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How do Mortgage Lenders stay accountable?

The Story of the Princeton Mortgage Happy Hour

"Every Loan. Every Day."

In 2019 the customer surveys kept rolling in, and our customers were among the happiest in the industry. However, internally, our LOs were feeling a bunch of pain. We had files that were sitting and being rushed at the last minute. We needed a better manufacturing process. So we built an algorithm to answer a few crucial questions for every loan in our system:

  • Where is supposed to be today?

  • Where is it?

Once you know the answers to those questions, you can keep track of every loan. If the loan is not where it is supposed to be at the end of the day, all operations managers get pulled into a mandatory meeting that we call Happy Hour. The managers roll up their sleeves and do what they need to get that loan back on track. In this way, we take the concern for loans off the Loan Originators' plate and onto the plate of operations and management. Transparency and Candor Radical candor and transparency permeate every interaction at Princeton Mortgage:

  • KPI Reports: Every day, we share data highlighting individual and company performance with the team. This is part of our commitment to be a transparent organization and have an "A" Player in every seat. This provides accountability for results and eliminates employee attempts to manage perceptions of their effectiveness. In other words, you got the job done or you didn't, no excuses.

  • Honest feedback is not just requested – it is expected.

  • Anonymous surveys are sent out twice quarterly in which every employee gets to rate each department across the company and give feedback on how we can make things better. That feedback is then shared with the entire company with responses from the leaders of each department. This helps us bring all problems to the service so they can be addressed. Leaders are responsible for fixing problems or their responsibilities get taken away.

Creating tools to enhance transparency and candor was a game-changer and helped us grow as individuals and as a team. Achieving Operational Excellence How do you achieve operational excellence? Our ops team can't leave for the day until your loans move forward. If a loan isn't where it needs to be, we have Happy Hour. Having a team motivated to move your files along benefits them, you, and your borrower. Well-rested ops team who leaves on time with all their work done, you knowing where your files are every day, and your borrowers being so happy that they don't claim the Princeton Promise at closing. Now the company has Better People, doing Better Work, getting Better Information from our customers (The Princeton Promise), getting Better Reviews online, which leads to More Customers, and that continues to attract Better People. When you start to peel back how a mortgage is manufactured, it's very much like a sausage. At the end of the day, the sausage tastes good, but you might get queasy if you think about how it's made! And what we found is one company is doing it "this" way, another company is doing it "that" way, and it's a little bit like Frankenstein's monster, cobbled together, which ultimately leads to chaos. Because of this chaos, we used to have those "end of the months" where the disclosure didn't go out. Loans weren't clear to close. We'd have to push the date! The borrower would be upset, and we just couldn't stand it! And frankly, many people were saying: "Rich, that's just the way it is. That's the mortgage business. You guys are expecting too much. It can't be done." I couldn't accept that. I didn't like getting phone calls on Friday at 5:00 from our loan officers freaking out because the clear to close or the CD didn't go out. We said, "there must be a better way." So we stepped back, looked at it, and realized that manufacturing loans is just an algorithm. And that we, as leadership, as a company, should be able to know exactly what should be happening on each loan, every day. We build an algorithm that says: "Okay, by the end of the day, today, here's where every loan should be!" We defined that for everybody, but nothing changed. Then we said: "Okay, well, people don't do what you expect; they do what you inspect." We need to introduce leadership into this. We need to introduce accountability. That is when Happy Hour was born. Every day, we started to run a report at 4:45 PM that laid out where every loan was currently and where it was supposed to be. If the loan is not where it is supposed to be by 5 PM, then the entire ops management team has to get on a phone call together to go through those problem loans:

  • What happened?

  • What do we need to do on this loan right now to get it fixed?

  • How can we solve this solution at the systemic level so it doesn't happen again?

We launched this in the middle of a pandemic when loans fell from the sky. For the first 60 to 90 days, those first couple of phone calls would sometimes last 2 hours or more. At first, we'd get on the phone and ask managers: "What’s wrong with this loan?” “Who’s responsible for it?” Nobody would know what was going on, and there would be a lot of finger-pointing, but we always say we’d rather have short-term discomfort over long-term dysfunction. So we kept meeting, and we kept improving through the discomfort. Now we have gotten to a point where we cancel happy hour, which means every loan is exactly where it’s supposed to be, 45 to 50 times out of every 60 days. Sales always knows where their loans are, which creates a great relationship between operations and sales. Now sales has confidence that what is supposed to happen to their loan that day will happen, and they know that if there is an issue, it’s automatically escalated up to management. In that instance, management will dig in, roll up our sleeves, and get those loans done before the day is over because, at Princeton Mortgage, we define integrity as doing what you say you’re going to do. So Happy Hour has been this amazing tool that helps everybody thrive because you can count on the person to your left and count on the person to your right that we’re all going to get the job done. And so, at Princeton Mortgage, we’ve built it all around: Every loan, every day.

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