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FACTA to affect disposal of consumer credit information

National Mortgage Professional
May 11, 2005

Using loan products as sales toolsRon Vaimbergdifferent loan products, benefits, option ARM, fixed-rate Every day, the landscape of loan programs available for use by loan officers is changing. Because of the limited effective sales training programs available in the mortgage industry, most loan officers never receive training that goes beyond basic loan program qualifying. What this means is that loan officers are taught how to plug a borrower's financial information into a product, but they are never taught how to use a product as a sales tool. In my sales and marketing seminars to loan officers and wholesale account executives, I often ask the question, "How many people in the audience know the difference between using a loan program as a sales tool versus as a qualifying tool?" The results are astounding. On average, less than five percent of attendees have any idea of what I am referring to. An example of typical sales patterns of loan officers is that they ask prospects the typical questions about income, assets, credit, etc. Once the loan officers obtain this information, they try to plug the borrowers' qualifications into particular loan programs. Although this strategy does work, it is not nearly as effective as using a mortgage product as a sales tool. The reason for this is simple. The strategy of plugging a borrower's qualifications into a loan program is what virtually all loan officers are taught from the moment they start in the mortgage business. Since most loan officers have been taught the same way, the result is that most loan officers sell with virtually the same exact style. We are in a market in which borrowers have a virtually unlimited number of loan officers that they can choose to do business with. If a borrower does not make the distinction that you are different than the rest of the pack, the prospect will ultimately make his financing decision based upon pricing. The result to you, as a loan officer, is either fewer sales or less profit per sale. Using loan programs as sales tools is one unique way of setting yourself apart from your competition. One of the keys to this sales strategy is getting prospects to clearly recognize the benefits of a particular loan program without knowing what the name of the program is. When a prospect can relate positive features of a loan program to his life, you eliminate any preconceived notions a prospect may have in regard to a loan program. Very often, prospects have heard about different loan programs. However, they may not know all of the features of a particular loan program. This limits their ability to make good loan decisions for themselves. Prospects oftentimes have preconceived notions as to what are good and bad products based upon things they have heard or read in the media. An example is how many prospects still recite horror stories about adjustable loans based upon market events that occurred more than 15 years ago. The reality of the situation is not what occurred 15 years ago or what is going on in the market today. It is getting a prospect to understand the benefits that all loan programs may offer for him. The critical step in helping prospects make buying decisions is bridging the gap that exists between customers knowing the names of loan programs and really understanding the emotional and financial benefits a product may have for them. All too often, loan officers leave the process of assimilating loan program benefits up to the prospect. In my opinion, we give the prospect far too much credit. Almost every prospect needs assistance in making a buying decision. He also needs help in understanding the features and benefits a program can have on his life on a daily, monthly or yearly basis. When you get a prospect to clearly recognize a loan program's benefits to his own life, you have hit the sales home run. Creating the emotional connection between the loan program and the prospect's life will greatly increase the likelihood that he will buy from you. The secondary benefit of this type of selling is that prospects will focus much less on pricing. The key to using loan products as sales tools is to improve the quality of the questions you ask prospects. In the following paragraphs, I have provided you with simple questions that illustrate the power of this concept. To make the illustration even clearer, I have provided two examples that encompass what would be considered complete opposite loan programs - option ARM and fixed-rate. The reason for doing so is that it will demonstrate that regardless of loan program, using products as sales tools can be accomplished. Option ARM example - "Mr. Prospect, have you ever had a month when your monthly expenses were higher than you were anticipating?" (We know that the answer to this is "yes.") - "Mr. Prospect, wouldn't it be great that when you run into one of these high-expense months, you could have the ability to lower your monthly mortgage payment to make your other expense payments more affordable?" (We know that the answer to this is also "yes.") - "Mr. Prospect, did you know that a mortgage program exists that permits you to do exactly that? The great thing about a mortgage with this type of flexibility is that it enables you to use your mortgage as a money management tool. This is something that no other mortgage permits you to do." - "Mr. Prospect, the way the program works is that it gives you multiple payment options every single month. When months occur that your personal expenses are higher than anticipated, you can opt to make a lower monthly mortgage payment. On the other hand, in months when your personal cash flow is not an issue for you, you have the ability to make advance payments toward your mortgage to increase your ability to build equity in your property." Once the prospect buys into this concept, you can explain to him all of the features of the option ARM product. The key to this example is that the prospect is looking at the product in a completely different light than if you initially used words like "negative amortization," "adjustable" or any other words that have negative associations to many mortgage prospects. Please make sure that you understand that I am not in any way, shape or form suggesting that you withhold information from a prospect about the features of a loan program. What I am teaching you in this example is how to emotionally connect a prospect to a loan program, which makes selling a borrower much easier. In this next example, I am going to use the same exact concept. However, I am going to do it with a fixed-rate program. Fixed-rate example - "Mr. Prospect, have you ever had a month that your monthly expenses were higher than you were anticipating?" (We know the answer to this is "yes.") - "Mr. Prospect, the benefit of a fixed-rate loan program is that no matter when you run into one of these high-expense months, you can always count on the fact that your mortgage payment will remain exactly the same, no matter what." In the end, you can see that both examples play on the same basic concept of getting prospects to recognize the benefit of the loan program by relating it to their daily life occurrences. This same concept can easily be modified to any type of loan program. Whether a prospect qualifies for a fixed, one-year ARM, 2/28, five-year fixed or any other product, the key is to adapt what you say to a real-life situation that virtually every prospect has to deal with. If you are not sure what real-life situations a prospect might encounter, just take a look at your own life. We all have similar financial challenges regardless of how much money we earn. Remember, top sales professionals achieve a level called "outstanding." To be outstanding, one must stand out from the crowd. Say and do things differently than your competitors, and you will be a leader in the mortgage industry. Ron Vaimberg is president of Ron Vaimberg International Ltd. and a trainer to the wholesale and retail mortgage industries. He may be reached at (866) 824-6237 or e-mail [email protected].
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