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.

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