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The online brokerage channel

National Mortgage Professional
Jul 19, 2005

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]
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