PERSON OF THE WEEK: This may seem like a very challenging time to start a new business in the mortgage banking industry, but don't tell that to Jennifer Fortier. Previously a senior vice president of secondary marketing at Eustis Mortgage, the New Orleans-based Fortier has recently launched The Artful Enterprise LLC, a provider of professional consulting services to mortgage banking firms. MortgageOrb spoke with Fortier about her new venture and the challenges of launching a start-up in the current economy.
Q: What inspired you to begin your new business?
Fortier: For many years, people regularly sought my input on business and personal issues, and I found that providing guidance and perspective was immensely satisfying. I was also getting great feedback from them that I was providing very valuable and unique insight. Apparently, I have an unusual ability to hone in on the important factors and create a meaningful action plan to move forward, and this is exactly what people often need.
Eventually, I found myself at a point in my career that I had collected a respectable body of knowledge and expertise and the practical experience to go along with it. I was itching to put energy into new and more diverse projects, and was looking for an opportunity to offer my best value to those who want to benefit from it. Going into business for myself looked like the best way to do that, and the time just seemed right to make the leap.
Q: What have been some of the challenges in starting a new business in view of the current economy and the ongoing problems facing the mortgage banking industry?
Fortier: There's a lot of fear in every industry. There are a lot of ‘lean and mean’ businesses that are surviving, even thriving, because of their focused efforts to make it through the recession alive. But professional services are often seen as a luxury, or even a threat to the efficiencies they may have created in recent years.
On top of that, businesses are bombarded with constant messages for services promising the answers to their prayers. You have only a split second to get a buyer's attention and convey the value you offer. Because my approach is highly customized, my real value comes when I am able to roll up my sleeves and get into a project with the client.
The challenge is competing with the information overload and lingering economic worries to deliver a sincere message about how I can help them continue to refine their operations and take advantage of new opportunities. But I also think there is some ‘recession fatigue’ out there, and smart businesses are looking to capitalize on their recent efficiency and stronger market position.
I believe the mortgage industry faces issues that could extend economic uncertainty for longer than in other industries. With the potential for a qualified residential mortgage (QRM) and declining servicing values, small and midsize lenders have a lot of questions about the future. Increasing production costs continue to press on the industry, and there is the problem of balancing that with being competitive.
I think a lot of bankers are in a holding pattern and just dealing with the issues that pop up rather than initiating new projects. But the face of the industry has changed a lot in recent years, and I believe there is a lot of opportunity to build business and create strong foundations for growth.
Q: One of your new company's goals is to provide input for secondary market endeavors. What is your opinion of the state of the secondary market, and do you see the current market environment changing in the near future?
Fortier: I think we are going to realize more and more that the secondary market may not be so kind to small and midsize lenders in the future. Those lenders rely heavily on correspondent arrangements, which are getting tougher and tighter than ever. Many of those lenders who do not have Fannie and Freddie approvals in place could find themselves with limited options – as a secondary marketing executive, that is not a situation I ever wanted to be in.
Those that do begin to rely more heavily on the government-sponsored enterprises (GSEs) will have some operational issues to address. And, of course, the issue of the future of the GSEs is on the forefront. I think you can argue both sides on whether they are good or bad for the industry and the public as a whole, but the truth is, it's not going to be so easy to enact reform that easily gets us out of this situation.
We've been discussing the issues since 2008, and there have been no substantial changes in how the markets work. Yes, there are tighter guidelines and higher costs, but we are still pretty much doing what we've always done, and there is no real change on the horizon yet. The Dodd-Frank Act will begin to pose problems, and I can only hope that the Qualified Residential Mortgage as it is proposed does not end up being final. I don't see many substantial changes in the coming year, but rather more a series of incremental changes in how the market operates.
Q: Your company's website observes that it takes a ‘holistic, comprehensive approach to align the entire organization and build a business system that lets you reach your full potential.’ Considering that companies are made up of diverse people who often share very different goals and personalities, how can a corporate staff achieve this often-elusive sense of alignment?
Fortier: The key to achieving this alignment is to create an environment in which your staff can succeed in their roles and produce the work as you want it done. You do this by creating effective processes with tools and guidance to lead them through and encourage sound, independent decisions. Policies and standards must be documented, unambiguous and comprehensive.
The management team, in turn, must commit to living by the policies they create and consistently apply them through the course of daily work. Focusing on processes and policies in this way directs the focus to what's important and minimizes the opportunities for personal goals and personalities to drive how your business works.
It takes coordination and commitment on management's part, but the result is employees who know exactly how they should approach their work – they know what it takes to do well in the job, which builds confidence and satisfaction. In turn, the ‘people issues’ get much easier to manage and leadership now has a system that they are confident can produce the results they want.
Q: Going into 2012, do you foresee more entrepreneurs creating new businesses within the mortgage banking industry?
Fortier: Flux in any market tends to present new opportunities, I think. The problems that mortgage bankers need to solve are changing. The players are changing too, and I think it's likely that some enterprising people will want to step up to that. I think there is potential opportunity for someone who wants to get a midsize origination or servicing operation going, but the capital requirements are going to limit who can play successfully in that field. The barriers to entry are pretty high, so anyone who chooses to go that route will need to take a more structured approach, requiring a good bit of capital and investment in human resources, as opposed to the small independent of the past that could grow a minimal investment.
I'm hoping we do see some new businesses pop up – competition and innovation are always good and could invigorate the industry a bit.