Thursday, March 23, 2017

Recent Retiree List (The Ultimate Career Done Well)

Jason Hultgren gave me a copy of the MBAG Gold Award List that SEM participated in for the first time in our history thanks to J. D. Crowe's support.  A great group of mortgage professionals with huge volumes that consistently earn this recognition year after year.  Other than a wonderful MBAG award, are these talented Originators awarded stock in their company or made a Member of their Company's LLC Operating agreement? 

I always ask myself, do they share in the wealth they build for their owners? 
Ask yourself these questions:

1. Do you have a path to retire that includes equity in the company you help create?  If you can only rely on what you save from your 30 - 120 bps per deal, you need to re-think how you will retire.

2. Have you worked hard only to start over again when your company sold or left your market?  Did they cut you a check when they sold?

3. If you do not act now to explore a path to retire, what will you do if mortgage delivery channels change before you have saved enough?  The company will benefit but will technology reduce your compensation?

I admire loyalty and friendship (SEM has the longest tenure and tenure of key people in the industry thanks to a Village view of loyalty); however, it is a two way street.  Solidify your family's future longer than a month out. 

I would love to see a section in the MBAG Gold Award Brochure that lists the latest retirees and celebrate Careers Done Well....  Everyone has a finite time and a finite market to originate.  Need to plan today!

Call 770-279-0222 ask for Shaun Graham or Kim Thompson or Jason Hultgren

Saturday, February 11, 2017

(Transcript) Does anyone in the Georgia Mortgage Industry Retire?

Does anyone in the Georgia Mortgage Industry Retire?

I have been active in the Georgia Mortgage Industry since 1993 and responsible for the acquisition and combination of 14 mortgage companies in Georgia.   I have seen a lot during my due diligence and research.  To me it seems nobody retires in the mortgage industry?  I have seen a few companies sell at market tops that benefit one or two people, but most of what I see are sales professionals that cycle around from company to company with no plan for their own exit strategy or retirement.  One trend that REALLY baffles me is why people follow a sales leader that has a record of failure due to poor judgement and or strategy.  You can always stay friends with sales leaders that cant get it right, but your career is your business and has a finite life.  You have to align with a company that will help you achieve your long term goals and retirement.  

This is a great wealth building industry and people who devote their lives to working in it should have the opportunity to retire comfortably at a reasonable age as a reward for their dedication and work serving clients.  

Market tops are opportunities for mortgage companies to expand through acquisition.  Growth is much easier and more efficient when they can buy a mortgage lender that has a great reputation and a secure market share. Unfortunately for the masses in the Georgia mortgage industry, most companies are organized as LLCs.  An LLC has an Operating Agreement that defines who gets paid.  There is no equity like a Southeast Mortgage and the sale is an asset sale not the purchase of employee or owner shares.  The rank and file employees do not benefit in an asset sale, and to date, I have not seen an LLC member cut a big check or any check for that matter to those employees that got them paid.  Why they don't or did not is beyond me and not right.  Employees and the team that create the value should share in the monetization of that value when sold.

Limited liability company (LLC) An LLCs has a number of disadvantages, especially in relation to the structure of a corporation. An LLC has to be dissolved upon the death or bankruptcy of a member, unlike a corporation, which can exist in perpetuity. Also, a LLC may not be a suitable option when the objective of the founder is to eventually become a publicly listed company. An LLC is not a corporation; it is a legal form of a company that provides limited liability to its owners in many jurisdictions. LLCs do not need to be organized for profit.

I truly believe if people would listen to their logic and believe in themselves, they would be in a position to get their fair share of what this great industry has to offer.  

Are you loyal to a company or a person that continues to move or benefits from changing companies.  Did they share the big upfront draws with you that your originations will pay for?  Are you expecting that behavior to change?  Hoping it will is not a plan for success.  A zebra does not change its stripes.

Most owners who who evolved from being great sales people never obtain the skills to manage the growth of a company which is the foundation of your career.  Sustainable growth rates, the dangers of stripping a balance sheet, cash flow, and organization structure design are foreign to most leaders and owners.  The majority of the owners that tend to be flashy and make deals that are not equitable or not financially viable in the hope they can buy business rather than earn it from service.  They also tend to be unsophisticated with respect to financial analysis and believe origination volume is profit?  I cannot tell you show many of them ask me "what is your volume". My response is always revenue pays the bills not origination volume.  Source and mix are critical post 2009.  Understanding why - is the key to converting volume to revenue.  The other disturbing trend is they tend to buy business rather than focus on service delivery and their employees’ futures. 

With respect to loan originators, I see two types at the various organizations I have frequented over the years.  The first is the employee who is loyal to an owner who either sold without sharing the gain or loyal to a sales leader that moves from one company to the next, to the next – either for a flashy, new out-of-state name or promises that have no merit or substance.

The second type of loan originator basically moves to a point of least resistance to avoid licensing which requires them to work for a significantly lower commission structure.  If it were me, I would license myself since it is my profession and adapt to a best in class methodology that earns me 3 times more.  We all have to follow the same rules and the golden key goes to those who adapt and execute the best under those rules.  Those that choose to bend the rules eventually fall into the failed company "poor judgement" example above.  Strangely enough loan originators tend to follow the same leaders that make the repetitive judgement errors rather than seeking a company that has a proven track record and shares equity with its employees.  At the end of the day (or the end of a career), you have to pay your own bills and you should put you and your family first.

Everyone should view their career like an investment.  You deserve a return on your career investment.

Ask yourself?

Is your career in the hands of someone that has a proven track record of success?

Is my company in my market for the long term or are they here for the low hanging fruit and then back to CA, VA, NJ, etc?

Does my company have a generous 401K match?

Does my company share ownership with its employees?

Would my company help me if I were sick and cut a check to help me through a tough time?  Loyalty is a two way street.

I would honestly like to see more people retire comfortably from our industry rather than seeing the same aging faces punching 8 to pay their bills.

As the Chairman and CEO of Southeast Mortgage of Georgia, Inc. (Georgia Corporation since 1993) I know how hard my team works to support their families and me and my Executive Leadership take our fiduciary responsibility seriously to ensure we reciprocate loyalty and trust.  Since 1993 we have added 37 employees to our shareholder list and will add 10 top performing Loan Originators to our shareholder list each year going forward.   

To my knowledge Southeast Mortgage is the only non-bank mortgage company to have retirees that enjoy a substantial monthly income while continuing to own part of our great company they earned during their years of service and contribution to our success.

Cal Haupt
Chairman and Chief Executive Officer
Southeast Mortgage of Georgia, Inc.

Friday, February 10, 2017

Does anyone retire in the Georgia Mortgage Industry?

Cal Haupt
Chairman and Chief Executive Officer
Southeast Mortgage of Georgia, Inc.
Common stock is a security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. In the event of liquidation, common shareholders have rights to a company's assets
Limited liability company (LLC) An LLCs has a number of disadvantages, especially in relation to the structure of a corporation. An LLC has to be dissolved upon the death or bankruptcy of a member, unlike a corporation, which can exist in perpetuity. Also, a LLC may not be a suitable option when the objective of the founder is to eventually become a publicly listed company. An LLC is not a corporation; it is a legal form of a company that provides limited liability to its owners in many jurisdictions. LLCs do not need to be organized for profit.

Monday, February 6, 2017

OPED: CFPB Fines Prospect Mortgage $3.5M for Alleged Kickbacks

The following news was released at the end of 2016.  IMO when clients are given a choice, they will select value and get a better mortgage fit when allowed to apply with licensed mortgage originators that take the time to understand their client's needs and fit the mortgage product to those needs.  Keller Williams and Remax employ a lot of great Realtors and IMO the actions of a few should not define two super organizations.  Hopefully this action better defines what is acceptable in our industry.  IMO we should stay in our lanes and allow Realtors to do their job advising clients on homes that fit their need and Mortgage Originators should be selected based on Service and Competence.  If these lanes are respected its a win win.  Realtors will get more referrals due to a great Mortgage Experience and Clients win by getting their dream home and a mortgage that meets their needs today and into the future.

Please read the latest CFPB action below.

The Consumer Financial Protection Bureau hit Prospect Mortgage with a $3.5 million fine for allegedly paying kickbacks to two real estate brokers and a servicer for referrals of government backed mortgage loans. The bureau also took action against Keller Williams Realty Mid-Willamette and Remax Gold Coast, which were among more than 100 real estate brokers that had "improper arrangements" with the Sherman Oaks, Calif., firm, the CFPB said.

"Today's action sends a clear message that it is illegal to make or accept payments for mortgage referrals," CFPB Director Richard Cordray said in a press release. "We will hold both sides of these improper arrangements accountable for breaking the law, which skews the real estate market to the disadvantage of consumers and honest businesses."

The CFPB said that Prospect created marketing services agreements from 2011 to 2016 and made payments to various companiesthat were disguised as advertising and promotional services. Prospect paid real estate brokers from $200 to $20,000 a month inreturn for borrower referrals, the bureau said.  Prospect tracked the number of referrals made by each broker and also paid various real estate brokers to locate loan officers at Prospect using desk licensing agreements, the CFPB said. Additionally, Prospect allegedly paid brokers to "prequalify" home loan borrowers with Prospect and to "write in" the lender’s name for anyone seeking to purchase a listed property, the CFPB said. The company allegedly split fees with Planet Home Lending, a Connecticut mortgage servicer that it hired to identify and help persuade eligible consumers to refinance into a government-backed loan through Prospect.

Under the consent order, Prospect will pay $3.5 million to the CFPB’s civil penalty fund. Keller Williams Realty Mid-Willamette willpay $145,000 in disgorgement and $35,000 in penalties and Remax Gold Coast will pay $50,000 in civil money penalties, the CFPB stated. Planet Home Lending, a Meriden, Conn., mortgage servicer, will pay $265,000 in redress to harmed consumers for accepting illegal kickbacks for referrals in violation of the Real Estate Settlement Procedures Act, which prohibits making payments or giving kickbacks to anyone in return for a referral to a real estate settlement service provider.

Prospect would not confirm or deny the CFPB's charges."Today's settlement with the CFPB regarding alleged origination practices initiated under the prior management team, closes an important chapter in the company's history," Prospect said in an emailed statement. "Under Prospect Mortgage's new leadership team, the company has rebuilt its legal, regulatory and compliance practices."

A manager at Keller Williams Realty Mid-Willamette in Corvalis, Ore., did not return a call seeking comment. The CFPB did not identify the specific office of Remax Gold Coast. Planet Home did not return a call seeking comment. Planet Home had ordered so-called trigger leads from a major consumer reporting agency to identify customers seeking to refinance, which is a prohibited use of credit reports under the Fair Credit Reporting Act.  Prospect had run afoul of California regulators in 2015. The lender agreed to pay $10.1 million for inflating settlement service fees charged for more than 70,000 borrowers during a four-year period, according to California's Department of Business Oversight.
In November, Prospect, which is backed by the Chicago-based private equity firm Sterling Partners, sold its sales and operating assets, including 150 retail offices, to Homebridge Financial Services, an Iselin, N.J., lender. Many of the Prospect's executives, including Michael Williams, a former Fannie Mae president and CEO, joined HomeBridge.


Friday, January 27, 2017

Economic Recovery Top - Low Country View by: Cal Haupt

I wrote an OP ED back in December 2011 about the relativity of a recession and the best course of action based on my data supported by 3 recessions.  Now the recovery top view.  

As we move into the 8th year of the recovery, a DOW 20116, Commercial Flights Full, Malls Full, Restaurants Full, New Car Dealer Lots Over Flowing, and everyone on your street doing home renovations, everyone should govern their actions by data vs. the euphoric feel of a recovery.

With respect to the Mortgage and Real Estate Industry, I am still confident we are in the 15th month of a 60 – 72 month cycle expansion.  I am confident to the tune of investing millions in a 30,000 sq. ft. operations and life balance center at 3575 Koger Blvd in Duluth.  The growth for the past 15 months is ahead of my projections which provides a large enough sample to proof that my hypothesis is correct.

Now for the Yang to the Real Estate cycle Yin.  The financial markets, various stock markets and other financial derivative instruments, can falter without an impact on the Real Estate Market.  Why?  The primary participants or the 80% of the underlying trades in the above markets are institutions and traders.  When it corrects and it will, the retail consumer in general will not be hit the way they were in the last financial crisis because they are not in the markets as deep as they were in 2008-2009.  As a result, they will be unaltered in their euphoric quest for Real Estate.  Whether their need is trading up, trading down, or new home creation for families this trend has 4-5 years left before a plateau. 

My low country view is we all have to navigate the same rivers in a low tide (2011) that we navigate at high tide (today).  Anyone who has been at the helm of a boat knows rivers can be a mundane transit or a harrowing experience depending on tide and weather.  No matter the size of your boat, the outcome is the same.
 This is relevant in that although there looks like more water and routes to take at high tide, beware that the tide cycle and that route outside the normal river may be mud at a lower tide.   The only constant is the Captain (leadership) must know the tidal pattern and govern voyages based on that data.  Financial Markets are no different.  You just need the tide table. 

Most of the Mortgage Lenders that went out of business in 2008-2009 were all navigating in areas that were not part of the average safe tide and were not paying attention to the data that determines our financial tide table.

My advice to MLOs and other professionals related to the Mortgage Industry is although low score, high LTV, and limited documentation products fit a specific need for a very narrow segment of clients; be careful when a Mortgage Company leads with these unique products.  If they do, be prepared for a change in career. 

The safe river is clearly defined by the regulations and directives of our elected officials.  Fannie, Freddie, FHA, and VA products.  Yes, FHA has some low score parameters and should be ingested carefully given Neighborhood Watch reflects gluttons and common sizes them given low scores correlate to higher default and delinquency.  Prudence dictates moderation and sell to client need which is always a fiduciary's safe path for industry participants and clients at all tides.
Cal Haupt
Chairman and Chief Executive Officer
Southeast Mortgage of Georgia, Inc.