The subprime mortgage crisis that savaged the U.S. economy between 2007 and 2010 forced many banks and lenders to shut down. At CrossCountry Mortgage LLC, however, the dark times provided the opportunity to plot a new way forward.
“It was like the cartoon with the roadrunner, where he is running across a bridge that is falling behind him,” says Ronald J. Leonhardt Jr., the company’s president and CEO. “You just came to work every day hoping it wasn’t going to be you as companies kept going out of business. I made the decision to recapitalize the company to boost its net worth. I took every penny I had personally and put it into the company.”
The bold move solidified the company and created momentum that has continued to build over the past decade. In 2014, CrossCountry funded just over $1 billion in loans; Leonhardt expected that total to top $15 billion in 2019 and, if all goes according to plan, $20 billion is well within reach in the very near future.
Leonhardt brings a competitive spirit to his work at CrossCountry, much of which stems from his time playing football at Baldwin Wallace University.
“When you play football, it’s the ultimate team sport,” Leonhardt says. “I like to think that’s the approach we take to things here.”
Leonhardt’s path to entrepreneurial success was not obvious upon his 1997 graduation from Baldwin Wallace.
“I was playing softball four nights a week,” Leonhardt says. “I had no clue what I was going to do with a sports management degree. These guys I played softball with, they worked for a national retail lender, and they’re like, ‘Hey, you want a job?’ I said sure. So really I just stumbled into it.”
Over the next six years, Leonhardt worked, learned and found success in the world of lending. By 2004, he was ready to make his own mark on the industry, which led him to start CrossCountry Mortgage.
“We started in January 2004 with my mom, my aunt, two of my best friends and a lady who’s still here,” Leonhardt says. “We had a small mom-and-pop shop, and that feel is still here today. It’s the kind of culture we’ve tried to keep.”
CrossCountry is licensed in all 50 states, with 350 locations across the country. That type of scale wasn’t Leonhardt’s goal when he started the business.
“My mentality was, I’m just here to close loans,” he says. “I’ve been wearing 10 hats forever, being the salesperson, overseeing operations, running day-to-day and handling the bank accounts. Slowly over time, as I’ve brought more people in, I’ve been able to get out of a lot of that and focus more on growth.”
It was only six years ago when Leonhardt stepped away from personally being involved in loan originations.
“That’s really when the company took off, because I was able to concentrate more on building the infrastructure and actually recruiting and things like that,” he says.
As far as industry competition goes, Leonhardt says it’s “anyone who offers a mortgage.”
“They’re all competition,” he says. “We’re in an instant gratification type of culture right now. The faster we can deliver, that’s what people want. As the borrower, you want to close on time, and you want it to be pain free.”
Change is constant
The pressure to perform and keep CrossCountry on an upward trajectory provides both stress and motivation, Leonhardt says.
“What I enjoy about my work is the same thing that gives me heartburn — that constant change and grind,” he says. “Every day, every month, is different. Rates are changing daily, and there are new opportunities daily.”
When it comes to his 3,000 employees, Leonhardt encourages them to embrace opportunity in an industry that has so much churn.
“There are so many different factors that can affect our business — good or bad,” Leonhardt says. “You have to be able to adapt to them. That’s one of the key things for me as an individual and us as a company. ‘Hey, this is the new set of rules. OK, we’ll play with them.’ That’s what has helped us.”
Licensing is a perfect example, he says. When the industry came out with the Nationwide Multistate Licensing System, some may have seen it as yet another regulatory burden. Not Leonhardt.
“That’s how I got licensed in all 50 states,” he says. “It was a regulation that required people to be licensed, but it gave me an easier path to obtain these licenses. So that was one of the key things for us getting in all 50 states.”
Another change is technology. As with so many aspects of life and business, people have turned to the web to shop for mortgages.
“When I was still closing loans, I met with almost every borrower locally,” Leonhardt says. “I just don’t think that happens anymore. The borrower just wants an instant loan. They want to get good advice, they want options, and they want it easy.”
As he guides his team through these changes, Leonhardt takes a hands-on approach. Done the wrong way, this can become intimidating as employees feel like they constantly have someone looking over their shoulders. Effective leadership is all about engagement.
“Routinely you’ll see people in and out of my office,” he says. “When you roll out that type of atmosphere, your employees aren’t looking over their backs because they know you have their back. It’s trying to stay in constant communication to make them feel like they’re connected.”
To that end, Leonhardt estimates that of the 350 CrossCountry locations in the U.S., he’s had dinner with at least 300 of the branch managers.
“When we open up a new location, we fly them into Cleveland,” Leonhardt says. “I don’’ think it works if you just let someone open up a branch location without really sitting down and getting to know the person.”
Put dealmaking in its place
Another critical piece in CrossCountry’s growth is dealmaking.
“We’ve done three acquisitions in the last year, and we’re about to do two more,” Leonhardt says. “My approach to dealmaking is that it’s all about relationship building. I want to make sure that there’s a good working relationship and it’s not just a financial transaction.”
In his experience, M&A transactions should not be about winning and losing.
“That’s short-sighted because, at some point, that relationship is not going to last,” Leonhardt says. “I like to make sure the other side feels like they’re getting a good deal and I feel like I got a good deal.”
Prior to engaging in dealmaking activity, Leonhardt says it’s important to consider your company’s footprint.
“You want to make sure that you’re not saturating a specific market where you already have a footprint,” he says. We’ve boosted our presence in Chicago and Philadelphia, where we really didn’t have that big of a presence.”
As CrossCountry has grown, Leonhardt has turned to real estate investing as a possible solution to his company’s need for additional space.
“When we moved into this building, we had 40 people,” Leonhardt says of the Brecksville location. “Now, in Northeast Ohio, we have like 650. So we’ve outgrown the building.”
In late 2018, a group led by Leonhardt and KJK Managing Partner Jon Pinney bought all of the buildings and parking lots between Superior and Payne avenues and East 21st and 22nd streets in Cleveland
“I’m looking for a new headquarters,” Leonhardt says. “Brecksville has been great, allowing me to park across the street. So we’re looking at maybe building across the street on the VA site or doing something between Superior and Payne. The idea is to figure out which one’s going to work out best long term. But we plan on developing the Superior and Payne property. It’s either going to be our new headquarters or some type of housing.”
Leonhardt is also an investor in three Slyman’s franchises, as well as Thirsty Dog East Bank and Dante’s Inferno in the Flats.
“If it’s a good investment, I’m not going to pass it up,” Leonhardt says. “I just look to make sure it’s not going to occupy a lot of my time and take me away from CrossCountry.”
Dealmaking can be lucrative, and it can be satisfying, Leonhardt says. But it can easily become a distraction if you’re not careful.
“You get guys who say, ‘Hey, I want to do this, I want to do that,’” Leonhardt says. “I’m like, ‘Where are you going to make more money?’ Sure you can make money flipping a house. Would you make more if you spent that time at work? That’s the approach I take. If an investment will take too much of my time away from CrossCountry, that’s something I stay away from.”
It’s that philosophy that has Leonhardt thinking about another big goal for his business. Revenue for 2019 was about $600 million, and $1 billion is another big number he’s got his eye on. In the meantime, he’ll keep plugging away at guiding his business forward.
“We have grown every single year since 2009,” he says. “We haven’t had one year where we took a step back. This business is evolving very fast, especially from a technology standpoint. That’s why I get up in the morning, and it’s what keeps me up at night, so it’s a double-edged sword. But I really thrive in this type of environment.”
Ronald J. Leonhardt Jr.
President and CEO
CrossCountry Mortgage LLC
Education: Baldwin Wallace University, sports management degree
Who has played an influential role
in your life?
When I first got into the business, I was with UC Lending. Our regional manager, my boss’s boss, Dan David, worked out of that office. That was my first experience in any type of professional setting. His approach to how he ran things, how he ran meetings, his approach to problems and things like that, I took a liking to it. It really formed my way of handling certain type of issues or problems and leadership in general.
What’s the best business advice
Don’t have a partner. A lot of times when people want to go into business or start a business, there is an uneasiness about going and doing it yourself. Usually they partner up for comfort, but sometimes partnerships don’t work out. My attorney gave me that advice when I started the company.
What was your first job?
My family was in excavating and trucking, so I was in a ditch laying pipe, working and doing construction. It’s old-fashioned hard work. That’s how I was raised, and it’s spilled over to the last 20 years of my career.