Skip to main content

Decision One products aid first-time borrowers

Sep 11, 2005

Marketing and market savvy: Your tools for emerging market successFran Clemensemerging market needs, education, relationship marketing Emerging markets represent a significant opportunity for mortgage brokers. In fact, according to a recent national housing survey completed by Fannie Mae, first-time and ethnically diverse homebuyers represent the fastest growing group of borrowers in the U.S. Fannie Mae's survey indicates that 57 percent of all renters say they are very or somewhat likely to buy a home in the next three years. Furthermore, 63 percent of African American renters and roughly 61 percent of Hispanic renters say that they are very or somewhat likely to buy a home in the next three years. When they do eventually buy, many, if not all, will be first-time homebuyers. To put the size of this pool of potential customers into context, consider that according to the 2000 U.S. Census, a third of all Americans rent their housing and 15 percent of all U.S. households live in an apartment home. Renters, especially those in emerging market segments, not only represent a vast pool of potential sales targets, but are most likely already residing within your existing sales region. In the 10 most populated cities in the U.S., roughly 50 percent of residents rent their home. Converting renters into homeowners does require work, but it's an investment of time, energy and resources that will deliver a significant return-on-investment. With the right combination of marketing and market savvy, mortgage brokers can build a very successful emerging market book of business that will boost their market share and generate many additional sales leads and referrals. The first rule of marketing: Know your audience To effectively capture emerging markets business, brokers must understand the unique concerns of ethnically diverse borrowers and respond to those concerns accordingly. Consumers who have never purchased a home, especially immigrants, have many mortgage misconceptions. Fannie Mae's national housing survey indicated specific concerns that a large percentage of first-time and immigrant borrowers have with the mortgage process: •A borrower is required to have been with their current employer for five years •A minimum down payment of 20 percent is required •Only borrowers with perfect credit are approved for traditional loan products •Housing lenders are required by law to give them the best rate available •Mortgage brokers will always give borrowers a better deal than the local bank The best research is only valuable when it is related to your own selling goals. Certainly, the results of Fannie Mae's survey are helpful to know, but how do the mortgage process misconceptions manifest themselves in your local home buying community? Luckily for mortgage brokers, the very same real estate agents with whom they routinely work can also identify local emerging market needs and more local misconceptions. Many of these real estate agent's associates actually devote 100 percent of their time to working with immigrant and ethnically diverse consumers. Next time you call on your local real estate agent, ask what they are experiencing in their own business regarding first-time, minority or immigrant homebuying trends. Inquire if any of their coworkers are working with this market segment, and ask for an introduction. To effectively capture purchase market business and become known in your area as the emerging markets expert, use the time that you normally spend courting real estate agents as a discovery and educational opportunity with them. Education is key to emerging markets success Knowing the issues on the mind of nervous borrowers is half the battle. To secure their business, however, mortgage brokers must offer borrowers educational resources that work to dispel mortgage misconceptions and overcome home-buying trepidation. For many first-time homebuyers, one of the most significant barriers to becoming homeowners is education. Prospective borrowers are often overwhelmed by the mortgage process, which is, by anyone's account, time-consuming and confusing. Mortgage brokers who work within their target markets to educate borrowers, clear up misconceptions, and explain and simplify the mortgage process for them, can succeed in capturing emerging markets business. Here are some education-based strategies to consider: •Host a "Mortgage 101" seminar (or series) in your community to help educate potential borrowers. Consult with your local mortgage insurance companies for the various types of first-time homebuyer education kits that are available for your use •Submit a self-penned "Mortgage Myths" tutorial to your community newspaper •Ask your local Chamber of Commerce to include information from you on "Helping You Buy a Home in Our Town" in the welcome packs that are sent to people who are new to your community Speak to local organizations, church groups and at community grassroots events that attract young families or immigrants. Be sure when offering expertise to these organizations that you highlight the educational value your involvement holds for those looking to buy a house Marketing through education is a great technique for mortgage brokers who many times may not enjoy the perks of a fully staffed, fully funded, in-house marketing team. For very little cost other than time and expertise, ideas like "Mortgage 101" and securing speaking opportunities with local community organizations carry a tremendous return-on-investment. Not only can they be used to raise a broker's visibility in the local community, these types of marketing techniques can boost a broker's credibility, creating an expert perception within market segments where education is a key barrier to homeownership. People marketing: Establishing relationships in emerging markets Investing the time and resources to educate emerging market consumers about the mortgage process provide ample opportunities for mortgage brokers to establish relationships with these customers. Relationships are key. Prospective clients come to trust that you are an advisor who has their best interests in mind. Fannie Mae's study indicated that consumers in emerging markets typically spend six to 18 months working with a lender before actually borrowing. Obviously, the time it takes to educate borrowers is time spent away from courting other customers and referral sources, but it is not wasted time. By becoming trusted advisors, brokers position themselves to reap the benefits of referrals from their happy clients. Many minority and immigrant borrowers turn to those in their social circle for financial guidance and will ultimately refer family, friends, church acquaintances and others back to your expert services. Reaching emerging markets requires marketing ... with a twist Research, education and "people marketing" do not supplant traditional marketing activities. Brokers should take advantage of every marketing opportunity possible, including free, customizable marketing tools offered by wholesale lenders. However, using advertising, public relations and direct mail to reach emerging markets requires an approach as unique as the needs of first-time, minority and immigrant homebuyers. For instance, direct mail and other marketing collateral should be created in both English and Spanish in order to reach the Hispanic population. That said, however, it's not as easy as simply translating an English marketing piece verbatim into Spanish. Marketing pieces should be crafted with the intended audience in mind to deliver the most effective message. A direct mail target list can be developed by working with local real estate agents or by old fashioned on-the-street research. For those brokers with a marketing budget, many vendors provide targeted mail lists. Some have products that can segment mail databases by a variety of criteria including metropolitan statistical areas, income levels and FICO scores. Advertising can be highly effective in reaching potential emerging markets customers. A local broker recently shared with me his successful advertising strategy: He advertised on Telemundo through his local cable provider and experienced a significant increase in emerging market business. Brokers should also consider placing advertising in local, language-specific newspapers or periodicals. Public relations tools can also be highly effective in expanding a broker's market base. Public relations is the single most cost-effective marketing tool available. Not only is launching a PR campaign inexpensive (as compared to direct mail or advertising), PR builds credibility as well as public attention. Brokers can generate media coverage by contacting writers at local newspapers and offering their expertise to those who cover real estate, personal finance or the needs of immigrant communities. What's a broker to do with all that extra attention? During the recent refinance boom, many brokers learned that capacity must meet demand. Targeting potential customers in emerging markets and developing a marketing strategy to reach those customers will only be successful or brokers who have the services necessary to meet demand. Think clearly about the market you're approaching and make sure you are appropriately staffed. For example, if the target market has English as a second language, your support and originations staffs should be bilingual in the respective language. Successful brokers will learn a second language themselves or seek multilingual representatives for their office. Hiring customer service associates who are from the communities you serve also provides an excellent source cultural information and insight, right in your own office. Brokers frequently differentiate themselves from local bank-owned lending operations by offering a unique personal touch. A broker's emerging markets strategy must include this "hands-on" approach. What products should be marketed? Many brokers worry that they will not be able to offer products that would meet emerging market demands. Although many first-time and minority homebuyers do not have established credit or a significant down payment, traditional loan products can still be the perfect solution for these emerging markets borrowers. In the first six months of 2004, more than 40 percent of ABN AMRO Mortgage Group's business was classified as "Affordable" or "Special Affordable," which is indicative of the company's ability to fill the needs of emerging markets consumers. These loans were granted using traditional credit and traditional products; in fact, the 30-year fixed-rate mortgage is the product AAMG most often granted to emerging market clients. Review the product lines offered by your favorite conforming wholesale representative and see how many products are available today that can be used to dispel the myths previously mentioned. Then figure out what steps need to be taken to help the emerging market borrower attain those conforming loans. The combination of market savvy and marketing know-how can generate emerging markets success for mortgage brokers. Investing time, energy and resources as well as in-house support to meet market demand ensures a rewarding, positive experience for borrowers ... and plenty of referral business for brokers. Building a thriving emerging markets business isn't easy, but it's well worth the effort. Brokers who actively build their emerging market clientele will see the bottom line benefit from steady, purchase market business. Fran Clemens is senior vice president and manager of emerging markets at ABN AMRO Mortgage Group Inc. She can be reached by phone at (800) 768-0572 ext. 55298 or e-mail [email protected].
About the author
Sep 11, 2005
More from
Figure Launches TBA Market For Non-Agency Loans

Currently handling only HELOCs, Figure Connect has new products coming soon, says Chief Capital Officer.

Jun 12, 2024
Fidelity National Financial Names Jason Nadeau As Chief Artificial Intelligence Officer

Nadeau joined Fidelity National Financial in 2018, serving as Chief Digital Officer

May 23, 2024
Planet Home Lending Welcomes New Executive Vice President And Chief Information Officer

Bill Shuler brings a diverse background in IT leadership and mortgage consulting to the role

May 21, 2024
Automation Attracts Investors Who Love Homogenous Loan Pools

Human-free underwriting promises to expand primary and secondary, non-agency markets

May 02, 2024
Raising An Ai Brainchild In The Mortgage Industry

Angel Ai takes on the next five years with a new ‘do and functions to boot

May 02, 2024
Empowering Mortgage Professionals With An AI Homebuying Marketplace

Faster time to close on transactions

Jun 18, 2024