Mortgage technology helps brokers reclaim customer satisfactionDavid G. Chungcredit analysis, optimization, rapid rescoring, credit simulation
Customers are as happy with their HMOs as they are with their
mortgage brokers. It's a tough pill to swallow, but borrowers in a
recent study ranked mortgage lenders as low as health insurers for
customer satisfaction. Both segments tied for last place behind
life insurance, property/casualty insurance, overall financial
services and commercial banks in a study conducted by Ann Arbor,
Mich.-based The CFI Group.
The study revealed that applicants were frustrated by excess
paperwork and felt powerless to comparison shop between competing
lenders.
Surprisingly, however, the study respondents rated mortgage
brokers lower than mortgage lenders across the board in stark
contrast to the presumed primary benefit to using a broker: better
service.
It is time to address the demand for a faster, simpler and
friendlier loan process, and to provide the information applicants
need to move confidently from shopping through closing. As a
mortgage broker, you can become a leading force in bridging the
information gap between consumers and lenders. Correctly applied,
technology can help you take a more consultative approach, making
you an advocate for the applicant rather than an adversary. As
rising interest rates drive origination volumes away from
refinances and toward purchases, customer satisfaction becomes
critical for customer retention and referral business. Brokers who
help shoppers in understanding the application process and help
them qualify for the best possible loans will have a marked
advantage over brokers unwilling or unable to do so.
Credit Analysis and Optimization
By providing credit analysis and optimization, you can build trust
early in the relationship, thus positioning yourself as the expert
helping the customer save money. This early relationship offers an
opportunity to set reasonable expectations of the types of loans
available to the applicant. You can also advise shoppers on ways to
improve their chances of qualifying for the best possible rates. In
return, the customer will come to you for guidance, assistance and,
when the time is right, an application.
Credit analysis tools are a simple way to accurately provide
constructive information with minimal time commitment for loan
officers. There are two types of analysis methods available:
tri-bureau and single bureau. A tri-bureau analysis identifies the
differences in information across the three bureau reports that are
most significantly driving credit score differences. This is a
valuable way to focus and prioritize your attention; this analysis
provides you with a place to start looking. A single bureau
analysis provides in-depth explanations and details about what an
individual's credit is like. While you may know the semantics of
credit scores (this score is too low, this score is good enough,
and this score is stellar) the specifics behind the scores are more
elusive. Understanding them will help you recommend positive
courses of action.
Optimizers run through different combinations of actions to
automatically determine the best combination that maximizes an
applicant's credit in a short period of time. Similar to
simulators, optimizers have the advantage of using actual credit
scoring algorithms to determine the best action plans.
Using these tools, you can diagnose and communicate an
applicant's credit, identify opportunities to improve it, test the
strategies, simulate the outcome and take action.
Rapid Rescoring and Credit Simulation
When a shopper commits to submitting a loan application, you should
take the opportunity to help them save money, further manage
expectations and build more trust. You can identify old or
inaccurate information preventing applicants from qualifying for
better rates or a loan entirely. You can also determine simple
actions applicants can take in order to improve their positions. By
explaining to applicants not just what they qualify for, but the
specific reasons why, you provide valuable context along with your
loan offer that makes it easier to accept. This assures applicants
that they are getting the best possible rates, eliminating their
need to continue shopping. This approach also allows you to make
more compelling offers. By showing applicants what actions to take
and how they can qualify for better rates, your offer stands out
because it includes the potential to save more money now and in the
future.
One of the most significant services for assisting applicants is
the rapid rescoring process, essentially an expedited bureau
update. Typically, this takes approximately four days to complete
and costs roughly $150. Rapid rescoring allows loan officers to
address items that artificially restrict an applicant within the
current loan process, so the applicant does not need to go through
declination and re-application.
A danger to rapid rescoring, however, is when loan officers make
educated guesses as to whether or not changes will have a desired
effect. It is often a costly gamble because the applicant waits
four days and pays a substantial fee for a service that may or may
not help and could actually do some harm. Fortunately, tools are
available for testing strategies before making a decision to do a
rapid rescore. This gives you a chance to gauge whether or not it
is worth the additional time, expense and expectation of undergoing
the process. Although simulators are prone to some of the same
assumptions that you currently have to make (e.g., nothing
unexpected is about to hit the credit file), simulators have the
advantage of utilizing, instead of being restricted by, the
complexity of credit scoring to predict a result. Obviously, there
are no guarantees, but simulators can provide a more accurate
prediction. And by improving your success rate, rapid rescoring
becomes a more profitable option.
The decision phase is your final opportunity to convert all of
your promoting, consulting and processing into a customer. At this
point, you have marketed to a shopper, helped them plan and
prepare, helped them qualify for a better loan and finished your
underwriting process. Even when applicants do not qualify, you have
an opportunity to follow through with the consultative approach by
providing them with a road to recoverya plan that shows them how to
improve so they can later qualify. By continuing to serve as a
trusted advisor, you can potentially recover your investment by
encouraging applicants to return when they have improved and are
ready to apply again. Rehabilitation is an old strategy regaining
significance as origination volume diminishes and the industry
becomes increasingly competitive.
However, you may be able to convert some of these declines into
qualifying applicants. If you have not done so previously, you may
be able to identify information on the applicant's credit report(s)
that can be updated or areas where they can make immediate
improvements. Your applicants will be thankful, and you will close
more loans.
By combining old-fashioned sincerity and new technology, you can
build customer trust, the fundamental basis for lending and a
critical factor in a borrower's decision-making process. Offering a
strong relationship and a high-quality experience will give you a
competitive edge, help you close more loans and position yourself
for success in the difficult times ahead.
David G. Chung is interim president and vice president of
business development of Towson, Md.-based CreditXpert Inc. He may be
reached at (800) 500-8553 or e-mail
[email protected].
