I know what you are thinking …. but it’s not “PR” as in “public relations.” Well, sort of along those lines though. The PR here stands for “Process and Relationships.” Most of us know that originating loans now feels more about a process and less about the result. Beyond completing the origination process, meeting compliance requirements and ensuring sound lending practices, what will separate the winners from the losers in mortgage banking is how the players manage their relationships.
Borrowers do not understand and do not like the increasingly tedious, mysterious and seemingly inefficient process of obtaining a mortgage. The professionals who explain the process best, who properly prepare borrowers, who provide better service and communication best, will define the next generation of mortgage bankers.
Process vs. Result
Let’s face it, with all of the regulatory changes and investor requirements, we find ourselves often more focused on the process of originating mortgages than the result of providing a timely, easy and pleasant experience and funding. Previously, our goal was to originate and close loans on time. Today, many mortgage professionals believe completing tasks in a prescribed order is more important than what actually gets done or when the loan is closed. The result is deadlines have lost meaning in favor of process workflows, pre-requisites and mandatory waiting periods between steps. These are the results of new regulations put in place to protect consumers.
The future of mortgage banking rests on balancing the process-oriented requirements with keeping a focus on the result. Ultimately, our customers are not interested in why it takes so long to get a loan; they’re interested in closing on time with the loan terms they expect. We can be successful in creating raving fans of our customers while completing tasks correctly. We can do this by deciding what and when the desired result should be and completing the loan with a defined plan from start to finish.
Predictive vs. Reactive
Consumers understand that obtaining a mortgage today is far different than it was years ago. The media has done a very good job informing consumers that obtaining a mortgage is a different and more tedious process than before; but what they do not understand is why originators often do not better predict and explain the process.
Top producing referral-based mortgage professionals have always been good at being more predictive than reactive, and have proactively explained to borrowers what to expect during the mortgage process. They explain it like a project/plan with the various steps that will take place and the expected time frames associated with each step. They warn the borrower about potential delays and the circumstances that could cause them, including ones the borrower can inadvertently cause. In this case, if there is a delay, the mortgage professional is able to remind the borrower that the delay was previously discussed and explain how it will affect the remainder of the process and reassess the expected completion. These professionals are not reacting to the delay with excuses and apologies. Instead, they underscore their value in helping guide the borrower through the mortgage maze from the beginning with Nostradamus-like predictive skills.
“The future of mortgage banking rests on conforming to similar transparency and information sharing standards, adopted long ago by other industries.”
Outlining a predictive plan for each loan, with full knowledge of the various detours that may arise, creates more realistic expectations for everyone involved. Each loan application has a series of steps, with each step taking a specific amount of time to complete. It is the responsibility of the mortgage professional to manage the transaction and relationship effectively. This means first creating a plan and then continually updating the borrower with timely updates, including letting them know where the process stands against the plan.
The future of mortgage banking relies on mortgage professionals doing a better job at predicting and guiding borrowers through the process. This requires developing relationships rooted in proactive and timely communication. In the past, competition was limited to other mortgage professionals. However, technology and artificial intelligence is evolving quickly. If we want mortgage professionals to continue to be identified by proper names rather than as “The Computers,” we must be better than the computers at guiding customers through the process to their desired result. That means we must stop being reactive and start being more predictive.
Transparent vs. Opaque
Another characteristic needed to develop the relationships and results needed to be successful is transparency. After we have set the expectations and the potential variables by being predictive, we must consistently keep borrowers and related parties informed. As consumers ourselves, we all expect automated updates and the ability to drill down into detail when we want. Think about the last time you ordered something online. When you placed the order, the retailer told you if the item was in stock, the approximate shipping date and what method and how long shipping would take.
If the next day, the retailer realized there was a component of your order not readily available, you received another message alerting you of the mistake and asking you how you would like to proceed. Assuming there was not an order error, you received an e-mail letting you know the item shipped and you likely received a link to track your order. Five minutes after you signed for the package, you received a notice alerting you that you signed for the package with instructions of who to alert if it was not really you that received it. You do not have to call online retailers every day to get a status update because they have mastered the art of transparency and automatic notifications. Interestingly, you expected this level of transparency before you even began the transaction, right?
The future of mortgage banking rests on conforming to similar transparency and information sharing standards, adopted long ago by other industries. Mortgage banking, as complex as we like to think it is, will be overtaken with a more transparent, more predictive new entrant from the technology retailer business if existing mortgage professionals do not adapt to consumer information consumption standards.
Empathy vs. Apathy
At 4:00 p.m. on the last Friday of every month, we all know that in every city and town across America, more homebuyers than we would like to admit are having that discussion with their moving company about storing all their belongings over the weekend because something got delayed with their closing. As I have spelled out, we have become an industry overtaken by process versus results, reaction versus prediction with a transparency deficiency.
We often fall into the trap of being apathetic versus empathetic. Now, this is where we can really shine over any computer programmer’s genius by developing empathetic relationships with our customers. With empathy we feel or can even anticipate the pain of the borrower experiencing the tedium of obtaining a mortgage. After all, we do it every day, albeit on a different side of the transaction. We must understand the stress and anxiety of the first time homebuyer or the move-up buyer with back-to-back closings. With that understanding and personal experience of these anxieties ourselves we develop empathy. And we can transform that empathy into becoming more results-driven, more predictive and transparent. Then expectations are met; we hold each other accountable; we ensure avoidable delays are avoided and unavoidable delays are communicated early enough to avoid dire consequences. And then everyone is happier, the mortgage professional and the consumer have a more positive experience and feel better about the process.
The future of mortgage banking rests on mortgage professionals developing empathetic relationships with everyone involved in the process. This ensures that borrowers receive the level of service and the overall experience they deserve.
Defining the “customer”
We tend to think of the borrower as our only customer when in fact everyone involved in the process is a customer. For the loan officer, the borrower is the customer, but so is the processor, the real estate agent and other interested parties in the transaction. For the processor, the loan originator and the underwriter are customers in addition to the borrower. And for the mortgage banking company, employees are customers. Customers deserve to be treated with the same respect, dignity, sense of urgency and appreciation as we expect to be provided to ourselves by other service providers.
Too often, businesses sanitize their terminology, which can change how they operate. A borrower can seem like a person in need, an employee can seem thankless in an environment of high unemployment, an appraiser can seem like an impeding obstacle. But really, a customer is a patron, someone who has chosen to do business with us and who are the sources of our paychecks and our family’s ability to live a decent life. In most cases, customers have choices of service providers and we should, internally and externally, define ourselves by how greatly we cherish and how well we service our customers.
The future of mortgage banking rests on broadly defining our customers and treating them like customers should be treated.
Sure, the future of mortgage banking is dependent on a lot of economic and other regulatory issues of which most of us do not have a lot of control. What each of us has complete control over is how well we develop and deploy our PR, processes and relationships. When we deliberately and successfully control our processes and nurture our relationships we will certainly have, you guessed it, good public relations!
Daniel Jacobs is president of retail branching for Columbus, Ohio-based Residential Finance Corporation (RFC). The mortgage industry veteran is currently responsible for overseeing and expanding the company’s retail branching strategy, which offers branch managers the efficiency of a large, nationwide lender with the service and attention required to build a successful business in today’s marketplace. He may be reached by e-mail at firstname.lastname@example.org.