Interview with a Winner:
Eric Union
President, Union West Financial, La Jolla, CA
2005 Origination Volume: $56 million
Average Loan Amount: $600,000
Software: Calyx Point (for processing), Goldmine (for database) and Mortgage Coach (for analysis)
Referral Source Mix: 50% from Wealth Management Team (financial planner, tax advisor, life/health/investment insurance advisor, casualty insurance advisor, Realtor and trust attorney) and 50% from past clients.
In Touch Today: How did you get started in the mortgage business?
Eric: I entered the mortgage business eight years ago. For 12 years prior to that I was a in financial advisor to the corporate arena on accounts receivables, cash flow and customer retention. I did a lot of analysis, using Excel, to show large Fortune 500 and Fortune 1000 companies how to better manage their internal treatment of their cash flow, accounts receivables, and customer retention of monthly recurring revenue-type billing streams.
It’s a fancy way of saying any type of service you use or monthly payment you make, whether it is your car payment, your cell phone service, your trash pickup, your local long distance, or so on. Those are all recurring revenue-type billing streams.
I was dealing with CFOs or controllers of large corporations and advising them on what to do. So it was a lot easier to move from that arena to family and talking to a husband and wife about their situations in terms of feeling rewarded. You can really impact someone’s life by giving them good advice. I’d give advice at the corporate level based on what I studied in school about using strategic debt to grow your business. And it all applies to the mortgage practice as well.
I started meeting people like Dave Savage, who created Mortgage Coach, the software program in equity repositioning analysis. I was doing it all by hand on Excel and it took a lot of time and still looked like a spreadsheet. Mortgage Coach produces beautiful results which look very professional.
In Touch Today: What made you decide to change your focus to the mortgage arena?
Eric: My brother got into the real estate business in La Jolla back in 1984. When we had our real estate down-cycle in 1990, he decided to start up the mortgage side and do loans as well as sell real estate, which saved his business. He’s been doing both since 1990. I joined him in 1998 and basically just opened up a new office. He was in Rancho Santa Fe so I opened up an office in La Jolla.
My brother was operating at a very high level. He was doing about $30 or $40 million in loans and selling tens of millions of dollars on the real estate side.
In Touch Today: Were you an immediate success?
Eric: I was in the beginning during a strong refi market. Then in 1999 rates popped up overnight. In August and September of that year, I did zero loans and had zero income coming in for my family of four. It was then that I learned that you can’t just focus on refinances – you have to work for purchase loans as well.
It was not smooth and pretty in the beginning. In fact, I was given advice by one of my friends who was a mentor in this business and who has been very successful in this industry. He said, “You’ve got to go see a guy named Todd Duncan and go to his annual seminar. It’s three or four days and you’ve just got to go.” I tried to explain that I didn’t have any income and couldn’t afford to go. But he told me, “I don’t care if you have to borrow from your retirement plan or emergency reserves. Just do it.” So I did it. I met Todd Duncan and I heard Stephen Marshall and Tim Braheem speak for the first time.
After I went to Todd’s conference, I did $13 million in loans… and it has just gone up from there. My volume from past clients kept doubling and redoubling each year, using Todd’s high trust sales principles.
For those folks out there just getting started, get your database software and start using it right away. Track your clients and keep in touch with them.
In Touch Today: Tell us a bit about your “High Trust Interview” process.
Eric: It’s not about quoting rates and products. It’s not about trying to compete against everyone else on price. Instead, it’s about becoming an advisor, not a salesperson. You need to be able to identify what people are trying to accomplish, both short and long term, financially. You need to understand their core values and the habits they’ve built financially. Do they spend as much as they make? Or spend a little bit more than what they make? Do they tithe at all? Do they give away money with no expected return either through tithing or philanthropy?
A trusted advisor understands their budget and cash flow even when they don’t. A trusted advisor knows how much they are spending even when they don’t. He/she knows how much they are contributing, and what their tax burden is. He/she understands how much equity they have in real estate versus how much equity they really need.
A trusted advisor shows the client how to keep assets on their balance sheet and add new ones to their balance sheet – because it’s all about the total assets that you control, not how much debt you have and when you are going to pay it off. It’s about cash flow, budget and total assets.
In Touch Today: How do you get a client to focus on financial planning rather than the loan rate?
Eric : First of all, I tell them that I understand that rates are in important and that I certainly appreciate their efforts to not overpay for financing. I then congratulate them on the property they’re planning on purchasing and ask them to tell me about the property and the part of town they plan to purchase in.
I’ll then try to build some sort of common ground through their answer before I let them know that there are other factors that will have more of an impact on their finances than the loan rate. I advise them that the more important decision they need to make is how much money – how much of the 100% equation – they are going to contribute. What I mean by that is that the home they’re buying is going to be 100% financed. It’s either going to be with their money or someone else’s. But the home will be 100% financed. So a really important decision they need to make is how much of their money versus someone else’s do they need to use.
Very few people in this country of ours know how to make that decision – to make the best choice for their family – but that choice impacts not only the monthly payment and the closing cost and the interest rate, but also the biggest bill of all… taxes.
I also ask if they’ve thought about how much money they are going to need to retire. When they give me their answer, I tell them that the choices they make on the home that they’re about buy and the debt structure they take on has a huge impact on whether they’re going to have enough assets to meet their long term goals of retiring.
I tell them that I can advise them on a much bigger scale than just quoting a rate. I tell them that I do a lot of volume and have excellent relationships with all the top lenders in town. I’ve established those through the years of being in business. So they’re not going to pay any more using me than anyone else. But the advice they’re going to get from me is going to change their life.
In Touch Today: Tell us a bit more about your “Wealth Management Team”
Eric: I formed what we call the Wealth Management Team with an expert in each financial discipline. As a team, we get together every month to track new referrals to the group. It’s amazing to see how many referrals have been generated. The minimum requirement for each group member is two new introductions per month to one of the other advisors on the team. This way, everybody is contributing clients into the process.
The guiding thought and purpose of the team is our desire to truly care for our clients. Everyone needs good tax advice, a good investing system built to feed, estate planning, insurance, real estate and mortgages. Everyone needs this team. A lot of people try to do it by themselves, or use people who aren’t at the top in each of those categories.
It’s not a networking group. It’s not a sales thing. It’s truly trusted advisors caring for the clients who have given them the trust and the responsibility. The group is my primary source of referrals and referral partners.
In Touch Today: Do you do any prospecting or advertising?
Eric: No advertising or prospecting. I just don’t need to with the referrals I receive from the Wealth Management Team. I should also mention the philanthropy pillar of my business. My church has been an excellent venue to meet people and bring them on as clients. I’ve also been part of the Kiwanis group in La Jolla for eight years. Philanthropic interests are essential to having balance in life and to give back to the community.
In Touch Today Culver: How many people do you have i on your company team?
Eric Union: I have three people on my team: a processor, a mortgage planner and a receptionist/office manger/personal assistant.
My mortgage planner analyzes each client’s complete financial profile (cash flow, budget, habits, et cetera) before I meet them. She uses Mortgage Coach to put together an equity repositioning analysis, projects for each property the client owns, as well as a total cost analysis.
She actually has 20 years of experience leading mortgages companies, so I have her manage my other two employees. This way I don’t have to worry about any of the day to day management of those folks. She also does high trust interviews for me (when I need her to assist) and manages all the lender relationships (since we’re a wholesale broker). She judges which lender and program to use and she’ll do the loan applications with the clients.
I then meet with each client for a high trust interview to design a strategy for them.
I’ll also integrate other financial advisors when needed, whether it be tax planning, investment advice, writing a financial plan, investment grade insurance, personal insurance: life, health, disability, or property and casualty insurance for their personal assets as well as if they own a business.
Most clients do not have topnotch advisors in each of these disciplines, so I make introductions for them. It’s a very comprehensive approach.
My receptionist/office manager/personal assistant wears many hats. In addition to acting as receptionist, office manager and my personal assistant, she handles all of the marketing, the client appreciation program and the scheduling. She sets up appointments for the new referrals coming in, gathers their personal information and then transfers them to my mortgage planner. She schedules my travel and appointments. She handles all my e-mail (and she can choose to distribute to the team if appropriate instead of sending them all to me). This easily saves me a couple hours a day of just communication.
She also handles all the reconciliation of closed escrows, making sure we were paid correctly. She preps the paperwork for the bookkeeper once I’ve reviewed it.
My processor gets all the loan application documentation in place. We’re a wholesale broker, so he then submits the loan package to whichever lender we chose. The lender is in charge of underwriting the file, funding it and dealing with it in the secondary market.
My processor also deals with escrow, title, appraisal and communication with all parties. We have a pretty sophisticated e-mail system in place for communication with our clients as well as the real estate agents, escrow and title. My processor takes all the incoming calls and questions throughout the process as well.
In Touch Today: What is involved in the email communication process your processor oversees?
Eric: First of all, when someone calls for an appointment from a referral, we email them directions to our office. Then another email goes out from the mortgage planner containing all the financial questions we need answered in order to do the prequalification and financial meeting. If they’d prefer to discuss the questions over the phone, they have the option to call.
Then we will email copies of the Mortgage Coach analysis to the client as well as the financial advisor if that’s where the client was referred from. Once they engage in a loan, an e-mail goes out with a list of the items required to process the loan. Another email goes out after we’ve received the items requested.
We email the buyer’s agent when the appraisal has been ordered. We email the appraised value of the home to the buyer’s agent as well as the client. If there is a discrepancy in value, we send an email that will speak to that.
We also send out an e-mail when we submit them for underwriting. We send out another one that says “You’re going to receive a number of disclosures from the lender.” Once the loan is approved, the real estate agent and the client are emailed. We’ll also send an email when final loan documents have been ordered. . Prior to the signing of their documents, we email them about all the terms and conditions of the loan to make sure that they don’t have any questions before they have to go in for the stressful event of signing their loan documents.
We email them important info about their loan, including when their first payment is going to be due, who’s it to, whether it’s set up for auto pay or not, if there’s an impound account or not. Then we give them a phone call. A phone call is made the first of the month of their first payment due to make sure they received it, that they’re scheduled to pay it because we don’t want to start out a mortgage with a late payment. People really appreciate that.
We also take a copy of their final closing statement, circle the origination fee and, if there are points involved, we write “Tax deductible!” Then at the end of the year, in the beginning of January, we take all of those – we keep them all in a file –put together cover letters that explain the tax ramifications and write, “As a courtesy to you in honoring our role as your trusted advisor, enclosed is a copy of your final closing statement that you will need to forward to your tax advisor to make sure you get all the write-offs you’re entitled to.” That’s a really nice piece for them.
We also send out e-mails on December 1st and April 1st reminding them that their property taxes are due on the 10 th. We teach them, if they have an impound, account where their property tax statement will say so.
In Touch Today: What mistakes do you think rookie loan officers typically make?
Eric: Competing on price instead of advice.
In Touch Today: What mistakes do you think veteran loan officers typically make ?
Eric: The biggest mistake you can make is being ten years in the business but repeating your first year over and over and over and not growing. You need to learn to be a trusted advisor from people like Todd Duncan, Dave Savage and Steven Marshall. You could say that it’s like chopping wood in a forest but never sharpening the axe. The axe gets duller and duller, and you just have to work harder and harder to get results.
If you’re in the advice game, you need to stay on the leading edge of the advice. You need to pay to play. You need to create an education budget line item in your business plan and fund it with $5000, $10000, $20000 a year as you grow your business. And as you’re building your team, you need an education budget for them as well. In my company, we attend Todd Duncan’s Mastery and ALE event every year as well as Steven Marshall’s Strategic Equity event. I also belong to a Vistage CEO group.
In Touch Today: Who or what has been the biggest contributor to your success?
Eric: My faith – for many reasons. One reason is that being spiritually grounded takes the worry and stress off of your shoulders that you have to absorb in this business. It is a pressure cooker industry that we’re in. If you’re not spiritually grounded, you’re in for a much tougher ride than if you are.
The second reason is that my biblically based training, Christianity, includes the concept of tithing. I think this makes me a better advisor. I talk to all my clients about it because it breaks the bondage of materialism. Living in the United States, we’re surrounded by a materialistic society. It’s our environment. Giving money away breaks that. It also impacts and helps other people, which makes you feel better, and will give you that internal fire to keep going and do better and work – do what needs to be done.
I also believe that if you are a good steward or trustee of the money that you’re given, and you make good decisions and you tithe and all that, you’ll be trusted with more. Certainly I’ve been trusted with a lot more than when I first got started in this business. I credit being spiritually grounded for that breakthrough.
The third reason is that faith teaches you it’s not about you, it’s about everyone else. So you think outside of yourself and what you need. Being a trusted advisor is all about having empathy and really understanding what’s going on in the other person’s life. Every client you have is unique, and the more skilled you are, the more focused you are on thinking outside of your needs and what your business needs to what your client truly needs. Having that type of perspective has had the biggest influence on my success.
Getting a coach was also a huge turning point for me. My coach keeps me accountable. We all get great ideas from the education sources that we plug into, but implementing them is the second half of the story, and that requires follow-through and accountability. If you just do a little bit each day, or each week, eventually 365 days later or 52 weeks later you’re going to be miles ahead of where you were before you got started. Having a coach helps you stay focused and on task.
Another important component of the coaching program is figuring out your life plan. What are you trying to accomplish? How do you have balance outside of the workplace? You’ve got to know your “why”. Why am I doing this to myself day in and day out in the mortgage business? A good coach will help you write your life plan. From that they’re going to help you write your business plan. Then they’ll take your business plan and help you chunk it down year by year, month by month and even week by week.
In Touch Today: How do you stay in touch with your past clients and show them appreciation?
Eric: I have two campaigns for staying in touch with my past clients: a value campaign and an appreciation campaign.
Our appreciation campaign is based on the critical stages of a loan: approval, funding, and four months after, eight months after, and a year after. So those are the touch points. At each touch point, we send a beautifully designed greeting card with text that speaks to each stage. It’s all centered on valuing, appreciating and congratulating them as well as being their trusted advisor. The text is on a nice vellum insert, which we adapted from the Ritz Carlton. Each of these greeting cards is sent with an accompanying gift which could be movie tickets, a Starbucks gift card, a little champagne split, or something like that.
Other forms of appreciation include sending birthday cards for the spouses and their kids. In the kids’ ones we include some Baskin-Robbins coupons and tell a little story about how in my family my grandfather takes out each grandchild individually on their birthday and it’s really a neat little tradition. I wanted to pass that family tradition on to their family.
We also send out beautiful wedding anniversary cards and other cards recognizing major events in their lives, either a birth or a death or promotion. We’ll send flowers or fruit bouquets.
Our value campaign is based on adding value to their experience with us. We talk about how all the due diligence we do up front (assessing their current financial position, doing a financial scoring and rating) works to help their financial situation and maintain (or improve) their credit score. We’ll completely analyze their credit and the credit accounts that they’ve established, advising them what to close down, what not to close down, how much more credit to have, debt consolidations and all that stuff. We try to get them up to a 760 or higher credit score, and we show them how to accomplish that.
Other parts of the value campaign include the high trust interview in terms of core value and highest value needs solicitation. It includes other tools that I’ve created to use for advising people and showing them the paradigm shift from the old way of thinking to the new way. It includes a cash building model for them to follow, a pyramid to become financially bullet proof, and then ultimately financially independent.
(By the way, I have no problem sharing these tools that I use if people want to plug into them. Simply sign up for my site visit by sending me an email at EricUnion@UnionWestFinancial.com or giving me a call at 858-454-5343.)
Our value campaign includes the use Mortgage Coach to document all the before and after pictures, whether it be the equity repositioning analysis reports and total cost analysis or debt consolidation. I will also create kind of a summary plan that is circulated to the other professional advisors that I’ll introduce them to (on the wealth management team) so that everyone understands and are all on the same page with what advice I’m giving and the objective we’re striving for.
Additionally, we do annual mortgage reviews. We pull their credit and run a preliminary opinion for value of each property that they own through our appraiser, and refresh all their data in terms of income, assets and employment. Running their credit will give us the debt and credit side, which we’ll use to rethink their current plan and how we want to tweak it. Is there equity that’s been built up or do they have a new expense on the horizon that they want to plan for? Are they feeling any financial stress? If so, where? What steps can we take to relieve it? We do about a half hour minimum review with every client and my mortgage planner gathers all that data and prepares it all. Actually, I’m having her do these annual reviews now for my silver and bronze clients. The gold clients I handle personally.
In Touch Today: How do you determine which are bronze, gold, or silver?
Eric: It is based on a multitude of factors, but basically gold clients are the biggest clients we have.
I break it out by money in terms of income that they make, how many properties they own, and do they understand the value of advice over price. Am I their trusted advisor? And are they so engaged in that that they’re willing to share my skill set with others? In other words, do they make referrals and introduce people so that they can have their lives benefited by the advice?
A silver client owns only one home but has a $600,000 mortgage or an $800,000 mortgage. But they’re kind of introverted. They’re not real comfortable referring others.
A bronze client would be one that has a little smaller loan or they’re just not making the big income so the future opportunity isn’t there. But they are certainly still a valued client who I want to take care of.
However, let me make this clear because you have to adhere to the government standards and you can’t over service one versus another. We do the same annual review process, the same due diligence, for every client (regardless of income size or loan size). We put about an hour and a half in for every client for every annual review. It’s a lot of work, but we do it for gold, silver, and bronze (more than 200 clients annually). For every two reviews we do, we get one loan, that’s a big ratio.
It could be a loan driven by the desire to pull out more equity from their existing home because they didn’t want to do it the first time through a year ago or there’s been appreciation. It could be a loan caused by a change in their life circumstances. It could be a loan generated by a referral. The annual review is a golden opportunity to create a lot of extra value with nothing expected in return.
I don’t charge for my annual client reviews. It’s all part of caring for my client and honoring that responsibility. And the law of reciprocity works heavily in your favor. They think, “Wow! This was a lot of extra time and energy!” I don’t charge them for the credit report or the preliminary appraisal analysis. I pay for the credit and the appraiser provides their service complimentary to us , given our volume.
In Touch Today: Do you have one sales or marketing turnkey idea that you’d like to share with our readers?
Eric: Implement an annual mortgage review process as described previously. Send them a postcard and follow up with a call. Or you could even just start calling your clients and asking them to come in. It will take awhile to fully integrate, but it will be worth it. I’d also suggest a full integration of an appreciation campaign (complete with all the touch points) as well as the value campaign.
In Touch Today: If you had a magic wand, what would you change about the business?
Eric: If I had a magic wand, I would teach the entire industry how to be a trusted advisor as well as how to honor their role as trustee for their clients. We all need to honor the responsibility that they’ve given us to help them not feel financial stress or burden through their lives. Financial stress and burden is a leading cause of divorce and family breakdown in society today. This is why I’m doing this interview, why I’m sharing whatever you want to know about my business, why I speak at conferences. I can only meet one customer at a time, one family at a time, maybe 100 or 200 couples a year, but there are more than 400,000 loan officers out there. And very few people think the way I do about my clients. Becoming trusted advisors is something I would love to see our industry do to significantly change our communities.
As for changing my current business with a magic wand, I think I would make it even less dependent on me. I just personally went through a bout of vertigo where I couldn’t work for the last ten weeks. Thank goodness I have a high-level mortgage planner on staff who was able to run the business without me. If I didn’t, it would’ve been a much tougher situation. I want to get my business to a point where it’s not relying on me at all. I want to make one more hire and get it to that point.
In Touch Today: What are your current business goals?
Eric: 20% growth. Most mortgage companies are cutting payroll and not growing.
I’d like to get the Wealth Management Team fully integrated. It’s made up of advisors from seven different disciplines within the financial arena. I want all seven of us to know each other’s business inside and out so we can best integrate our individual planning for the better good of the client.
In Touch Today: Is there anything else you’d like to say to other loan officers who would like to achieve the level of success that you have attained?
Eric: I would encourage them to invest in themselves and use the resources. I think sometimes in this world we’re taught that everybody’s out to make a buck off you. “Buyer Beware.” You can garner amazing information from seminars and the resources I suggested. Make site visits to advisors who have built a practice that fits the vision of the practice you’d like to build. There are so many different ways that you can build your business. When you dial into someone who really runs things the way you can see yourself running your business, go meet them. See the systems and meet the people and get a feel for what it looks like because that will help create your vision for your practice. You’ll be able to see it tangibly. The better you can visualize where you want to take your business, the higher the probability is that your business is going to look that way.