Reflection  -  Mind  Mapping

Challenge

It  was  the  aftermath  of  the  housing  bubble  in  2008  when  many  homeowners  owed  more  on  their

mortgages  than  their  home’s  market  value,  mortgage  defaults  were  rampant,  and  Realtors  were  starved

for  work  as  traditional  real  estate  transactions  dried  up.  My  challenge  as  an  entrepreneur  was  to  create  a

viable  business  that  is  beneficial  to  the  homeowners,  mortgage  lenders,  and  Realtors  in  distress.

Selection

At  the  time,  I  was  not  aware  of  the  design  thinking  approach.  My  engineering  background  led  me  to

choose  mind  mapping  to  help  me  visually  think  through  the  problem,  make  connections,  and  create  ideas.

Application

After  speaking  to  various  stakeholders,  I  mind  mapped  the  then  current  reality:

1)  Homeowners  can’t  afford  their  mortgage  payments  and  can’t  sell  their  home  because  selling

their  home  can’t  cover  the  mortgage  their  owed.  They  wanted  a  feasible  way  out  to  avoid

foreclosure.

2)  Mortgage  lenders  were  understaffed  in  their  loss  mitigation  departments  and  did  not  have  the

processes  and  systems  in  place  to  handle  the  surging  volume  of  short  sale  requests.  They

wanted  to  process  as  many  short  sales  as  possible  to  avoid  the  costs  associated  with  foreclosing.

3)  Realtors  did  not  possess  the  skill  set  to  negotiate  short  sales,  so  the  bulk  of  their  clients  ended

up  in  foreclosure  despite  tons  of  extra  work.  They  wanted  to  close  short  sales  so  they  can

continue  to  make  a  living  from  commissions.

4)  Homebuyers  losing  out  on  the  home  they  wanted  after  months  of  waiting  to  foreclosure.  They

wanted  to  settle  the  transaction  quickly  and  move  into  their  new  home.

Insight:

The  insights  gained  from  mind  mapping  was  that:  1)  Homeowners  were  not  aware  that  short  sale  is  a

viable  option  to  avoid  foreclosure,  2)  Mortgage  lenders  were  not  educating  Realtors  on  how  to

pre-qualified  short  sales  and  only  send  in  complete  and  viable  files,  3)  Realtors  assumed  that  they

needed  to  negotiate  short  sales  themselves  because  distressed  homeowners  can’t  afford  to  pay  out  of

pocket,  and  4)  Home  buyers  were  not  equipped  to  decipher  the  odds  of  success  of  a  particular  short  sale.

When  I  challenged  the  assumption  that  distressed  homeowners  need  a  good,  fast,  and  cheap  solution  --  I

realized  that  good  and  fast  are  absolute  musts  to  avoid  foreclosure,  whereas  cheap  is  only  a  relative  term

to  the  consequences  of  foreclosure.  I.e.  cheap  did  NOT  mean  $0  out  of  pocket  as  assumed.  In  fact,  the

$0  assumed  constraint  is  costing  all  stakeholders  dearly  --  homeowners  got  foreclosed,  lenders  incurred

costs  to  foreclose,  Realtors  made  no  commission  when  their  listing  is  foreclosed,  and  homebuyers

wasted  months  waiting  to  buy  a  home  that  ended  up  in  foreclosure.

Based  on  the  insights,  we  created  a  loss  mitigation  company  that  focused  on:  1)  educating  homeowners

about  the  short  sale  option,  2)  accepted  only  pre-screened  short  sale  listings  that  were  straight  forward

enough  to  obtain  mortgage  lender  approval  fast,  and  3)  took  over  short  sale  negotiation  work  from

Realtors  and  charged  homeowners  and  homebuyers  a  fee  for  loss  mitigation  work  that  is  due  only  when

the  deal  closes.

Our  premium  pricing  strategy  was  designed  as  a  win-win-win-win  solution  for  all  stakeholders,  despite

appearing  counter-intuitive  in  a  distressed  market.  We  were  able  to  deliver  a  90-day  cycle  time  with  an

80%  success  rate,  trouncing  peer  group  average  of  365-day  and  20%.  We  received  raving  testimonials

from  homeowners,  home  buyers,  and  Realtors,  enjoyed  dramatic  revenue  growth  and  profitability,  and  led

the  local  market  in  the  first  one  year  of  operations.

Approach

The  next  time,  I  would  go  several  steps  deeper  with  a  service  blueprint  to  gain  additional  insights  along

the  journey  for  all  key  stakeholders.  I  think  doing  so  will  help  refine  the  service  process  and  deliver  an

even  better  experience  for  all  involved.

