The Chief Executive (Loan) Officer

AWMS’s CEO Michael Brenning on How To Become a LO-CEO

I’ve been fortunate enough throughout my career to be in positions and at companies where I’ve met thousands and thousands of loan originators and branch managers. It’s one of the highlights and favorite parts of my job: meeting and engaging with originators.

Four members of the AmeriSave team meeting

I’ve always taken mental and actual notes, trying to learn from the best of the best. What are they doing that makes them successful? What is holding them back? How are they marketing themselves? Do they have a business plan? What kind of hours do they work? Are they refi or purchase-focused with strategies for each? How are they running their business?

Run your business like a CEO, not a Loan Officer

Wait, WHAT? Running a business? That’s not what a loan officer does. They originate. They talk with clients. They market. They process. They negotiate. They lock loans. They communicate and coordinate. But they don’t run a business, do they?

A great loan officer absolutely runs a business, and they run it like they are the CEO or a LO-CEO for a winning mindset. After so many years, I can quickly discern which loan officers possess the CEO mentality and which ones focus on originating in the here and now.

And let me be clear, I’m not picking on or faulting a loan officer who wants to originate—there are hundreds of thousands of very single-focused, successful originators. And then, there are only a few thousand who run their business like they own the place. It makes an incredible difference. It’s significantly more challenging, requires a lot of extra mental muscle and time that aren’t needed to originate, but it turns a loan officer from a pipeline-driven into an executive-minded originator..

Woman using laptop for video conference

Secrets of a LO-CEO

Running your business like a company will involve many things. Foremost should be the development of a three-year plan which include items such as the following:

  • Annual origination goals
  • Marketing & advertising strategy & Budget
  • Technology plan (LOS, CRM, website)
  • Lender Review including product width/depth

Annual Origination Goals

It’s easy to write a number down for year one, year two, etc. The LO-CEO not only writes a number down but also breaks the goal down into categories of where the volume will come from, which then helps inform sub-strategies in the overall 3-Year Plan:

  • Purchase vs. Refinance
  • Refinance (Rate-Term, IRRRL, FHA Streamline, Cash-out)
  • Purchase (First Time Homebuyer, 2nd Home/Investment, Move-Up)
  • Channel (Lead buy, previous client database, referral partner, etc)
  • Goal by Year
  • Goal by month

By breaking origination goals into more sub-defined categories, the LO-CEO can begin to formulate very tactical plans on driving those segments. An example would be setting a goal around Rate-Term refinances for Years 1, 2, and 3 annually. The LO-CEO then needs to figure out how to drive those goals, with one example being creating a DRIP campaign for previous clients in their LOS/CRM based on the initial interest rate and whether the loan had mortgage insurance of some type. Clients who could benefit from a refinance strictly from a rate-improvement standpoint could receive one email/text/mailer type. Clients who could have their mortgage insurance dropped or reduced would receive a different email/text/mailer to drive the strategy.

Without setting broad goals, the LO-CEO can’t drill down. Without drilling down, the LO-CEO can’t drive a strategy down to a tactical level. Thus, the LO-CEO needs to develop broad goals that lead to more specifically defined goals that lead to very tactical execution plans.

A Marketing and Advertising Strategy That Drives Origination Goals

Developing well-rounded marketing and advertising strategies is one of the most significant differences I’ve found between an originator and the LO-CEO. Where will get next month’s business? Next quarter? One year from now?

The originator can’t answer that; instead, they ride the ups and downs of the market, their current referrals’ sources, and their former clients reaching back out to them. Again, I’m not here to judge that approach. It works just fine for several hundred thousand originators. It’s just not predictable, and it’s not scalable.

To manage and grow a business, one has to plan a set of activities that will drive business consistently. Thus, creating a marketing and advertising plan at a broad, then drilled down, then very tactical level again becomes critically important to the LO-CEO’s business. The LO-CEO must look at their origination goals and assign them to specific marketing and advertising strategies. Said another way, the outcome of particular marketing and advertising plans, when executed, should result in a certain level of origination activity.

Let’s look at an example. The LO-CEO sets a 2022 purchase origination volume goal of $100,000,000 for the year. In 2021, the LO-CEO is on track to originate $75MM in purchase volume and feels confident that by doing a good job, continuing to market to their current referral partners that they can count on the $75MM next year. The question becomes, how will they drive the remaining $25MM.

In this example, the LO-CEO should break the $25MM down to a tactical level. How much referral business comes from the typical realtor relationship? For example, we’ll say $5MM per year per referral partner. (Realtor, CPA, Etc.) So, in this case, the LO-CEO will need to develop a tactical marketing/advertising plan that includes getting their name in front of new referral sources and landing five new referral sources at a minimum to fill the $25MM gap.

Once goals are set for origination volume at a high and detailed level, a marketing/advertising plan is formulated to drive those origination goals. The LO-CEO can budget out the financial resources necessary to enact the marketing/advertising strategy. These steps are generally done in tandem and result in a give and take between origination goals, Budget, and marketing/advertising strategy.

A Technology Plan That Supports Successful Loan Origination

Picking the right technology is key to every industry and being a successful LO-CEO is no different. The successful CEO does an annual assessment of their loan origination system, website, and CRM tools. Is there a new, disruptive, better, cheaper, or alternative that has come to market? Are they satisfied with the capabilities of their current LOS or CRM? Does their website leave them feeling flat or proud of their public image and ranked highly for organic SEO?

Without getting into specific technologies, a well-thought-out technology plan includes reviewing and assessing your current platforms’ functionality and satisfaction level every year. There are many options, so don’t feel stuck with what you have today if you aren’t satisfied. The key is to assess annually.

Lender Review

Doing business with and having a suitable stable of lenders onboard is probably one of the single most overlooked elements of running a business as a CEO, not an originator. Have the necessary breadth and depth of lenders to serve all your clients needs, including:

  • Conventional, FHA, VA, USDA (Tech-driven lender, price-driven lender, service-driven lender)
  • Jumbo
  • Non-QM
  • Home Equity Lines/Loans
  • Small Balance Commercial
  • Business Loans
  • Personal Loans

The LO-CEO may choose not to build a plan that includes all of these various loan types, and that’s perfectly fine—one can only spread their knowledge so far. The more the LO-CEO offers, the more they are catering to the fullness of their client’s needs, and the more likely it is the client stays with them long-term.

In evaluating potential and current lenders, the LO-CEO should develop a personalized set of criteria to measure wholesale lenders for each product type. You can make an argument that you want a price leader, a service leader, a tech leader, and a speed leader as a lender in your stable of lenders. Hopefully, those don’t all have to be separate lenders necessarily. The broker’s role is choice for the consumer, so make sure that as you think through your lender strategy, you are arming your consumers with plenty of choice around costs, rates, speed, service, etc.

In closing out this article, I hope you’ve found a nugget of knowledge or two for you to put to work in running your business as a LO-CEO. It requires more effort and work, but it will create consistency in earnings, growth, and mindset to help you achieve your life’s dreams at work!