Before you move companies, read this
A conversation with Larry Bailey of Mortgage Workflow Partners
A large lender hired Larry Bailey and his team at Mortgage Workflow Partners to move them onto a new loan system. The system went live. By that measure, it worked.
Something else wasn’t working. So a few months later, Larry went back in and pulled the screen recordings to watch how the work actually moved, because the results were bad.
In one file he watched a processor spend an hour reviewing a loan the disclosure team had already reviewed, after the loan officer had reviewed it himself at the point of sale. Three reviews on one file, and nothing new found on any of them.
The migration worked. The company had taken its old, broken workflow and rebuilt it, step for step, inside the better software. New system. Same machine.
That’s the part Larry can’t fix for them. He can configure the technology and show them how to use it. What he cannot do is make a company change how it works. And this one didn’t.
That is Larry’s real expertise, and it’s why companies call him after the expensive answer didn’t fix anything. He has a phrase for it that his whole company is built on. Workflow Before Technology®. Fix how the work moves first, because the technology can only ever run the process you hand it. He doesn’t just switch systems. He goes inside mortgage companies and fully documents how the work actually moves, step by step and loan by loan. He’s done it for 33 years.
Transparency in how these companies actually operate is a theme I keep coming back to, and originators almost never get to hear from the one person who has seen the inside of everyone’s operation. So I called him to interview him for Originator Unleashed, because the mistake the companies that hire him nearly all made is the same one you need to be able to spot before you decide where to work.
Last week, mortgage attorney Brian Levy and I went through the contract you sign when you move, and what to actually read before you sign it. This week is about what the contract can’t show you. The operation you can’t see until you’re already living, or dying, inside it.
Five Out of 100
So I pushed Larry for a number. Out of 100 lenders, how many are actually tuned up and running at the standard possible today?
Five.
Not five with good people or nice software, because almost everyone has those. Five with a workflow that’s documented, owned, and visible. The other 95 can’t even have the conversation about the next level until Larry walks them through the basics, and most of them have no idea they’re in the 95, because slow feels normal when slow is all you’ve ever seen.
So the question worth sitting with is whether you’re sure you’re with one of the five. It’s harder to tell than you’d think, because familiar is not the same as good. Larry’s bet is that within about three years, the gap between the shops fixing this now and the ones still running like it’s 2015 will be impossible to miss.
Why This Lands On You
You’re going to change companies someday, or someone is recruiting you right now. When they do, they’ll show you the same thing that didn’t fix that bank. The demo, the screens, the software, the part that looks great until a real borrower touches it.
You’ll read the comp plan twice and skim the rest. Then you’ll move your borrowers, your referral partners, your pre-approvals, and your name into an operation you were never allowed to inspect. You can’t inspect it from the outside, because the part that decides whether your loans close clean or die slow only shows itself once your business is already inside it.
And when it breaks, it doesn’t break on the company. It breaks on you. The borrower doesn’t know there’s a disclosure desk. The Realtor doesn’t know whose job the appraisal was. The title company doesn’t call corporate. They call you. Your name is on the file.
You’ve done the thing this produces, even if you never named it. You told a borrower the rate was locked, in a calm voice, while you went to find out whether the lock desk had actually hit accept yet. That was you spending the one thing you own outright, whether people believe you the next time you tell them something, to cover for an operation you didn’t build and couldn’t see.
So how does a company end up like that, with the work hidden even from the people running it? It isn’t bad luck, and it isn’t rare. It’s the default. And Larry can tell you exactly why.
Simple Is the Hard Part
Larry thinks mortgage manufacturing is simple, which is not the same as easy. A loan moves through a known set of steps in a known order, and there’s a clean version of that path that works almost every time.
Hardly anyone builds it. Most companies never do the work to define the path and make it simple, so everyone fills the gap with a version of their own. This processor does it her way. That underwriter does it his. The sales team runs on habits nobody ever wrote down. It’s hard to see, because on the surface everyone looks busy. But working hard is not the same as working. And at the end of the day, almost no one can show you, on paper, how a loan is actually supposed to move, because they never defined it in the first place. In Larry’s words, the workflow isn’t documented, there’s no governance, nobody owns it.
You cannot scale a complex thing. To scale, you have to do the hard, unglamorous work of taking something complex and making it simple yet powerful. Software does not do that for you. Software is a tool, not a process, and, more often than not, it adds complexity rather than removing it. Put a fast system on top of an undefined operation, and all you get is the same confusion, faster. You can get worse, Larry says, and not even know why. And confusion is never an advantage. It’s a tax you pay on every loan, whether you can see it or not.
The problem is, technology and AI can make anything look like it’s working. And so you don’t see it until it’s too late or when things get busy. A simple operation absorbs more loans. A tangled one just produces more chaos per loan as it grows. You don’t fix that by buying software or hiring people. You fix it by simplifying the work, which takes the nerve to say no and the patience to do the boring work almost nobody is willing to do.
Why It Never Gets Fixed
When Larry takes a job, he does the hard part for them. He studies the operation, finds the tangle, writes down exactly what to cut and what to change, and hands them the plan.
Then, often, nothing happens.
Money isn’t the obstacle. Larry watches well-funded companies leave the plan in a drawer. When I asked him why, he said: “Because people won’t move toward something they can’t picture”. He describes it as asking a team to commit to a place they have never seen. He tells them it is better there, that this is where they will work now, and they cross their arms. But Mortgage people are hands-on. They tend to only believe a change once they can see it. They want to click the button themselves and watch it work before they will take a step. So the company stays put until someone makes it real enough to see.
And, as Lary points out, that has to come from the top.
The problem is, most leaders came up through the slow version. They ran loans the hard way for years and made it work, so somewhere they decided the slowness was just what mortgage is. They can’t see the better room either.
Then something finally breaks that forces the change to happen. And it usually breaks like this.
A company gets tired of nothing changing, gives up on the people inside who won’t move, and hires an outsider to walk in and say, “That’s wrong, stop doing that, follow me.”
My two cents
I see all of this through one lens, and I should tell you where it came from.
We built Princeton in wholesale. Wholesale is a different fight than retail. You sell to mortgage brokers, and a broker has no loyalty to your brand and no patience for your excuses. Every morning he can send his next loan to whoever has the better price and the faster answer. You win it or you lose it that day, on three things. Your cost, your price, and whether you can execute. Nothing else. There’s nowhere to hide, and no relationship thick enough to cover a slow file.
That market trains you. You learn to treat a slow process as money walking out the door, because that’s exactly what it is. And to actually run that way, I had to be willing to be exposed. Building a simple, fast operation is mostly subtraction. You take out everything that quietly works against the result you want, even when it’s comfortable. For me, that meant cutting everything and everyone that wasn’t willing to operate with that level of transparency and accountability. Reality is the drug. A leader has to be willing to face and own the truth about their own operation, and most won’t, because the truth is uncomfortable and the complexity was the thing protecting them from it.
You can see it in the numbers, too. Mortgage has almost no economies of scale. The biggest lenders don’t make loans meaningfully cheaper than small ones, which makes no sense until you understand everything above. They never simplified the work. They just grew the bureaucracy around it, and a bigger bureaucracy is even less willing to expose itself. That cost doesn’t get absorbed at the top. It shows up in your rate sheet and your comp plan, which means it shows up in the deals you lose.
Larry’s Test
So I asked Larry what he’d do if he shut his company down tomorrow, took his license, and went shopping for a place to originate. And I think his answer is what it means to be unleashed.
First, he’d say: show me, in writing, how the work happens. What I do, what the processor does, what it takes to close this file. He says every company answers the same way: “well, that depends,” and then they point at its technology. But almost none can show you anything written down. Larry suggests that you make them try.
Then I would ask them for the following items:
I’d ask them to pull the data on a hundred loans and show me the days between every milestone. Application to disclosures, disclosures to processing, processing to underwriting, underwriting to clear to close, clear to close to funding. This is a report, not a favor. The loan types I actually do, not the company average. Why? Because averages are where companies hide. “We close fast” is a slogan, but a hundred real files that look like mine is a fact. And if they can’t produce it, then I know everything I need to know because a shop that can’t measure its own timeline can’t fix it, and I’m the one about to live inside it.
I’d ask them to show me what I can run myself, without waiting on a desk. When I take the application, can I send my own disclosures with one click? When I lock, is it actually locked, and does the locked disclosure reach the borrower in fifteen minutes? When the borrower is ready, does the appraisal order itself off their payment? If the answer keeps coming back “that goes to a desk,” then I know that I don’t control my own loans. I wait in line for them, behind whoever left early that day.
I’d ask them to show me what happens the moment income and assets clear. Can they clear before the file even reaches processing, and once they do, does anything stop an underwriter from turning around and asking for the same documents again? Most shops can’t help themselves. They clear it and re-ask for it, and you’re the one explaining to the borrower why they’re uploading the same statements twice.
I’d ask them to tell me which title companies they close the most volume with. Then I’d call those title companies and ask whether their docs and wires actually show up on time. They can market to me all day. But the title company has no reason to cover for them. They will tell me in one sentence what your recruiter spent an hour dancing around.
I’d ask them to show me what the borrower goes through after the loan closes. I’m the one who has to call them for the next deal and the referral. If their after-close experience makes me look bad, I want to know that now, before I’ve put my name on it.
What the Test Really Measures
When Larry scores these operations, the average comes in around a four out of ten. The gap between a four and a ten is not the software. They’re all running the same systems. The difference is whether anyone can see the loan. In the good shop, the file shows everyone what it still needs and what’s already cleared, the moment the data lands. In the average shop, everyone is guessing. The processor doesn’t know what the loan officer knows. The loan officer doesn’t know what underwriting knows. The borrower doesn’t know anything. There is no mortgage software on the planet that fixes that, because it isn’t a software problem.
One example stuck with me. A national lender brought Larry in, more than 200 branches, the kind of place that lets every branch do whatever it wants. He took a sample, and one branch stood out the second he looked. The manager ran his entire operation, every loan, every product, on monday.com. A basic project board, not a mortgage platform. But he was a maniac about it, every deal sitting in exactly the right status all day long. Larry could tell that branch apart instantly, not because it had better software, but because one person decided his whole team could see the work, and it put him in another league. The other branches he couldn’t tell apart at all, because there was nothing in the system to tell them apart by.
Larry summed it up better than I can. If a file needs six things and has five, and everyone can see which one is missing, that loan closes faster than the file where nobody knows which box is empty. Nearly every time. That’s the game. Whether the company decided to show people the truth, or let them guess.
So make them prove it
The companies calling Larry already paid tuition on this. They bought the system, ran the kickoff, trained everyone. And the same loan still got looked at three times, because software only runs the workflow you already have.
There’s one more thing worth saying, and it’s the hardest one. Getting to a genuinely better level, in a company or in your own career, has a cost almost nobody is ready for. The first thing that happens is you get exposed. For a moment it’s obvious you’re not yet what the new level requires, and it feels like standing there with no clothes on. Most people flinch from that and go back to pretending they’re already good enough. The ones who actually grow are the ones willing to own where they really are.
So don’t pick your next company the way these companies picked their next system. A demo is a performance built for the conference room. The truth is what happens to your file at four o’clock on a Friday when something goes wrong, and the borrower calls you, not the website.
Make them prove it.
Including me.
To learn more about Larry Bailey and Mortgage Workflow Partners, visit Larry’s LinkedIn and website.
To follow Larry on LinkedIn, click here.
Or visit Mortgage Workflow Partners by clicking here
Rich Weidel
CEO, Princeton Mortgage
