Arthur D’Arcy “Bobby” Locke (1917-1987) was one of the first internationally successful South African golfers. He was inducted into the World Golf Hall of Fame in 1977.

His famous saying was “You drive for show but putt for dough.”  

So what does Bobby Locke’s famous saying have to do with the mortgage business? Let’s take a look at the two key words in this quote: show and dough. 

Have you ever noticed at industry events that people always want to brag about their loan volume and never talk about how much money they’re making? 

What we often find in our reviews that management’s primary focus is on loan volume, branch expansion...grow, grow, grow!  Loan volume growth looks great as does the golf ball sailing down the fairway.  You need loan volume in order to create an opportunity to generate profits just as you need to have decent drive to get close to the green, but it’s not what wins the game.

In golf, its the putt that wins the match. In mortgage banking, its efficiency in the non-loan origination areas that builds profits.

These areas are behind the scene and generally don’t have the sizzle of loan production.  They include:

  • risk management
  • technology
  • operations
  • secondary market
  • finance

Here is a quick overview of the mortgage banking “putt”:

(a) Effective risk management policies and procedures will mitigate losses resulting from poor loan quality and unscrupulous customers

(b) Proper technology will improve efficiencies and reduce overall costs

(c) An informed and proactive mortgage operation's team will ensure loans flow through the origination cycle with minimal friction and less errors, which again, reduces overall costs

(d) There are so many revenue opportunities in secondary market that it’s requires its own blog post, but here are a few – moving to mandatory hedges, optimizing execution, macro hedging. All increase margins

(d) A focused finance group will provide management with timely financial reports offer up to date metrics on all aspects of the business. This ensures capital is allocated to the right projects...reducing costs and increasing profitability in the process!

While origination is a pivotal part of the process (without it there would be no loan cycle)...heading into the new era of mortgage lending, focusing on the dough and not the show will help you contain per loan costs and give you an advantage over competition.

P.S.  Bobby was also known for his knickers.