Loan originator Todd Bitter answers five questions on adapting to a downturn

Bitter: 'I look back on 2008 as the catalyst that changed my whole career for the better'

Editor’s Note: This is the second installment in the “Industry Warriors” series, a collection of profiles on veteran real estate professionals and loan originators who produced high volumes pre-9/11 and pre-2008, weathered those economic downturns and rebounded even stronger.

In a downturn, there is opportunity – to establish new relationships, hone a business niche or pivot altogether.

That’s the mantra that Todd Bitter, a loan originator servicing the Greater Phoenix-Scottsdale market, adopted during the Great Recession. Prior to 2008, a majority of the 25-year industry veteran’s lending business was non-conforming subprime loans. He pivoted to conforming loans when those markets dried up and used the Recession to build up purchase contacts. Since then, he’s focused on conventional lending with some government loans.

HousingWire spoke to Bitter, of JKS Mortgage, about how he navigated the 2007-2009 recession and his approach to today’s market.

HousingWire: What are you doing within your lending business to adapt to the current market situation?

Todd Bitter: For the last quite a few years, I haven’t done an FHA. I haven’t done a VA loan. I’ve never done a non-QM loan since 2008. My product lines are not blowing up around me like the non-QM people are losing their deals left and right. The low-score FHA people are losing their deals left and right because the FHA guidelines are going higher and higher. Luckily for the last few years, I’ve only done the clean conventional business, so I haven’t had to pivot much from that.

Todd Bitter

What it’s (the current situation) making me do is stay on top of my Realtors better. I’m sending out daily updates to Realtors saying, ‘This is changing in the marketplace.’ Even though I don’t do FHA or VA, here are the guidelines that are going out right now, to stay in front of my Realtors and keep them informed because there’s so much bad information out there right now. The Realtors appreciate hearing it from someone they trust. It’s slowed down, but I’m still taking in contracts. I’ve still got people looking at houses. It’s still business as usual with a twist of uncertainty right now.

HW: How are you encouraging your team to stay positive during this time? How are you staying positive?

TB: The new guy we brought on literally six weeks ago (to focus on FHA and VA loans), we’re trying to encourage him. He made the switch, was starting to do really well with us and then three weeks into his switch-over, is when all this started. I’m talking with him every day and keeping him abreast of the changes. I’m trying to give him as much business as I can. I focus on purchases; I don’t do a lot of refinancing, so right now, I’m trying to give him as many clients of mine to refi as possible.

HW: What did you do in past economic downturns to successfully navigate those times?

TB: Prior to 2008, I was probably 75% non-conforming subprime up until 2007, when all of the subprime business started imploding. I did not do any purchase business other than the ones that fell in my lap.

In 2008, being a small, two-man broker shop, everything went away except for conventional. We lost all of the subprime, of course. Everything subprime was gone instantly, and FHA and VA – you had to have those sponsorships back then – and a small little shop like ours couldn’t get them. So in 2008, we were faced with Fannie and Freddie and 20% down because all of the MI companies had imploded at that point. It feels like we woke up one day in 2008 and found out, ‘Okay, you have one product and one product only to sell.’

I had to refocus everything I was doing. It took me from doing nonconventional refi’s, to I had figure a way to develop real estate relationships. I knew conventional loans because I was doing them, but I had to get my mind wrapped around that that’s all I had. It made me refocus my entire business model to real estate agents and conventional prime lending.

We were in Arizona, which was one of the hardest-hit areas for home valuations. So the refi business dried up pretty quickly even though interest rates were falling. So few people had enough equity in their houses. Even people that had equity, say they owed $150,000 on a $300,000 house and they were sitting really good, within months that $300,000 house was worth $200,000 and suddenly they weren’t refinancing.

I was stuck with the dilemma of, ‘Do I refocus my whole business and find a way to make it work, or do I leave the industry?’ It was all or nothing. It forced my hand. At that point, I had to make a decision: Am I going to stay an originator? Yes, I’m going to do this; I love the business. Okay, then you better go out there and develop all these agents to do business with.

I wouldn’t say 2008 was a success, but it laid the foundation for my future success, and basically I just went out there and found any avenue possible to get in front of a real estate agent. I took the mindset that a lot of guys were leaving the biz, so there would be a lot of Realtors out there that no longer had their first choice as an originator. I started pounding the pavement. I was going to networking groups, BNIs (Business Network International), every insurance agent, title company, anybody who would listen to me. It was either that or get out of the business.

HW: Given your history in those past economic downturns, what do you think LOs need to know now that they might not be thinking about?

TB: The most vital things right now are keeping a positive attitude and looking for any positive thing you can find in the marketplace. Other than that, it’s staying on top of the changes; every day we’re hearing about change of some sort. The guys who don’t take the time to read every bulletin and every podcast and listen to the Barry Habibs of the world are going to find themselves on the wrong side of this. You’ve got to find positive things in this mess, and you’ve got to stay on top of every change that’s coming down the pike. Because the changes are coming fast and furious and what we’re doing today, we might not be doing tomorrow.

HW: What piece of advice from your history in downturns would you give to others in your field trying to navigate COVID-19?

TB: Don’t be the person who looks back on this in three years and sees nothing but a horrible experience. I look back on 2008 as the catalyst that changed my whole career for the better. It pushed me into what I am today, which has made me very successful with what I do. I can look back on 2008 and say, ‘That was good for me; I found my niche then.’ I tell everybody: Find your positive thing that you’re going to take away from this, that’s going to catapult your career a year, two, three or four years down the road. Maybe you’re going to pick up a couple Realtors who are going to be really great referral partners in the future because right now, those two Realtors have a loan officer with a negative attitude. There’s going to be people coming out of this, better for it.

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