy is home at five o'clock and earning twice the money. It was a big joke in our house - I would come home, tired as all heck, with my tie half-way down my shirt. And he would look at me in his shorts, having fun, and say, "Yeah Mark, but you are the professional!" It was kind of like a kick in the butt.
He had a mortgage company and he said one day, "Mark, why don't you do a couple loans for your clients?" And I said, "sure". So I started doing a few loans and made a lot of money very quickly. There weren't a lot of people in this business that had a customer service attitude. I used to hear things like, "My lender won't even call me back." As a CPA I called everybody back - I built my whole practice based on that.
Boni: Did your connections in the accounting profession result in 40% of your business being CPA's?
Mark: Well that's kind of how it started. I went after that market without even knowing that was a market. I also formed another niche early on by accident. I did a loan for a famous psychologist; I am not going to say her name. She was doing a million dollar loan. It me hit hard at that time - how much more money could be made just financing a larger property. So at that point when I said, "Why not go after all these jumbo loans?" From day one I wanted to do jumbo loans.
Boni: A great niche.
Mark: Then I met Greg Frost - he is the Albuquerque guy who does 80 loans for a $100,000 each in New Mexico. I didn't believe he did that many loans. I had heard about all these guys doing all this volume and I had no clue of the volume they were actually doing. I used to think they were just flat out lying. Sure enough I met Greg, and over the years, I became really good friends with him. I went to some of these guys' offices and saw what they did. I decided that if I could bring even close to that kind of volume into my market area or my target market, I would become a 100-million-dollar-a-year man. And that is what I did.
Boni: What mistake do you see rookie loan officers most often making?
Mark: Good question. Two reasons…
1. I don't think they have a target market. I think people need to focus. I don't care if it is FHA, I don't care if it is jumbo loans, I don't care if it is non conforming loans, I don't if it is with realtors, builders or whatever. There are too many people in our business that are jack-of-all-trades and master of none. They do the commercial deals, they do the FHA deal they do the second, they will do the whatever, and I think that is the problem.
I would rather become an expert on one or two things as opposed to knowing little about everything and trying to do things that I don't do well
2. I think the second mistake rookies make is they don't work ON their business. People have a tendency to work IN their business all day long… talk about doing a loan… returning phone calls, but they never make that time to come up with some marketing plans, make sure their marketing plan is consistent, come up with a system to return phone calls, to analyze loans, to get info quickly. And they don't work IN their business to set up these systems. They end up doing one deal at a time over and over again.
Boni: Going back to that first point, what advice would give a rookie as to how to choose their market?
Mark: First of all they have to like what they do. I found out that people are successful in life working at what they like to do - whether it is mortgages or being an accountant or being a lawyer, a doctor, or whatever. To determine what market to target, I would first ask what loans do you like to do? Do you feel comfortable working with first time homebuyers, or would you rather work with government loans? And who are the people you already know who can help you get there?
Try to take a five-year approach. If you looked ahead five years from today, where would you be? That is what I did in 1994. I sat down with Carolyn Martin in a Todd Duncan seminar and she was talking about coming up with a business plan and giving yourself a flow chart with all the different positions you want to create. At that point I was doing every job in my business.
I came up with a flow chart with me at the top and going down from there. If you can imagine a business flow chart where you have a president, a CEO, and a marketing person, sales people, etc. I said I want my business to look like this… And you know what? I kept that flow chart, and three years later, my business looked almost exactly like I mapped it out.
Boni: Did you look at it often throughout the three years?
Mark: I would look at it every once in a while. I would go back to my planning and say "Wow this is really happening." I had it in my mind, though. I envisioned it. Today, the only way you can do a hundred million dollars and work only 25 hours a week, is by having good people in place.
But you don't just put them in place expecting them to know what to do. It takes lots of training. But I had the plan. I wanted a sales manager and I wanted to pay him or her lots of money. I wanted an operations manager and I wanted to pay him or her lots of money. My plan was to make other people under me very successful and in turn I would become very successful.
Boni: Great concept and it worked. And on the other hand, what mistake do you see veteran loan officers most making?
Mark: Again, I don't think they work in their business enough. There is one seminar leader who points out the difference between working in a business for 17 years and working in a business one year, 17 times. I've heard that over and over. People keep going back to doing what they thought they were supposed to do, and even though they try to change it, they don't.
Again I think it goes back to sitting back and working on your business. I am not saying stop taking business calls. But I can tell you the stories I have heard of people who stop doing everything they are doing, change the way they were doing business, and their entire business flourished.
I have many systems in my office now, and the only way that happened was by me working on the business. When a request comes in from the Internet, phone, etc., I give a check off sheet to my assistant and she sends out a loan package and follows up on it. I never have to see it again until it comes back. It sounds easy enough, but that is the system. And most people don't have systems - especially the experienced loan officers.
The other thing I believe that people could do if they want to do more business is to have more meetings. Meetings are the key to our business. And it could be meetings with realtors, with builders, it could be meeting with CPA's, it could be meetings with past clients, it could be meetings with business owners, it could be any meetings. I do a lot of speaking for the mortgage industry, and I look at people and say, if you want to do more business, have more meetings. There is not one person I know that has 3 -5 meetings a week that would not do 60 million dollars business a year. And that is guaranteed.
Boni: And what do they do at these meetings?
Mark: That is where Mortgage Coach comes in. You need to have something to say when you get to the meetings. I have a presentation where I educate the clients. I call it my Mortgage Banking Course 101. And it is a standard presentation, it takes about 10 - 15 minutes, and I go through exactly how to make an informed loan decision. You know it is easy to quote rates, it is easy to quote points, it is easy to quote fees, it is easy to say we can do this and we can't do that, but how do you let clients make an informed loan decision? It is the same presentation every time - it is canned. I know the scripts that go with it and I know the dialog.
I will say, "Look I don't care what loan you take, I don't care if you get a 30 or fixed, or a one year or arm. What I do care about is you making an informed loan decision." I will go through the benefits of how difficult it is getting a loan in today's society. I talk about the fact that only 60% of all loans applied for are approved. That means that there are 40% that are not. Why are they not approved? I will go into why other mortgage companies may say they can do something but they don't realize that you have a credit glitch or they don't realize that it is a lot of land or whatever the issue is, and ultimately can't do it. I talk about all the issues that come up and why certain loans are not slam dunks - people should know that.
And then I will talk about how long people should have a mortgage - and what the average time is for that. I will talk about how taxes implicate everything. I educate them on the process. Then I will go into educating them on why I think what I think which is I think that rates will stay down for a very long period of time. And I will show them the graphs of the 30-year bond. I will show them what an aggressive loan is and what is not an aggressive loan. I will compare it to stocks. I will let them know that when they apply for a loan with me, that they are applying with hundred different investors because I am a banker and a broker.
I will show them a rate sheet and how confusing it is and how difficult it is to make an informed choice. I will go into advertising. I see advertising out there that says "no points, no fees". I'll explain to them how a lender can make loan look as attractive or unattractive as they want to make it but what really matters is what you pay in total cost at the end of the day. Then I will show them some standard stuff on a purchase or refi using the total cost method, which is in Mortgage Coach. We talk about how long they need this loan for - three years, five years, seven years, etc.
And I quantify the options - you know if I say, "There is a $150 a month difference between two options," - that sounds great. But if I can look a client in the eye and say, "That loan is going to cost you $20,000 over the next 5 years," the client can make a decision based on real actual numbers.
I also show them the PMI analysis if that is appropriate. The last thing I do in my presentation is show them the rate-watch program (from The Mortgage Coach), which is a phenomenal thing. I say, "Look our job is to manage your mortgage. We are mortgage managers. That's what we do. And as mortgage managers, we send you an annual physical review once a year called rate-watch. It goes out once a year regardless, showing you where your loan is in today's market."
Then I will say, "In addition quarterly I review your loan internally to make sure it is still working, and that we have the most optimum mortgage for you at any given point of time." Whether I am talking to a client or referral source, it is the same thing. I educate people. I build trust by letting them know what I am doing.
Boni: Mark, if you had a son or daughter and if they were entering this business, what advice would you give them?
Mark: I would give them pretty simple advice. I would say come up with a plan including time blocking your week. Decide how much time you are going to spend on educating yourself on new programs, how much time you are going to spend on being proactive and prospecting and make sure you have 3-5 meetings a week with people. And I would leave it that simple. But you do need to have 3-5 meetings a week. You need to have time set aside to call people you know to get leads to set up the meetings. In addition you need time to work on deals that are in the system or that are coming in. So I would say that you really need to have a really good time blocking schedule and a plan for how you are going to do all these things and stay with that plan.
Boni: Mark what was your most successful marketing campaign?
Mark: The key to my marketing isn't about what goes out, but in the consistency of sending something out. I have a marketing calendar and my mailings go out religiously - once a month to my A clients, twice a month to my business managers and what I call my gold referral sources and gold realtors. It doesn't really matter what it is but that it is very consistent.
Boni: So it doesn't matter what it is - postcards, newsletters…
Mark: I am into postcards now because it is inexpensive and it still gets the point across. I just keep my name in front of them all the time.
Boni: And do you give closing gifts, Christmas gifts, and anniversary gifts?
Mark: I send anniversary cards; I send birthday cards. I have a marketing person that does that for me. We send an after-closing gift and we might send a year-one anniversary gift. I have a marketing person doing that.
Boni: Do you have a turnkey sales or marketing idea we can share with everyone?
Mark: What I do is real simple and I think everybody can do this. I do a problem/solution postcard. It will say something like, "Our client had a problem - he needed to cash out of his house but he couldn't show tax returns because he is self employed. However, he had reasonably good credit etc…. He needed money to do this and this…" we get real personal with the details of what we did. I won't use the actual client's name - I make up a name.
It's a real situation. I will say that we were able to help Mr. Smith get his $200,000 to remodel his house, build his pool, pay off his credit card debt and save him $500 a month. I go into real detail about a situation. Then at the bottom I will say, "If you know of anyone else that we can help like this, please email or call me." And then I will say, "Oh by the way if you know anybody that is going to buy or sell a house…." I always use an "Oh by the way" or "PS" or "Referrals are the life blood of our business".
I always ask for business and I always ask for referrals. And that is a real simple thing to do - very inexpensive and very easy. We send that our religiously
Boni: Once a month?
Mark: At least. Depends on what the marketing plan is. We live by our marketing plan.
Boni: Who or what is the biggest contributor to your success?
Mark: I got involved with Todd Duncan's group through Mortgage Coach and he and his network of people are phenomenal. I got to meet all the other top mortgage people in the industry. Not only did I meet them, but I went to their offices and checked out what they did and became friends with these guys. Seeing that it is real, seeing that these people are really doing the business they are doing. Seeing that they really are not working a 100 hours a week - was a mind opening experience for me. I still talk to these guys on a regular basis. They help me when I am having problems with my processing or capacity issues or whatever. They have been a huge impact on my life and business.
Boni: And where do you go from here Mark?
Mark: Well I am retooling my business a little bit. I have lost some key staff over the last couple of years that I really relied so I am going back to the drawing board and trying to build some other people up. Again I totally believe that I have a 100 percent referral based business and I do believe I can operate that without being there more than 20 hours a week if I have the right people in place and the right systems in place. That is my own personal belief. So my overall goal is to become the number one affiliate and have systems in place where I can work on only prospecting and managing the business.
Boni: And how do you keep people if one of the problems has been losing people?
Mark: You know, in the past I've kept people for a long time. Basically I think you need to pay well, I think you need to give them power, I think you need to let them enjoy the successes you're having. It's funny, I know some people that have key people and I know what they pay them and I am amazed that they stay with them because these people are making lots of money and they are not paying their people very well in my opinion. Yet it works for them.
I don't know if there is a right answer. In my book I want my key people to do very well financially. I want them to be very happy in their jobs. I want to let them know that they are a very important part of the team. I want to empower them. The key to having good staff is empowering them. That's the other problem I have seen - people are really afraid to empower their staff. Let them make mistakes, let them go out on a limb. If you don't let them do those things, you are going to be a slave to your business and have to do everything yourself.
Boni: How many hours a week do you work now?
Mark: You know lately because we are definitely in a boom and I'm training staff, I am working 35 - 40 hours a week.
Boni: Most originators during this refi boom would love that.
Mark: It hasn't been a fun 35 or 40, in all honesty. We are spending a lot of time apologizing to people. An incredible amount of my time is spent solving problems. Speaking of working on my business, I haven't been able to work on my business for quite some time, which is unusual for me. On the other hand, during this whole refi boom I coached both of my kid's baseball teams. Four o'clock comes and I am out of there. And I don't work weekends. But that didn't happen overnight. When I first came to the business in '92 through '96 my average workweek was probably 75-80 hours.
Boni: So it took a while to build up to this kind of freedom.
Mark: Now I am spoiled.
Boni: Is there anything else you would like to leave the loan officers who are aspiring to create your volume?
Mark: You know, I think the big thing is that you have got to believe it. You've got to believe you can work whatever your goals are and they will come true. You've got to believe that if you can just hang with it and give it some time, it will happen. I know once I saw other people doing it, once I saw it and believed it; I made it happen. Until that time I would have never ever have envisioned doing these kinds of numbers.
Boni: And you said that last year you turned yourself around with motivational tapes and books?
Mark: No question about it. I remember I went to another seminar - by Brian Buffini, of Providence Seminars. I love Brian. That's who I have been coached by lately… his company. I like them because their system is very simple and that's how I do business. Everything they do is by referral and everything they do is a very simple system. Which is how I have always worked.
I started going to Brian's seminars, started listening to some of his tapes, some of his past tapes, and my whole office changed. Everyone in my office was coming in all grumpy and upset and I use to think, "My attitude isn't rubbing off on him or her." But of course it was. But I totally switched that around. I got re-motivated and sure enough, the whole office changed.
Boni: What is your favorite tape?
Mark: Brian has a little conference call he's called "Doing the Ordinary". I thought that was really solid. What it was about was doing the everyday things to grow your business. In his mind it's doing five notes a day (personal hand written notes), making ten calls to your database, and stopping by your client's house or referral sources places to say hello (concentrating on your top 20 referral sources).
Doing this consistently, I get referrals. When that happens, we send out a thank you card with a gift certificate for $25 to Friday's restaurant. Every referral - if I close the deal or not. The point is somebody thought of me. Again that is doing the ordinary. If you make sure that happens each and every time and over time, you are going to get the business. I thought that was a real solid. He has a many. Look up www.ProvidenceSeminars.com . Also Todd Duncan has some great stuff. I was with him for many years. All that stuff is good- what matters is, you implement it.