When you have the opportunity to coach as many loan originators as I do that cover a big cross section of the country and all possible housing markets, you often get different views of the same type of information, but you also find some things that are absolutely the same. Today, I want to have a conversation about originators who have a “BAD” production month. In most cases, the word “BAD” is used to describe a month in which the total number of loan applications, closed loans, and/or closed dollar volume was below a predetermined threshold. Many companies and originators use these measurements when calculating production and often publish these numbers and have award programs based on these numbers. I agree that this is a good thing, but it often pushes people to think they might have had a “BAD” month when they really didn’t.
Let me explain. Selected units of measure and time frames in which they are measured are often a great indicator of performance and usually are reliable to show the quality of work and how well someone is performing. However, sometimes the items measured are NOT a great indicator of what is really happening, and originators and their managers need to look a little deeper!
In my business I use five units of measure to follow the business flow of my clients on an ongoing basis, not just use a set of numbers from any given month. I like to keep focus on the “ongoing business” not just the results in one month or another. I find looking at units or closed loans in any month as helpful, but not by themselves the best way to see what is going on. In fact, some originators may have had a “Bad Month” with closings or applications according to the system that only measures those things, and be left feeling disappointed or upset that they didn’t do well, when by a broader measure, they may have had a really good one.
Since nobody benefits from a depressed originator, and since we are in a business that flows month to month and year to year, I use five units of measure to track what my people are doing because I feel it provides the best overall picture. Those five areas that I track are:
When you track all five areas and the relationship between them, you get a better picture of an originators business. If an originator closed more loans or has put more loans into processing by depleting their numbers of total preapprovals out looking and with little or no new incoming business, it’s likely that the following months may not be so kind. On the same note, if an originator doesn’t close many loans or may not have put as many loans into processing as they would have liked, but their new contacts, credit pulls, and preapprovals are rising dramatically, they are looking at better closing months to follow.
So take a good look at more numbers. Sometimes certain numbers don’t really tell the whole story. I have found that tracking these five areas and the relationship between them helps provide a much clearer picture of the business flow and overall production.
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