There’s a common misconception out there among loan officers that whoever has the processor that can handle the most loans is the winner. But I’ve been around long enough to know that the opposite is true. If your processor is closing more than 20 loans a month, you’re actually losing big. I know it sounds counterintuitive, but hear me out.
As loan officers, we don’t want our loan processors and assistants doing too many deals each month for several reasons.
#1: They need time to ask for referrals.
I used to measure a successful closing in my branch if it closed on time. That’s not the gold standard anymore. The new way we define success is to have asked for and received a referral during the time we worked with the client and the real estate agents involved with each and every transaction.
In the past, we’ve been taught to ask for a referral at the end of the transaction. But we’ve found there’s a better way. When your client is in the middle of the process, and things are going well, that’s the prime time to ask. Once they close, we’re old news to them. They’re too busy moving and getting on with their lives. Get that referral while they’re in the middle of the deal and have house-buying on the brain.
We’re not the only ones asking for referrals during the loan process; we’ve set up our team to do it too, which results in dozens of extra loans closing each month. If our processor is juggling 20+ loans in a month, they don’t have time to ask for business on our behalf. They’re too busy trying to close the loans already in the pipeline. Why would they ask for more loans to come in? They’re already at, or beyond, their capacity.
Our processors are talking to our borrowers, co-borrowers, listing agents, buyers’ agents, title companies, and insurance companies on a daily basis. Each of these people have the potential to be a huge source of new loans if we give our processors a simple script to use at the end of each call to ask for more business. My mortgage branch closes hundreds of loans each month, and this simple activity is responsible for most of the new loans we have coming in.
We have to give our processors the bandwidth to ask for new business from the people they’re on the phone with every single day. Or we’re wasting a lot of great opportunities.
Think of your processor as a “free” employee. If they make $75,000/year and you charge a $500 processing fee, they only need to close 13 files a month to break even for you. Why would you want to overload a “free” employee to the point that they can’t ask for business on your behalf? Why would you want to overburden that system that’s been proven to work?
You may think that you are saving money by overloading your processor, but it’s actually likely costing you a fortune in loss of income per month.
#2: When our loan processors are overloaded, they start making mistakes.
This is just human nature. Any time we’re taking on too much, trying to juggle too many balls at once, something’s going to get dropped. I like working my team at a 70% to 80% capacity. I don’t have a scientific way of measuring that, but we figure it out together.
In the past, I worked everybody hard and tried to squeeze everything out of them that I could get. But one thing that kept happening was that they started making mistakes. Not because they weren’t competent at their jobs, but when you’re trying to do too much, have too many irons in the fire, you can’t give your full mental capacity to any one thing, and you start messing up. And those mess-ups can get costly very quickly.
It’s impossible for your processor to give their very best service to every single one of their clients if they have too many deals in the pipeline. You want your branch to have a reputation of caring for clients well. This can’t happen if your processor is overwhelmed.
#3: When our loan processors are too busy, we get pulled back into the file and away from our money-making activities.
When our processors are trying to handle too many files at once, then the loan officer starts getting involved with the details of the loans and chasing conditions and putting out fires. If you’re chasing conditions, then, in essence, you’ve become your processor’s assistant. Is this the best use of your time? Of course it’s not.
When the loan officer gets “pulled back into the files,” they can’t focus on the very activity that brought in that loan in the first place. If you’re not working on that money-making activity, you’ll find yourself back on the proverbial roller coaster—up this month, down next month, up the next month.
My team closes 600-800 loans a month. This would have been unfathomable when I was doing everything on my own. The only way to achieve true freedom as a loan officer is to delegate all activities that aren’t money-making activities. By money-making activities, I’m talking about developing relationships and getting referrals and new business. Give your processor a manageable number of deals each month, so you aren’t falling back into those activities that someone else can do.
If you have too many loans for your processor to handle, it’s time to hire another processor.
#4: We want our employees to have a balanced lifestyle, not be workaholics.
This final reason sounds really unselfish and altruistic, but it actually isn’t. A burned-out loan processor might quit, and hiring new employees is expensive. It’s much more cost-efficient to keep your current employees happy, rather than dealing with a high rate of turnover.
But there’s an unselfish part of this as well. We want to live a balanced lifestyle, and we want our employees to have a balanced lifestyle too. When we overwork our processors, we’re robbing them of time with their loved ones. I don’t want to be that kind of boss. I don’t want to be the reason why a parent doesn’t have time for their kids or partners don’t have time for each other or someone never gets to hang out with their friends and family. That doesn’t fit with my life values.
I believe in living a life of freedom, but I’m not going to live this life of freedom while everyone who works for me is struggling to survive.
Take some time to evaluate your loan processor’s workload. Sit down with them; ask them how they’re feeling about the number of loans they’re doing each month; and assure them that they won’t be penalized for their honesty. Some employees might be afraid of getting fired if they’re not churning out enough loans.
Let them know you care about them and their well-being, not just their job performance. Work out a plan where they have just enough loans to be working hard, but not overworking, and they’re still getting all of those amazing referrals that will grow and scale your business in leaps and bounds. Then everybody wins.