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Mortgage technology and beyond: The last quarter and what are you going to do about it

National Mortgage Professional
Dec 07, 2004

The Key to a Successful Internet Mortgage CompanyAeron StedmannInternet, Web-based, technology, online Imagine an Internet-based mortgage company that processes 100 loans a day with a small, efficient staff. Now, picture yourself managing that company from your laptop computer on a cruise ship in the Caribbean. Or perhaps three-day weekends with your family is your idea of success. Maybe you'd like to be able to combine philanthropy with business by donating a small portion of your profits to a high profile charity or social cause. All these are possible with the technology and opportunities opening up to the smart business person today. The Internet is revolutionizing the way we do business, and changing consumer expectations. The business focus for the 90s was customer service and building relationships to ensure repeat business. While those values remain strong, the watchwords for the next decade for Internet-based businesses is going to be bottom line. Consumers doing business over the Internet are looking for the best price with a fast and easy transaction. To build a successful business on the Internet, you will need to keep these customer needs in mind and orient everything you do toward increasing efficiency, improving simple access, and lowering the product cost for the customer. Prepare for Success One of the problems that small businesses often encounter is that they are not structured to accommodate growth. Once the volume of business begins to increase, they find that they do not have the systems in place to move to the next level. Processes get bogged down, employees feel overwhelmed, service and efficiency deteriorate, and morale plummets. If you plan to grow your business by opening up shop on the Internet, you must be prepared to handle a major increase in business activity over a short period of time. Work flow analysis and automation may be a necessary part of that preparedness. There are consultants that will do work flow analysis for your company, or you can do an internal systems audit yourself. An internal audit should look at the key work flow paths in your business and look for ways to improve upon efficiency. Involve everyone who does the work in the process, so they don't feel that they are the target. Develop a flow chart so you can get a visual image of the flow of paper and information in your office. Then consider ways to automate your systems. The first step to speeding up your processing is to get linked directly with Fannie Mae technology tools to reduce costs and streamline activities throughout the mortgage cycle. These state-of-the-art technology products help make the mortgage loan process more efficient and cost effective. You can find information on Desktop Underwriter and Desktop Originator on the Fannie Mae web site at Freddie Mac also offers a range of software and Internet products to streamline your origination process, lower costs through greater productivity, and offer significantly greater service to your customers. Visit Freddie Mac at Another source of technology power to boost productivity and increase customer service is the IMX Exchange Internet loan bidding system. This system enables the Mortgage Broker to put loans out to bid to more than 50 leading national lenders and receive approval and/or rate lock within hours. More information about IMX can be obtained from Bring on the Customers Now you are ready to open your doors to the Internet. There are a number of considerations for building your business Web site. The bottom line is keep it simple, easy to use and put your best price forward. Generating business to your Web site is the most critical element of your business plan. Too many businesses rely on capturing Web surfers with banner ads, search engine listings, and ads on topical index sites. While 38 percent of adults in the United States have Internet access, only a fraction of that number are willing to spend time searching for an unknown company that might have what they are looking for. The best way to generate traffic to your Web site is to market directly to those people who have Internet access and will use it to conduct their business if they know exactly where to go to get what they want. The first step is to put your Web site address (URL) on everything: business cards, letterhead, envelopes, display advertising, company cars, building signage--everything! Use a brightly colored sticker on existing stationary and brochures to draw the eye to the Web site information. The second step is deciding how much business you want to generate and who you want those customers to be, and then build your marketing plan. How Much Business Do You Want? Begin your marketing plan at the end, then work backward through your process. How much money do you want to make each month? How many loans do you need to be closing each month to earn that amount of money, given your average loan size and commission? If you close about 25 percent of the leads you begin with, how many leads do you need? If you are doing database marketing, such as direct mail, voice-mail broadcasting, or telemarketing, you can determine in advance how many contacts you need to make in order to generate the number of leads which will eventually result in the desired number of loan closings per month. Based on your own experience, or the experience of others doing similar marketing, you can create a mathematical formula that expresses all these variables. By changing the variables, you can see how your business activity and income level will increase or decrease. Loans = (contacts x response rate) x conversion rate Example: Desired # of loans 25 Leads conversion rate 25 percent Number of leads needed 100 Response rate = 0.5 percent Number of contacts =20,000 These are fairly standard figures for direct mail or voice-mail broadcasting. To increase the response rate, thereby lowering the number of contacts necessary (or increasing the number of leads) use niche marketing. A niche market can be based on population demographic, geography, loan type or amount, or other factors. Examples of niches you can effectively target for marketing are occupational groups such as engineers, teachers or doctors, high-income families in a particular region, ARM holders, renters, veterans, BCD paper loans, or your previous customers. Niche marketing enables you to tailor the offer specifically to the needs of the consumer you are contacting. For example, renters will respond to a package requiring a low down payment, whereas ARM holders want a low fixed rate with a no-cost refinance. Physicians or other self-employed occupational groups often respond well to a jumbo loan offer with no income verification required, and those with over-extended credit want cash-out refinance for debt consolidation. The most profitable niche to market will always be your past customer database. Use direct mail or voice-mail to make sure all of your previous customers know you have easy-to-use online services. Invite them to visit your Web site, and to mention your company to their co-workers and friends who may be in need of your services. Returns from mass media marketing such as radio and newspaper advertisements are more difficult to predict because of factors beyond your control. You have to rely on circulation figures supplies by the media, and placements are often first-come, first-serve. A good ad, placed on the right combinations of radio stations, will enable you to target certain population groups. Whereas a print ad in the real estate section might effectively reach new home buyers. The purpose of the ad is to entice consumers to visit your Web site to get the latest information on rates and fill out an online application. Be sure to build in a tracking system so you can record which ads are bringing people to your site. All the experts are predicting that the Internet will soon become a major vehicle for consumers looking for mortgage loans. Many mortgage companies have already learned from experience that just having a Web site is not enough. Many of our tried and true marketing strategies can be easily adapted to work effectively to generate business for a Web-based company. That old adage still rings true, "You gotta know the territory!" Recipe for a Successful Internet Business * Prepare for success by automating your work flow processes * Decide how much business you want to generate * Identify niche markets and tailor your marketing strategies * Publicize your Web site * Create Internet customers by marketing to your Web site Aeron Stedmann is a Marketing Consultant working primarily on technology infusion for the mortgage industry. You can reach him at (707) 942-1469, e-mail sted[email protected], or visit the Stedmann Web site at
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