From Bad First Mortgage Experience to Kaizen 改善: Daniel Jacobs Focuses on Improvement

Tom Wilkins: Well, we’re here in beautiful San Ramon, California, at the SocialSurvey Create WOW event, and I’m sitting here with Daniel Jacobs, EVP of MiMutual Mortgage. Daniel, thank you for joining us!

Daniel Jacobs: All right. Thank you. Thank you, Tom.

Tom Wilkins: Yeah. So, one of the first questions we ask everybody is, how did you get in the business? What was the driver for you entering the mortgage industry?

Daniel Jacobs: Well, like most of us, I didn’t set out as a kid to go get into the mortgage business, but it really has been so rewarding. I’ll tell you, the way it happened was I graduated from college, and I was taking a year in working and planned to go to law school. I bought a house and I just had the worst experience. My loan officer couldn’t answer a single question, no matter how basic, and acted annoyed that I even had such a question. So, she asked me to sign some documents that were blank. I said, I’ve seen Judge Wapner too many times on the Peoples Court. I learned you do not sign blank documents. She said, “Well, I can fill in the marks.” So, I said, “I’ll come back the next day.”  So, long story short, I came back three successive evenings, and before the third one, I stopped at the book store the night before and bought a book on how to buy a home, because we were incidentally buying a house that was for sale by owner. I don’t know what we were thinking. Just young and dumb, right? And, how to get a mortgage. So, I educated myself and I told her, I said “Look, here’s what I want. Let’s do this.” I just said to my wife, I said, “I don’t know how this company is doing it, or how this particular loan officer is thriving in this business, giving this level of service. If she’s doing well, I know I can do better, because I can offer more.”    Again, maybe a little naivete, right? But what happened is, I ended up seeking out a position in the mortgage business, and I made the decision that I was going to be everything that my loan officer wasn’t. I did that as a loan officer, and then I got into management, and I made the decision that that was a great role for me because I could affect a lot of people to give their best, and create that experience for the consumer, that I didn’t receive, that I feel like all consumers do deserve.

Tom Wilkins: So, you came to that decision just based on that experience that you had with that particular loan officer?

Daniel Jacobs: She mentioned the boat she had just gotten, too. I said, “So you just bought a boat?” She says, “Yes.” I said, “So, you do well in this business.” She says, “Yes.”

Tom Wilkins: So that played a little part in it.

Daniel Jacobs: Yeah, I decided I could do this better, and it’s a good business to be in. But, the truth of the matter is, my real motivation was I thought this was terrible, and I can do better than this.

Tom Wilkins: Well, that’s a pretty good motivator, but did you have any academic background before, that was …

Daniel Jacobs: I was a political science major. I was a political science major so, no. I was planning to go to law school.

Tom Wilkins: That’s right.

Daniel Jacobs: But, I was always detailed oriented, and I always really enjoyed working with people. I had a sales background. I worked, through college, selling furniture in a retail environment, so I was used to working with people, and helping them narrow their focus to choices that were appropriate for them, because on a much smaller scale, buying a living room set or a bedroom set, it’s still a durable purchase. It’s something that you’re gonna have for a while. It’s not as big of a purchase, obviously, as a home, or a mortgage, but it was an analogous, in terms of having that consultative approach, and helping people make the choice that’s right for them.

Tom Wilkins: Sure.

Daniel Jacobs: So, it was a natural fit. It really was.

Tom Wilkins: Well, the baseline, the foundation which you came from with regard to your previous experience that was terrible, was that you knew you could only go up.

Daniel Jacobs: Listen, I didn’t have to be very good to do better, okay? So, the success wasn’t too hard, but really and truly, I love the direction the industry has gone because that was 22 years ago. Now, consumers are so much more in power. They have so much information at their fingertips. They don’t rely just on us as experts. They rely on their peers, their friends, their family, their social networks. So now, we’re transforming the business to provide greater empowerment to consumers, as they sift through information and discern what to absorb and how to use it. Then, we’re there as professionals to help them curate that, and answer the questions that they aren’t able to answer in that social environment, and to help guide them toward what’s best for them. I just think consumers are so much better off today because I was reliant upon that loan officer, who really wasn’t interested in helping me. Today’s consumers have the ability to get information on their own. They have so many resources, and then we’re there to narrow that, and to help them make those final decisions, and to facilitate what’s best for them. But, they know so much more, now.

Tom Wilkins: So, that’s interesting, and it’s obviously true. The industry’s come a long way since you started 22 years ago. So, let’s talk about a compare and contrast a little bit with when you started, and the evolution of where you are today, and what you did in between. You were telling me earlier about selling a couple of companies, and some of the things that happened that led you to where you are today. So, give us a little background on that.

Daniel Jacobs: I started off as a loan officer. I just was out calling on realtors, and builders. The company promised me leads. I got two leads a week, and had to make the most of that. I just started giving really great service and being completely unafraid, going in and asking for business, and asking how I could help people solve their problems. I think naivete just really played a large part in that ability to go out and build my business. So, within a years’ time, I was doing 10 or 12 loans a month, which I didn’t know whether that was good or bad. I just knew that’s what I was doing. I got up every day with a plan to get a couple of loans, or whatever I could, and I went out and executed on that. Then, when I was approached by a builder that I was doing a lot of business with, they said, “We want you to come and work for our mortgage company.” I said, “Why would I ever do that? There’s sales people that hate your in-house mortgage company. I think I’ll do this. No.” So, he asked me to lunch again and said, “You know, if you don’t come work for me, I can tell all my people to stop doing business with you.” I said, “Well, let me think about that.” So, I went home that night and I pulled up my pipeline. I looked through it. My pipeline back then was on a yellow steno notepad. Every week I rewrote it. So, I crossed out the loans that were closed. So, I’m looking at this, and I quickly realized that 60% of my business was coming from this builder, which I never intended for it to be, but I wasn’t gonna throw it away, right? So, I called him and I said, “Okay. I’ll be there on Monday.” Which then, when I got there, I quickly realized why they were not the lender of choice from his own salespeople. I figured out what they were doing wrong. It wasn’t a lack of trying, and it wasn’t a lack of good people. They had great people. They just had bad systems. They weren’t regimented in a way that they could deliver the same level of service, day in and day out, to every salesperson, to every customer, and I asked the president of the company, I said, “I want to buy a $200 piece of software so that I can track things and I can-”

Tom Wilkins: Streamline the process.

Daniel Jacobs: And he said, “No, it’s not in the budget.” So, I went out and did it on my own. I bought it out of my pocket, and I did it. I said, “Look. This is how we’re gonna do this. This is how we’re gonna do that. We’re gonna solve these problems. We’re gonna create this. Not only that, but I want to manage this process. I know I’m just a loan officer here, but I want to manage this process. Don’t pay me anything more, just give me a percentage of the increase and the profits.” I made him a deal he couldn’t refuse. He said, “Okay.” Well, little did I know, that was my entry into management, and it just went from there. We went from losing money to making money in three months, and it actually wasn’t that hard. We just had to create some systems and procedures, and we started doing all the business for the builder, or most of it at least. Then from there, that company ended up being sold to a big conglomerate, and I went to work for a small company out of New York that was expanding, that I opened the sixth office. I told the owner I’m interested in helping you grown nationally. He said, “Okay. Let’s do it.” Well, a year and half later, we started acquiring companies together, and grew it from six offices to 200 offices.

Tom Wilkins: Wow!

Daniel Jacobs: From about $18 million a year, in loan volume, to $4.2 billion, three years later. So, that was a lot of fun.

Tom Wilkins: That’s a game changer.

Daniel Jacobs: It certainly was.

Tom Wilkins: In your life, in the direction you started to take.

Daniel Jacobs: Absolutely.

Tom Wilkins: Yeah. So, tell me a little bit … I’m gonna jump ahead a few years. Tell me about MiMutual Mortgage, and what they do, aside from the obvious, and what your role is there.

Daniel Jacobs: Yeah. So, MiMutual Mortgage is a 25-year old company, founded in Port Huron, Michigan. Two brothers, best guys you’ll ever meet, they started hustling and solving problems for people, and doing mortgages there. They were doing retail loans, and they grew the company within Michigan, and eventually, they were able to take advantage of an opportunity to move into wholesale. So, they did that and had really never expanded the retail presence outside of Michigan, not much. So, just a little under four years ago, the company decided to expand into retail, nationally, and three years ago, I started with the company. We’ve really built a really special platform that lives our core values and places our customers first, and delivers consistent, great service. When were first started doing surveys, for example, we thought we were better than we were, actually. So, we had our own survey system even before we were working with Social Survey. We thought, for sure we’re gonna have an 85% satisfaction rating. We used the net promoters score. It was nowhere near that. But, what we did is we took every bit of that feedback and we focused on continuous improvement. We focused on continuous improvement for consumer experience.

Kaizen – Japanese Kanji for theory of continual improvement

Tom Wilkins: Like kaizen.

Daniel Jacobs: Hmm?

Tom Wilkins: Like kaizen. It’s the theory of continual improvement. It’s what the Japanese do.

Daniel Jacobs: Oh, yes. Yes. Yes.

Tom Wilkins: Yeah.

Daniel Jacobs: So, we focused on not only from an operational sales perspective, but a sales perspective. We focused on it internally, to give a better experience internally with each other, because we’re each other’s customers, and also with our consumers, our borrowers, as well as our referral sources. That culminated until last year. We actually got the customer service award of the year from mid-sized mortgage companies, from Social Survey, which we were so surprised, and elated, and humbled by. So, that just has driven us to even focus more on creating a great experience for our customers.

Tom Wilkins: That’s awesome. Well, let’s wrap up a little bit with maybe a little personality kind of question. Do you have any hobbies? Do you have any volunteer activities that you do?

Daniel Jacobs: Yes, yes. Thank you. So, I … Well, first of all, I’ve got three kids that keep me very busy. I’ve got twin boys that are gonna be 14 soon. My daughter will be 17. We’ve been driving with her, and every time I get in the car with her, I think I lose six months of my life. So, they keep us really busy. But, other than that, I’m a musician. I play the bass. Except for a little bit just recently, I’ve always played in a civic orchestra. I actually started off as a music major in college before I went to political science.

Tom Wilkins: Interesting.

Daniel Jacobs: So, I’ve maintained that all these years, and I still really, really enjoy playing the instrument. It’s a nice escape from the stress and pressure of business every day.

Tom Wilkins: Yeah, yeah. Well, that’s great. Oh, man. I wish I had some hobbies like that. Well, I think that’s gonna wrap it up for us. Daniel, thanks so much for being a willing participant here.

Daniel Jacobs: Yes, yes, yes. Absolutely.

Tom Wilkins: We’ll be seeing you around the rest of the SocialSurvey Create WOW conference.

Daniel Jacobs: Yeah, this has been great.