When Richard Hall and Robert Gregory launched Ace Mortgage Funding Inc. in 1998, their goal was take advantage of advances in technology that competitors had failed to use.
But the two quickly realized that while technology was important, attracting and retaining employees and developing effective channels for communication were just as critical to success.
“I feel strongly about communication,” says executive vice president Gregory. “We have 21 locations … but I feel I know most of the loan officers.” Hall, Ace’s president, echoes that feeling and says the company is really all about Ace’s employees and its clients. By focusing on those two groups, Hall says, he and Gregory have expanded the company into one of the top 25 mortgage brokers in the country. Today, Ace employs nearly 700 employees in 10 states and Hall says his goal is to have offices in every state.
Smart Business spoke with Hall about how he and Gregory turned Ace into one of the fastest-growing business in Indianapolis.
How have you grown so quickly?
We have been able to keep the really good people and help them get to their goals personally and financially. By keeping those great people, using the right marketing and technology, we have been able to offer the best products to our clients and have grown very quickly.
Have you changed your management strategy as the company has grown?
Most of the core values are very much the same. We now do things a little bit more on the big-picture side when making decisions.
Sometimes, making an exception on a rule is a bit tougher, knowing it can be scrutinized by 700 employees as being viewed as favoritism of one employee over another. We had to come up with a few more rules than we did in the early years.
What lessons have you learned from this process?
There are five key ones. Get three or more quotes on everything you are doing. You will cut your costs down by over 30 percent, on average, by doing that.
Kill them with kindness. No matter how mad you may be at someone that you work with on a regular basis, realize they didn’t try to mess up whatever you are likely upset about. Be calm and try to resolve the problem versus just freak out.
The harder you work, the luckier you really do get. Become an expert on your products and programs or your competition really will be better.
Set both short- and long-term goals and continuously monitor the progress. Be super-positive every day, as people will judge you based on their deals with you.
What have been your biggest challenges to growth?
Creating a network and communication structure that allows everyone to easily communicate over more of a national versus across-the- office realm.
Staying focused on business that relates to your core competencies versus all the other projects or new ideas that come your way. Many people would view them as opportunities, but most of the time, if not related to what you do well, they are really only distractions from what matters.
Creating a general set of rules that have to be followed with less off-the-cuff decisions being able to be made.
How do you differentiate your products and service from competitors?
The mortgage lending industry is one of the most diversified industries in the country. We are different on knowledge, our marketing approach and our technology. Our average loan officer and employee, in general, is frankly just much more experienced and knowledgeable about the product options and how to get loans closed quickly.
The marketing that we do is very target-specific to our core client — that is, a customer that is there whether the rates are higher or lower. Our technology is one of the best with an IT team that is on the very edge of what is available and are often the people creating what should be the standard for other companies.
What hurdles does the next phase of growth pose?
To continuously maintain close communications with all the offices as they become more and more spread out. Making sure the production options, education, energy and overall company philosophies are spread evenly throughout the company is a challenge, but it will get done.
New legislation is the biggest concern, at both the state and national level. We have already begun minimizing the concerns there by setting up the option to bank rather than broker the loans.
This creates an opportunity to create a higher yield on the loans, even if the core legislation creates rules that attempt to minimize the yields on each transaction.
How do you handle fluctuations in interest rates?
Due to our core focus on marketing to clients that have the highest benefits on the loans, rates are only a small part of the equation.
Our clients have very good credit, but may have outstanding credit that is normally tied into short-term rates, which are on the rise.
As those rates keep increasing on things like credit cards, the spread between mortgage lending rates and those higher-rate credit cards will remain approximately the same.
That means the savings, whether we do a loan at 5.5 percent and the credit cards are at 18.5 percent or if we do it at 8.5 percent and credit cards are at 21.5 percent, aren’t that different. We are still saving our clients a huge amount of money on their monthly payments.
This also puts the loan on a fully amortizing loan versus a revolving credit balance, which means the balance will actually pay down.
Most people don’t realize that just a $3,900 credit balance at a 17.65 percent rate and a 2 percent balance payment will take more than 39 years to pay off if you pay minimum amounts only. As rates go up, the facts are still there, and lower mortgage loans will always be better than high-rate revolving credit debt.
What are the biggest challenges of managing satellite employees and offices and how do you overcome them?
That gets back to communication — making sure the same vision, product knowledge and overall philosophies are the keys. General e- mail is very helpful when combined with monthly management meetings.
We are also planning on pushing out videoconferencing with our offices so all the employees can be on the calls at the same time. That will lower the layers of people that it takes to get things out.
Keeping the organization as flat as possible is very important.
How to reach: Ace Mortgage Funding, (317) 246-5740 or www.acerefi.com
