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picking the best loan products for your customers

National Mortgage Professional
Jul 19, 2005

Five steps up for a downturn mortgage marketSig Anderman marketing, adapting to changing rates, diversifying Do you like roller coasters? The mortgage business has always been a kind of roller coaster ride. When rates go down, we stay up long hours, racing to handle the surge in applications for new loans and refinancing. Then, the moment rates creep up, we're expected to power down immediately, cutting both expenses and manpower until the ride takes off again. In past decades, most of us accepted this roller coaster as a way of life and simply waited it out until the ride took another upward turn. But in the competitive mortgage market, you can't afford to just sit back and wait. Today, there are steps you must take to diversify your business so you stay profitable during the downturns, and keep your lending machine well greased and ready to roll to take advantage of the next upturn. Here are five ideas for you to consider: 1. Strengthen Relationships This means adding value to your relationships with clients by becoming a trusted financial advisor. It also means strengthening relationships with your referral sources including real estate agents, banks, tax advisors whoever is sending business your way. How do you do this? By incorporating a management program into your loan origination system that can manage contacts, create targeted marketing campaigns and keep in constant contact with your most valuable referral source your existing clients. I'm always surprised at how many companies don't effectively turn to their clients for referrals. Another idea is to consider teaming up for a seminar or workshop with one of your referral sources and invite every client and potential client you can think of. Also, make sure your Web site allows you to send "broadcast" messages to your customers and prospects on a regular basis. It's a lot less expensive than producing and mailing flyers. And finally, why not approach your best real estate agent contacts and ask them to call on your company as a preferred partner on their site, with a link to your home page, and vice-versa. 2. Add Additional Streams of Revenue One of the newest trends that has emerged from the past refinance boom is the opportunity to cross-sell other products to your clients. I'm talking about products that are natural extensions of the loan origination service that mortgage professionals provide. I recently met with a large mortgage company that was introducing life and homeowners insurance to its clients. What appeared on the surface to be a clever way of creating a unique client retention tool also turned out to be a key contributor to this company's newfound image as a trusted financial advisor. And, of course, by offering insurance products, the company has also gained a very profitable additional revenue stream. 3. Take Greater Control Over Your Process There are dozens of innovative technology solutions to help you streamline your internal processes. One of the smartest and easiest to initiate is to begin drawing your own loan documents. The good news is that most lenders will accept closing docs that you prepare, utilizing one of many professional document preparation companies. Most of those companies charge between $25-$75 per loan set, which is a far cry from the $150-$200 that you or your clients may be paying today. These systems are easy to use and most of the top providers are probably already available right within your loan origination system. This simple step can help you keep better track of the time you spend on information verification before submitting your document requests. And, perhaps most importantly, it will give you more control over when the loan documents are drawn. It's not unusual to eliminate as many as 14 days from the waiting time you've become accustomed to if you've had someone else drawing your documents. Now, there's a competitive advantage that you can sell. And while you're at it, why don't you get rid of those endless stacks of paper and telephone tag? Easier said than done, you say? However, most companies are just scratching the surface on what they could be doing to simplify and improve their processes. Most of you already order credit electronically and many of you are now using automated underwriting, and submitting loans to your favorite lenders in the same fashion. However, the technology is out there for so much more appraisal, title, mortgage insurance, flood, AVMs and more. Every service that is securely ordered electronically moves us closer to the "e-mortgage" we all dream about. The roadblock to moving your business forward is one word habit. Everyone is accustomed to using the fax machine and picking up the phone to order services. But why use 25-year-old technologies? Leverage your computer investment and the Internet you'll end up with less paper, happier customers, and you and your team will have more time to find new customers and serve your current clients more effectively. 4. Pre-Qualify Every Customer for a HELOC As a courtesy to clients who are applying for a refinance or purchase transaction, why not also pre-qualify them for a Home Equity Line of Credit (HELOC)? In many cases, consumers are unaware of this product and how it can prepare them for future purchases. Positioned as a "service that you provide to all of your clients," the HELOC product is not only a second source of revenue for you, but it is a truly valuable product for your client. As you know, since 1986, the only consumer finance products whose interest may be tax deductible are those tied to a mortgage loan, whether it's a first, second or third mortgage (up to 100 percent of the loan to value). Unfortunately (or fortunately, depending on your perspective), many consumers aren't aware of this fact and spend thousands of dollars in interest each year on furniture purchases, automobiles and other items that could have been purchased through a HELOC. 5. Take a Hard Look at Your Web Site The 2003 National Association of Realtors "Survey of Homebuyers and Sellers" shows that 71 percent of homebuyers used the Internet in their search for a home during the first quarter of 2003, up from 41 percent during 2001. Thirty percent growth in two years is dramatic, even spectacular proof that you can't afford to ignore or downplay the importance of the Internet to your mortgage business. Increasingly, it's where your customers are. You need to be there too. And you need to be there with an active site that delivers easy-to-navigate design, point-of-sale immediacy and online interactivity while branding your company and differentiating your value proposition. Sig Anderman is founder and CEO of Ellie Mae Inc. He may be reached at (925) 227-7087 or e-mail [email protected]
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