The LO Dependancy Cycle

AstonishResults · Joined: 11 Jul 2006 Posts: 7

I'd like to get anyone's feedback on this. Many of our clients (medium sized mortgage companies) are finding themselves in a vicious cycle. Most of thier business comes from 20% of thier top producing LO's. These LO's are demanding more and more commission which the owner feels obligated to pay or else they'll loose the LO. As they do this their profit goes down.

In a constricting market many mortgage companies need to hire more LO's and the problem only worsens. If they hire new LO's away from their competitors they're still too dependant upon them - they feel trapped.

I'd like to hear your feedback

chow · Posted: Tue Sep 05, 2006 12:24 pm Post subject:

20% of any sales force does 80% of the work! :wink:

I'm all for paying the people who produce more than those who are NOT making the company enough money to pay for their existance. Having owned a mortgage company, who had owners actually finding the business together-made us accountable to ourselves. Our employee's earned less. If they wanted to become a partner, they had to invest the time and money, then we paid them 70% of the fee income. They had to produce leads which were exclusive to them, They had to market themselves. We would provide on site processing, a office and all supplies. Basically all they had to do was go pound the pavement pay for personal advertising with their phone and contact information.

We had this set up going before Netbranches came into (popular) play. We didn't market any territory that we were not allowed to go without our full eagles. We had all three eagles at one time. We realized that we had to focus on a smaller market-just a few states. We only went to states our partners moved to, who would accept our license and eagle. In one year we expanded to 5 states, without even thinking about it- One of the partners went to Colorado to Seminary for the Nazereen church. Ivy Mortgage-AKA SIB gave us some deals they couldn't do in Ohio, We had a partner move there-who was a financial advisor...

15% of the partners were doing 90% of the work. I had a board meeting where I sent out registared mail to announce it. Just to get everyone back around the table. (I did this just to find out where the MIA's were at-Mentally, and to expose them to a wild card who I ended up kicking out of the partner's because he scared me-I knew if he scared me, it was not good for the partner's who were out of state.)

It's really easy to run a mortgage business. :roll: I'm proud to say no one ever got stiffed on a paycheck, the bills were always paid on time, and our credit, as a company- was flawless.

AstonishResults · Joined: 11 Jul 2006 Posts: 7

I guess I see where you're going. I'm just curious how current mortgage company owners feel about this.

My point is that most companies we meet with want to grow thier businesses, but find it very difficult.

There's a great chapter from the book "E-myth" that talks about working "on" your business intead of working "in" it. It talks about McDonalization - being able to hire people with the least amount of experience and knowledge and having systems in place that allows everyone to be sucessful.

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