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].
