Mastering the Mortgage Market

When the subprime mortgage crisis hit in late 2008, Steve Kaliff (left) and Sean Clark (right) were ready for it, which paid off for Advisors Mortage Group. PHOTO: Michelle Gray

with Steve Kaliff and Sean Clark of Advisors Mortgage Group

In 2008, long before the subprime mortgage crisis took hold, Advisors Mortgage Group, LLC decided to change a key business process. “We went to a conference about mortgage fraud, and brought back some ideas that led us to start reviewing mortgage applications more carefully,” says Sean Clark, vice president of the 13-year-old mortgage bank, which processes, underwrites, and sells loans to the secondary market. Today, thanks to that evolution and others, Advisors Mortgage Group has 20 offices and lends in 13 US states, and has made Inc. 5000’s list of America’s fastest-growing companies three years in a row. Here, Clark and vice president Steve Kaliff break down the New Jersey company’s impressive run.

1. Maintain Independence

A direct lender, Advisors Mortgage Group lends its own money and underwrites its own loans so it’s not reliant on anyone else. “We do everything in-house—from originating to closing loans—because we know if we rely on other companies, their performance can affect our performance,” Clark explains.

2. Make Quality Control a Priority

The most significant tactic Advisors Mortgage Group has implemented, says Clark, is to put in place a fraud-prevention program. In late 2008, believing that fraud, including falsified loan documentation, was rampant in the industry, Clark, Kaliff, and president Steven Meyer hired a quality-control manager. By January 2009, they had developed two departments, one called quality assurance, to prevent fraud prior to closing, and one called quality control, to ensure compliance after closing. “One hundred percent of our files now go through a department in addition to underwriting for the purposes of reverification and fraud prevention, so when we sell our loans into the secondary market, we know they’re clean,” says Clark.

3. Stay Abreast of New Regulations

In the wake of the subprime mortgage crisis, a wave of regulations hit mortgage bankers at the federal and state level. To help ensure compliance, Advisors Mortgage Group has turned to a team of external experts. “It seems like every day there’s a new regulation,” Clark says. “To keep abreast of them, we use AllRegs, an up-to-date database of mortgage-lending guidelines, to ensure that we understand regulatory changes in every state. We use DataVerify, QuestSoft, and Desktop Underwriter for fraud prevention. We also have two attorneys: Washington, DC-based Ari Karen of Offit Kurman helps us deal with compensation changes that resulted from the Dodd–Frank Wall Street Reform and Consumer Protection Act, and New Jersey-based Wayne Watkinson of Levy & Watkinson, P.C. helps us deal with fair lending changes and licensing changes.”

4. Establish a Web Presence

The company also relies on traditional marketing techniques, such as word-of-mouth referrals from realtors, builders, and financial advisers, but has also hired a social-media consultant and implemented a social-media effort that is showing significant results. “It’s hard to track what’s coming in from Facebook or Twitter, but loan officers who have used it have seen a dramatic increase in business, and we know it’s the future,” Clark says. “Statistics show approximately 90 percent of first-time homebuyers find their homes and mortgages online.”

5. Diversify

Advisors Mortgage Group has always sold its mortgages to other banks, such as Citibank, JPMorgan Chase, and Bank of America. Recently, however, those players have begun to exit the industry, driving the company to expand its options. “We’ve sought to do what those banks previously did, which is sell directly to government-sponsored entities such as Freddie Mac and Fannie Mae,” says Clark. “Now we can apply to sell loans to the Government National Mortgage Association. The more you can do on your own, the better you can compete.”

6. Encourage Staff

In 2006, a fire burned Advisors Mortgage Group’s only office to the ground, forcing the firm’s 30 employees to work from a small office equipped with folding chairs and tables. Clark says many left—but those who stayed were committed to the company’s success. “Employees who work with us now have been with us for 5–10 years, which is rare in the mortgage industry,” says Kaliff, who also points to the company’s culture as a factor in its slow turnover. “We facilitate a family relationship so employees feel like more than employees,” he says. “Every Thanksgiving, our president cooks a turkey dinner for the entire company at his home.”