Typical Career PathTypical Career Path

Top LO opens a new company• Lack of business training

• Especially with P&L’s

WHY OTT?One Transaction Thinking

WHY OTT?One Transaction Thinking

• Because I wasn’t smart enough to be able to read financial statements

– I spent over $4,000 in seminars trying to learn

• I needed to react quicker in market swings

• Allows me to read my P&L in minutes

Mistakes I MadeMistakes I Made

• Former internal accountant misallocated 1 loan– $127,000 error…created huge amount of

financial stress– He was managing my books, why should I?– I was detached from my financials. OTT

reattached me.

Revenue versus ExpenseRevenue versus Expense

• Revenue determined loan by loan

• Expenses come in lump sums

• Exercise–Pick a loan “How much did you make”

How much was your last payroll?

The accounting world has taught usThe accounting world has taught us

Expenses

Common Sense…..Common Sense…..is not “That Common”!is not “That Common”!

Definition– It combines monthly closed loan reports with P&L

broken down to one transaction

• Think in approximate numbers

• Needs numbers now to run the business

• Think Financials and Productivity

• Think in exact numbers• Wait to publish P&L info

until it’s perfect• 60 days is quick• Think Financials only

AccountantsAccountants EntrepreneursEntrepreneurs

The Mortgage BusinessThe Mortgage Business

• Changes occur very quickly– Rates go up refinances go down etc.

• Owners need information now to react

• Revenue per loan fluctuates

Entrepreneur’s CompensationEntrepreneur’s Compensation

Entrepreneur’s CompensationEntrepreneur’s Compensation

Entrepreneur’s CompensationEntrepreneur’s Compensation

Entrepreneur’s CompensationEntrepreneur’s Compensation

Numbers and CapacitiesNumbers and Capacities

• They go hand in hand

• If you don’t know the numbers… – How do you know whether you need more out of a

processor?– More or Less Processors?

Basic Mortgage Accounting Basic Mortgage Accounting

• Chart of Accounts– Only need to see what you want to track

• Focus on Income Statement– Balance Sheet is more complex

• Creating a cheat sheet for all the numbers– OTT vs. the 55 gallon drum of numbers– I can remember processing costs should be around

$130

Two Crucial ElementsTwo Crucial Elements

1. Combining the closed loan production with your P&L

2. Timing of the data-Entrepreneur time

Timing is CriticalTiming is Critical

• I used to wait 45-75 days for numbers– Too late, the market changed

Future Decisions Using OTTFuture Decisions Using OTT

• Rent Analysis– I pay $144 a closed loan for rent– I look into a different location

• I run the OTT and find out I will go to $294 per closed loan

– Can I afford to add $150.00 per closed loan for the new space?• This comes right off of profit

– Will the new location increase closed loans?• $$$ per closed loan (higher loan amounts)

– My ego needs it. I will sacrifice the $150.

Future DecisionsFuture Decisions

• The rent decision was made based on a crystal clear view

Why Companies Lose MoneyWhy Companies Lose Money

• Capacity/Production Imbalance– Rent

• Space for 30 only 15 employees

– Phone system• Phones on each desk not all desks are full

– Ops Salaries• Staff for 400 loans only doing 200 loans

– Managers Salaries• 4 managers managing 3 people each

– Copy machines• Pay for 50,000 copies per month only doing 25,000