As a kid, I always loved “banking.” I would always volunteer to go with my parents when they needed to make a deposit, and would never mind sitting around while they spoke with the fancy “bankers.” I was fascinated by the big bank vaults and was captivated by all that might be stashed away in those safety deposit boxes at each branch. I remember being intrigued by the concept of a check and by the premise of how credit cards functioned. I laugh each time one of my children encourage me to “just write a check” so that the item being bought “doesn’t cost any money,” which I know I have said myself as a kid. Some things never change, although in the banking world they seem to be changing too frequently these days.
I remember when one national commercial bank began using the marketing slogan, “The right relationship is everything” to highlight the emphasis on their clients’ interests. I thought that was very honorable and impressive. I quickly found out that at the same time they also launched a massive campaign to close branches and focus on locations with high net-worth clients that maximized the most significant return on investment to their bank. Their CEO asserted that the regulatory oversight and demands made it extremely difficult to optimize shareholder returns without making those necessary changes. Many know that there was recently another large commercial bank that implemented branch-level “goals” that ultimately incentivizing their managers and employees to fabricate new accounts and open up fraudulent services that were never requested. Again, the challenging landscape was blamed for the poor business strategy, which was hurtful to so many clients and tarnished their reputation.
I bring this up not to focus on poor business decisions by others, because every business can be accused of making bad judgment calls more than once in their existence (although there is never an excuse for misrepresentation). I bring it up to highlight the difficult burden placed upon “Corporate American” Banking which can end up hurting certain clients at the expense of “bottom line” earnings and goals. Between the regulatory headaches, risk mitigation, challenging economy and volatile markets, it’s tough to be a “successful” bank. More often than not, most small banks don’t get it right and end up consolidating or merging with others to remain solvent. A unique advantage of a local mortgage lender is that their primary and sole focus is to service the needs of their clients in a more comprehensive and relationship-based setting.
I was recently speaking with a potential employee candidate who was working for a large commercial bank in Long Island. He had a stable employment history with extensive mortgage experience and was at this bank for the past six years. He claims he was doing well but looking for other opportunities in the marketplace. It’s not that I was discouraging him from considering career opportunities at Approved Funding, but I did underscore how a place like ours is the antithesis of what he is used to today. In fact, I went on to say that it is because of banks like his that we have a such a strong niche and value to the consumer. Corporate America is not about relationships, not about hands-on service for their clientele, and usually not about providing low-cost and inefficiency. After probing a little more, I found out that two major things were driving him away from the bank. The first was that although his primary role was that of a mortgage originator, the bank was demanding more cross-selling for ancillary bank products and services and tied his “comp” into that measurement.
The second issue, however, he claimed, was the straw that was breaking the camel’s back. Over the past six months, he had several clients whose mortgage applications were submitted to the bank for approval but were turned down despite his best efforts. He had plenty of clients who abandoned the process mid-way or whose loan was denied with merit, but he felt that a few of these loans should have gone through. A few weeks ago, he was scanning the banking-system and found a name that sounded familiar. He realized that it was one of the clients whose loan he was unsuccessful in obtaining. What was ironic was that the customer now had a loan on the system with his bank. A few days later the same situation occurred with another client whose loan he could not procure. He started to go through more of his “fall-out” candidates from over the years and found a few more whose mortgages were now with his institution. Upon further research, he found out that these customers ended up getting their mortgage from other local mortgage lenders (one of them being Approved Funding) who ended up selling the loan to his bank despite the fact that they turned it away in the first place. The lesson for me was glaring – the right relationships are everything, but only to those who spend the time understanding those relationships with the real needs and requirements of their clients. Special shout out and happy birthday to Kenny Yager!
By Shmuel Shayowitz
Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience including licenses and certifications as certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected].
