If there’s one takeaway from this article, Damon Germanides wants you to start doing one thing when you submit a loan:
Write a cover letter.
“There’s nothing an underwriter loves more than to get a nice credit memo explaining either the positives or the negatives on the file before they look at it. You've given them the pros and the cons on the loan before they even flip the page. If the loan is close, that time spent on that cover letter, I'll tell you, many times will overcome the issue because the underwriter's been made aware of it upfront . . . You've already addressed it,” he said.
Germanides, co-founder of Insignia Mortgage, believes in a lot of things. He believes in dedicating energy into data and strong CRM tools, utilizing detailed borrower and relationship data for sharp print, and digital marketing outreach. He believes in a very hands-on approach, knowing each and every one of his client’s files inside and out. These beliefs put into practice netted him more than $206 million in closed loan volume in 2017.
He also believes in an entrepreneurial spirit, which is why he founded Insignia along with colleague and friend Chris Furie. After the financial crisis it was tough to close loans, and Germanides said that he and Furie decided that they’d be better together than they would be apart.
The pair partnered with smaller community banks looking for a jumbo outlet (at a time when “there was really no jumbo lending going on,”) and the company evolved from there. Eventually, they found their specialty, which was doing A-paper loans with a bit of a wrinkle that made them more difficult to place.
“We really focused, the last 10 years, on good quality loans, but loans that require a little bit more—or in some instances, a lot more—attention, a lot more analysis, a lot more research, to understand the quality of the file,” Germanides said. “It’s getting easier now, but for many years, banks didn’t want to do anything out of the box, and so we were able to locate lenders who wanted to look at out of the box deals, and then we were able to find clients who needed out of the box deals. Especially working in Southern California, there’s a lot of entrepreneurs, a lot of real estate investors, a lot of foreign buyers, so that whole mix worked out very well for us.”
That’s not to say that founding Insignia was smooth sailing; launching a startup rarely is. Aside from having a good attorney (he jokes, but there’s truth in that), there are a lot of requirements, from compliance and legal considerations to ensuring adequate cyber security and systems that can communicate properly, and a host of other little things that are generally left to the higher-ups to figure out.
It was stressful, sure. But Germanides says that learning from the people who taught him how to do loans means that he doesn’t let the stress overwhelm him. When it comes to doing individual loans, he says, there’s always stress, but it can be limited by good discipline.
A blueprint of Germanides’s disciplined day generally includes starting early, spending a few minutes understanding what’s happening in the markets and what’s going to be driving rates in the coming days. He spends at least half an hour each day developing relationships, making and returning calls and emails, getting back to people, writing thank you notes, and continuing to build his database. One thing that can’t be done in the office, however, is getting in front of clients.
“You’ve got to find ways to be visible,” he said. “You could go to your local community centers or whatever your market is, church, synagogue, go talk about mortgages. Find ways to differentiate yourself. And then over time, you build goodwill, and then people have you on the front of their mind when they go to do a loan. None of it’s rocket science, but it is hard work. It just doesn't happen organic--it just doesn’t happen without the effort, most like everything.”
Insignia Mortgage is based on Southern California, and most of their business comes in the form of jumbo loans from high-net-worth clients, which include a lot of investors and entrepreneurs. In that region, home prices are rising faster than incomes, and Germanides sees people becoming cautious when it comes to certain types of purchases. That, coupled with the fact that credit is still tight and banks are still holding to strict guidelines, means that, even for Insignia’s roster of A-paper clients, not everyone can qualify for a home loan.
For the loans that do qualify, Germanides places extra importance on crossing those Ts and dotting those Is.
“Nobody cares about your file like yourself, so unless you're doing a ton of loans a month, you should always make time to review your disclosures, review what's been done by your processor, make sure that the loan file is buttoned up properly. Lots of times in my career when I haven't done that, loans have gone sideways for the simple reason that I didn’t spend the time reviewing and then I could've addressed a question that I knew the underwriter would've asked up front and it would've been asked opposed to letting it linger out.”
Germanides refers to himself as an “old dinosaur mortgage guy,” but given his disciplined approach and experience with the complexities of the clientele in his market, he’s not going extinct anytime soon.