To Danny Horanyi, head of non-agency lending at Caliber Home Loans (who worked primarily in origination for 16 years) the key to becoming a successful loan officer is not necessarily to give the clients what they want. Or what they come to the loan officer thinking they want. Instead, it’s a matter of finding what they need — what is driving the desire for a particular home in a particular area — and finding the best possible solution to meet that need.
“There’s still a pretty good group of loan officers, I would argue in the industry wide, that still sees their job as being an order taker,” Horanyi said.
Let’s say a customer says they want a 30-year fixed mortgage and have 25% down, for instance, and the loan officer delivers. But a really good loan officer — a “black belt” originator in Horanyi’s words — won’t just take that request at face value, and will instead analyze the situation to see if what the clients are asking for is really best for them, and what might be a better solution for them.
Finding the Real Need
“They’re saying they want a loan. Well, really they don’t want that loan — and I can promise you there’s never been a person on the earth that wants a loan. They don’t want to put themselves in debt,” Horanyi said. “What they want is the house, the property. But the next question for the loan officer to explore: Why do they want a house? And why that house? There could be many possible reasons, from needing more space for a growing family to needing less space for downsizing empty-nesters.”
He added that, “There’s a story. There’s a need behind the need. And by discovering the true need, the true motivation, and then crafting a solution that responds to not only that need but the changing and evolving potential needs that they’ll have over their lifetime, a loan officer goes from being just a transactional player — a bit secondary part in the story of this family’s life and their home ownership experience — to a true advisor and a partner that can then become a planner, a debt planner that can walk them through their home ownership journey and their mortgage journey all the way through their life.”
That’s why Horanyi was attracted to the non-agency end of the industry, he said: Analyzing and meeting the needs of clients in that sphere goes a considerable way in broadening an originator’s knowledge, skills and overall “toolkit,” he said.
Horanyi began his career as a loan processor and transitioned into origination, eventually joining with two partners around 2009 to build a large team in San Diego. He has worked as a mortgage consultant with Bank of America and a mortgage loan consultant with MetLife Home Loans, then originating at Caliber for four and a half years starting in early 2012. He assumed his current role in July 2018.
Origination and administration are two different beasts, he’s found.
“It’s a very different lifestyle,” he said. “I’ve described my mission in the mortgage industry as helping families buy houses. And when you’re originating, the success outcomes of that, they’re very real. And on a day-to-day basis you can say ‘I am winning or losing’ because you either helped a family or you didn’t. And so, it’s very real-time and there’s some nerves that come along with that because you wake up unemployed every day and you’re trying to get that deal.
“In the corporate capacity, it’s both better in the sense that there’s far more leverage. So, as I say, my mission is to help families buy houses and really serve those communities. Then in a corporate capacity it’s possible to do that in a much broader scale and help people in a leveraged way. … The feedback loop is a lot longer because it’s someone else actually on the ground, on the front lines doing the actual work with those families.” He added: “One person described it to me as, there’s a big difference between having control and having influence over the outcome.”
At the California MBA’s recent Secondary Market Conference in San Francisco, Horanyi spoke with Mortgage Media’s Eric Souza, elaborating on what’s needed to be that “black belt” loan officer.
Horanyi’s “black belt” terminology comes from the obvious source: His kids do karate, learning a new skill with each class, and they go up a belt when they learn enough skills. The same is true of originators, Horanyi said: Some of them never get out of the white belt skill level, the lowest sphere. They’re merely “order takers,” and don’t take the pains to analyze the clients’ needs and build the relationships needed to succeed. And when the market gets challenging, as in the recent period from around November 2018 through early February, some of the white belts flounder in what’s really a brown- or black-belt market.
“The white belts were getting their butts kicked,” Horanyi said. “…. And so I’m optimistic that we’ll hopefully have learned a little bit of what that looks like. And then we got this relief where we can now batten down the hatches for that next brown to black belt market.”
Leveling up involves the change in philosophy Horanyi described, of evaluating and meeting needs rather than just trying to find a loan that the client thinks they want. You need “a genuine interest in your client’s optimal outcome,” he said.
“So, being able to listen and hear their story and then have a genuine desire to deliver then maybe even a better outcome than they were asking for — If you, because of your expert knowledge and your higher level belt, you’re able to then identify and articulate a solution that might be better for that family,” he said. He remembered a client who wanted to put 40 percent down on a $2 million property with a 30-year fixed mortgage — the loan officer worked with a financial planner and they ended up recommending going with 5% down instead. It meant more money in interest expense, but it was much more than offset by the lower capital gains taxes paid. It’s because the loan officer had the ability to partner up with other experts and the courage to give the customer advice, to choose a path and recommend it, based on their confidence in their knowledge and expertise. That’s leveling up your belt, he said.
“Because here’s what I believe. I believe that people don’t need information from us in the mortgage industry any more,” Horanyi said. “They have all the information that they’re ever going to need. It’s all on the Internet. Everything they would ever want to know is in the ‘Top Five Biggest Things to Worry About When You’re Buying a Home’ list somewhere. What they don’t have is expert insight. And the more information that’s out there, the more confused our clients get and the bigger risk they have of making a bad choice and following bad advice. So really, it’s getting to that place where we can confidently provide insight and then have a diverse set of solutions — be it VA lending, complex down-payment assistance products, be it non-agency, non-QM solutions. Whatever renovation loans, anything that’s going to be a little bit out of the box that might provide a better, more comprehensive answer to the long-term success of that family. Combine that all together and you become a black belt advisor.”
Finally, it’s increasingly important to leverage technology and the products that are out there to provide a great client experience, he said. As an originator he would use tools like Mortgage Coach to become an expert in the industry and articulate options — and make recommendations — to clients so they could understand what was in their best interest.
Hunters vs. Gatherers
Horanyi admits it: When he was an originator, he didn’t always properly manage his database. He viewed himself more as a hunter than a gatherer — the hunter goes out and generates business, works directly with clients, generates leads. But the “gathering” — the maintaining a database, staying on top of relationships, following up with people — is important as well. It pays dividends for the originator in the form of clients who continue to come back when they have needs.
Many originators currently are actively working to engage their past clients now that interest rates have iterated down so significantly — and they’re finding it hard, Horanyi said, because they didn’t create a systemic plan to prepare those clients for the next step.
“So I sincerely hope that as the market iterates higher and becomes a little bit more challenging that loan officers actually build into their plan what is called setting up the next deal,” Horanyi said. After all, the majority of people in the non-agency sphere are there because of a life event — a bankruptcy, a foreclosure, a debt-to-income situation — that may be temporary. In a few years it might be possible for them to refinance out of that loan and possibly into an agency loan or another type. Which means it behooves the loan officer to be poised to help them set up the NEXT deal.
“You do not let that client leave your office without a clear understanding of what their future lending, their future opportunities to do business with you might look like,” he said.