Mark Johnson is reluctant to talk.
Currently an originator with HomeBridge Financial, Johnson has been doing mortgages since 1986. Last year, Johnson closed 199 loans for more than $94 million, but because the next 12-24 months are going to be extremely competitive, he wasn’t too keen to let the world see what’s behind his curtain. He’s clearly figured out how to navigate the ups and downs of the mortgage industry, though, and once he got rolling, he had quite a lot to say.
POW: What continues to draws you to origination?
MJ: I’ve always been a people-pleaser and willing to help. When I was a kid, I didn’t give a sh*t what the bank manager what he wanted me to do. If he wanted me to run next door and buy him a bottle of sherry for his customer that was coming in, I didn't care. If I had to go buy toilet paper for his private loo, I didn’t care. I put a smile on my face, and I was there to have a good job and help people. It’s really hard to fire somebody if they've got an amazing attitude and are always smiling. It’s not inherent in everybody, but I think if you turn up with that, opportunities open up. With mortgage origination, you’re always trying to get something somebody they want. When you give them what they want and get them where they want to go, it’s a great reward. That’s the drug, to a large degree. If you listen to people, always add value, and get them where they want to go, it’s a win-win for everybody. That’s what keeps me motivated and keeps me turning up.
POW: Take a snapshot of origination today versus 26 years ago. What’s the same, what’s different?
MJ: It’s more essential today—and probably more difficult—to get across your value proposition and your value in the transaction to clients, and that can be clients that are realtors or clients that are consumers. And it’s the same for the realtors, it’s the same for the loan officers, it's the same across the board, because information is moving much quicker, so people take a very peripheral or quick view of information, whether it be interest rate or listing commission on a house, or cost of title, or cost of escrow, they take a very, very quick piece of information and there's lots more of that information out there.
In the old days, you’d be up against people that would just blatantly lie and lowball. Somebody would just make something up, pull it out of the air. And it was so much more difficult to validate that that the guy was full of sh*t; you’d lose a deal and the client would go elsewhere and they'd be baited and switched and they'd come back three months later and they'd say, 'I'm so sorry, I got so suckered.' That’s not as prevalent today because there’s more predominant information out there and the laws have maybe changed, but it’s still very similar. In those days, we were having to sell ourselves and sell our value proposition against people that would blatantly lie, and today we’re having to do the same thing but against multiple [sources of] information and it's not always complete. You just have to change the way you get through the noise.
POW: How do you feel about the digital disruption?
MJ: The process has not become streamlined; it's become more complicated and costly. The technology companies have made an awful lot of money selling stuff to the mortgage companies that have not increased productivity—YET. There’s a huge upfront cost: design, development. It’s funny, but you know the biggest racket in the world is Encompass. It's the biggest racket in the world, and it's a brilliant business model, too. They don’t bring one product off the shelf and say 'here you go, you're ready to go.' They go, 'okay, here’s the framework. ABC mortgage is now going to pay us to tailor it to everything they want to do. And then we're going to go to BCD mortgage, and they're going to do the same, and we’re not going to share anything that we changed and did for ABC to BCD, we're just going to charge again.’ So they’re charging again and again and again to the whole industry instead of any one standard, and that’s increased the technology costs across the board substantially. And it's not just Encompass, it's just, there's no standard.
As there's more competition and more skills in the industry, I think there will be cheaper solutions and components, so I think that we'll get some of the reduction in the technology costs and the efficiencies that we've been looking for sooner than later.
POW: How can an originator determine how they fit within the system?
MJ: With the resurgence of the non-QM market, you will see a lot of competition for the originator business still, so we still have a place to add value. Every one of those options has guidelines and products that change constantly. The loan officer is going to be as important, but really is going to have to step up their game hugely, to move quicker and know more and be more knowledgeable to steer in that arena. Nobody can be expected to know every one of those things every day. The loan officer always has to know when to say, 'I need to ask, I need to research that, and I need to get the answer right.' The systems will never be able to program everything that is not a square-peg-square-hole situation, because that competition between all those different sources will continue to change constantly.
Interview has been edited for length and clarity.
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