So we’ve talked management philosophy, product philosophy, and last month we discussed a bit of market philosophy as well.  How does leadership intersect with both insight and implementation?  I ended my last blog saying that, here at Investor Services within Grid151, we have the best people in the industry, offering the best products, operating in an environment where our understanding of the challenges and what it takes to overcome them is second to none.  This is all true, especially the “understanding the challenges” part.  I hope you came away from my October piece with an understanding of how we go about doing this – from leadership on down, we have people throughout our team who have gone deep into addressing what it takes to excel in an environment where a half dozen or more interested parties all bring their own needs and priorities to the same table, trying to succeed within a very compacted timeframe.  Try to imagine a room where a slew of people come together, all speaking their own language, all trying to understand one another, even though each of them has a little bit of a different system that places the structure around HOW they go about arriving at that level of understanding.  You have to know the different languages, you have to know how they relate to each other, and your end system has to tie it altogether.  We know this, we understand it, and we live it every day.

But this month, I want to dive just a little bit deeper.

You can think of the environment you live in as something of an end stage.  You have doubtless heard the old adage that most of us, in business and in life, are a product of our environment.  But how does our environment influence us to begin with?  I would say that the influence lies deep in the details.  Socrates, the famous Greek philosopher, was said to have uttered the phrase “the unexamined life is not worth living.”  In business, it might be better to say “the unexamined environment is not worth operating in.”  If you want to be a success, it’s not enough to come to work every day with a time-tested sense for how to survive (and thrive) in the environment you do business in.  You have to know all the details, all the parts of the whole that have gone into building that environment.  The detail is where your real influence comes from.  It is where you glean the understanding of how the parts informed the whole.

So let’s talk a little bit more about the details that form the challenges you will see in the secondary mortgage market.  These are the issues that end up being WHY you end up in a room where a slew of people come together, all speaking their own language, all trying to understand one another, even though each of them has a little bit of a different system that places the structure around HOW they go about arriving at that level of understanding.  If you understand how to make these details work for you, the end environment will take care of itself.  The product of your environment is that you WILL be a success.

The asset sale world is a world of vast and disparate data sources.  Almost everything revolves around some type of reporting (more on that later), but the content and even the structure of that reporting is nowhere near uniform as you navigate the various transactional stages of a deal.  Title and diligence reporting is built on huge data sets, organized to tell the story of risk assessment and flags.  Custodial reporting relies on contractual commitments to a servicer, ongoing volume churn, and multiple means of slicing up the data (file level, exception level, inventory data, exception data, etc.).  Sale reporting is built on the specific contractual agreement between buyer and seller, with a laser focus on what is missing and what is an exception, and status updates that reflect the working progress.  As a participant in this process, you can’t control how disparate the data is.  What you CAN control is the parts of the data you choose to focus on.  You need to know which parts of the diligence data may inform your exception curing work later.  You need to know which exceptions matter, and which may just be noise.  You need to make sure status progressions never remain static.  It’s the ACTIONABLE parts of the data that need to be the primary focus.  Different data sets all still rely on action to get them to the correct end points.  If your focus is on the actions, your reporting velocity will take care of itself, no matter who is reviewing it and how different it is from one place to the next.

This all feeds into your own specific reporting around working progress.  You should be asking yourself this question, always – does your reporting highlight the right things, and tell the right story?  Reporting in the asset sale world is a story telling device.  It should be easily telling the story of what’s happening, and how fast it’s happening, and allow you to glean a significant amount of information in just a few places.  Asset sale reports are a lot like school reading assignments – people may not want to read every single sentence, but they want to be able to talk through the main points, and know that the ending is going to make sense to them.  This means that, most of the time, high level numbers of cured and open exception buckets on summary pages are getting the most scrutiny.  Some of those exception buckets, especially ones that are more escalated (more on this later as well), may get some secondary scrutiny.  Almost nothing beyond that will get much attention at all.  You have to have clear markers for progress, your reporting statuses have to delineate those markers, and once again it is the actionable items that needs to be the focus.  My estimate is that you have a minute or two to tell the story of the successes you are driving towards, based on the time the various end parties will spend on the reporting.  Make sure you are telling the right story, and that story will be a success in and of itself.

One of the most ironic parts of the story in the asset sale environment – really in exception processing itself – is that, for all of the work that gets done, a very small number of items tend to get all of the attention.  This is true in the overall progression of the work, and it is especially true when it comes to escalated items within your overall exception populations.  Escalations happen for all types of reasons, but they are usually driven by some subsequent servicing or transactional need after sale.  Almost every single end party has something they want to prioritize, and knowing what those priorities are, and how to deliver on them, is one of the most important things you will do over the course of a sale.  You must have the ability to track and execute properly on escalated items.  It’s almost a guarantee that failing to execute on a handful of escalated items can change the tenor of an entire transaction between a buyer and seller.  Conversely, handling escalations properly buys you significant equity on timeframes for completing non-escalated parts of the same transaction.  Ultimately this is a mindset, and the mindset has to be that you put yourself in another person’s shoes – what THEY find to be important has to be important to you as well.  You need to pay attention to this, track it, communicate on it, execute on it, and continuously do so throughout the life of a transaction.  When you show care for an end party’s wants and needs, they are much more likely to care about your own.

Lastly, exception processing requires you to be agile in understanding and implementing vast sets of requirements.  There are contractual requirements for the sales themselves, there are document level requirements for drafting, and there are county level requirements for recording.  Loan status, transactional stage, and the type of loan or sale may also play a part in what is or isn’t required.  The most successful teams operating in the secondary mortgage market have an understanding of how each of these requirements informs the other, how to weave them together seamlessly, and how to understand when one may need to take precedence over another.  This is where the details matter most, but you don’t want to drown in them – you want to be in control of them and make them work for your process.  Being an expert in an asset sale environment means being an expert at doing a lot of different things at once.  Some of them are macro level, some of them are micro level, but the best teams are able to blend both together simultaneously.  The story you are telling in those moments?  We can do everything we need to do, and do it well.

Is the unexamined life worth living?  Probably, just as the unexamined business environment may afford you the chance to stumble through some good times, especially when market conditions are conducive to supporting a lot of secondary mortgage market activity anyway.  But if you want to be great at what you do, over a sustainable period of time, you need to dig into the details.  Details tell the story of your success.  The story of our success in Investor Services?  Details matter.  We will take our understanding of the details, which is second to none in the vendor space, and make them work successfully for you.