Support isn’t free

The team built to make your life easier has to be paid for somewhere.

A team that does about $150 million a year joined us last week.

At the end of the first week, one of them sent me this:

“Gonna say it again simply because it’s so refreshing and you should know... everyone here is SO helpful!! I’ve already gotten to know so many people and everyone has been able to answer my text, call, email, Teams, at the drop of the hat. This is different.”

Most people would read that and see a nice note about culture and support.

I read it and think about cost.

Everyone available. Everyone responsive. Everyone answering at the drop of a hat.

And we run lean. Real lean.

* * *

Support usually gets talked about like a benefit. Something the company gives you. More of it is better. A bigger team means you’ve arrived.

Support isn’t something you’re given. It’s something you buy. On every loan. And you never see the price.

When a producer asks me “what’s the support like,” he’s thinking about the people who will help him get his loans done and the people that will help when things go wrong. Because he’s so used to things going wrong. He isn’t thinking about the rest, because he doesn’t know the rest is his too. The recruiter who pitched him, still in the cost structure a year later. A marketing team. Two layers of management he’ll meet twice. The 20 lock desk people. The appraisal support people. The tech admins. The payroll team working nonstop on draw trackers in spreadsheets. The sales coaches and trainers. The consultants. A whole building of people he’s paying for out of his loans, most of whom he’ll never lay eyes on.

The visible part is rarely the whole bill.

* * *

A big team can feel safe. It can even feel like proof the company cares.

But good support and high cost were never the same thing. A lot of companies deliver “helpful” by adding people. And every person they add lands in your rate, whether or not they ever touch your file. You’re not paying for helpfulness. You’re paying for the headcount a messy system needs to approximate it.

The expensive version of support isn’t bad people. It’s average people trapped in a messy system, with managers and coordinators hired to keep the mess moving. The cheap version isn’t fewer people doing worse work. It’s better people doing less unnecessary work.

A few highly capable people who aren’t buried in chaos can answer your text faster than a department of twenty. They cost a fraction. And the person on the other end of the file has a better week. That isn’t a tradeoff. That is what it looks like when fewer people are carrying less mess.

But speed is only part of it. When a team isn’t digging out of avoidable messes all day, that time doesn’t disappear. It goes into the work that actually moves a deal. Getting ahead of a problem on Tuesday instead of finding it at the closing table. Calling the borrower before the borrower has to call you. A team that isn’t buried has room to think about your loans. A buried one only has room to react to them.

* * *

I avoided this for years myself.

For a long time my answer to every problem was to add a person. Slow process, add a person. Dropped ball, add a person. The real fix, simplifying the work until the problem stopped happening, was boring and unglamorous, and I quietly hoped someone else would handle it for me. Rot starts at the top, and I was the top.

Then the market stopped being generous, the kind of market that hides a lot of waste, and hoping wasn’t an option anymore. So I did the boring work. The difference was big enough that I went the other way entirely. Now I’m a maniac about it.

The fix was never more people. It was better people, fewer of them, doing simpler work, with the chaos taken off their desks so they could actually be good at the job.

* * *

Convert it to dollars per loan.

A branch does 20 loans a month and adds a support person. Good hire, everybody likes her, $10,000 a month all in. That’s another $500 on every loan the branch writes. Just like that. The same $500 a loan also buys a regional you’ll never meet, making $500,000 a year over $400 million in production.

It hides even better when nobody uses dollars at all. They use basis points. Five to your assistant. Ten to your processor. Twenty to the manager above them. Each one sounds like a rounding error. Add them up. Thirty-five basis points on a $700,000 loan is $2,450, and a hundred loans a year is $245,000. Quoted in basis points the whole time, so it never once felt like a number.

And this was never only a branch problem. The same thing happens at the top, where it’s bigger and harder to see.

I used to look at a company’s website and envy the leadership page. Head of this, head of that, a chief of something I’d never heard of. It read like strength.

Now I look at the same page, add up what those people make, divide it by the number of loans the company actually closes, and think: that’s expensive.

Every one of those leaders has a team. Every one of them wants a bigger team, so every one of them argues for more budget and more hires, and it creeps, year after year. Nobody’s job is to make their own department smaller.

None of this is bad. The regional might be excellent, the hire might be great, every leader and every basis point might be earned. The point is that the costs stack faster than anyone counts, and you only get to decide whether they’re worth it if someone shows you the real number. Most companies never show it to you that way.

The operation around you at a branch costs roughly 100 basis points to run. On a $400,000 loan, that’s $4,000. A lean version of the same thing runs closer to $2,000, not by cutting service but by refusing to staff around a low standard. The other $2,000 isn’t the cost of being taken care of. It’s the cost of a mess somebody had to staff around.

Two thousand dollars on a $400,000 loan is roughly an eighth of a point.

The borrower you lost by an eighth last month may not have been lost at the lock desk. You lost him months earlier, the day you picked the company with the most people in it and called it support.

And that’s only the deals you lose. On the ones you win, the same money is missing from your own check. It all comes out of one margin, split between the rate your borrower pays and the comp you take home.

The originator doing two loans a month and the one doing ten are different animals. The industry prices and pays them the same anyway. They are not the same, and once you see that, the rest is just arithmetic.

No company can optimize for both at once. The low-volume originator needs more help per loan, and that help is the cost that prices out the high-volume originator. Optimize for either and you’re wrong for the other.

We chose our poison. We built for top producers, and we live with what that costs us everywhere else. The benefits start to pile up around five loans a month, and the more you do past that, the more the math tilts your way. Some of it in deals you finally win. Some of it in pay you finally keep.

* * *

None of this makes the people on a big team bad at their jobs. Most of them are good, and most of them care. It makes them expensive, and slower than you’d guess, because too many of them spend the day on work a sharper, smaller group wouldn’t be doing by hand. The team isn’t the problem. The model that needed a team that size is.

And usually nobody built it to hurt you. A good branch manager hires people to protect his originators. He built a team to take care of your comfort. He just never measured what your comfort costs, so the bill moves quietly into your rate and your comp, and you experience it as losing.

* * *

So I keep that text on my phone.

That team didn’t write to me about our technology. They didn’t write about comp. They wrote to say that everyone answers immediately and knows what they’re doing.

That is what good support feels like from the inside.

Not more people. Less drag.

Rich Weidel
CEO, Princeton Mortgage