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Online lending for the new decade

J.P. Kelly
Sep 29, 2009

Our cell phones, our cars, our games, our stores, our homes, and of course, our computers … we don’t just use the Web, we are the Web. The Internet is so pervasive, so much an integral part of our daily lives, it’s hard to believe that just eight years ago, half of the families in the United States did not have Internet connections. Now, according to Nielson NetRatings, more than 72 percent of households have Internet connections. No wonder the Web has become the dominant source of research, social interaction and commerce for business. And consumers have adopted the Internet as more than just an information source. According to the United States Census Bureau, electronic commerce generated more than $3.3 trillion in sales in 2007, the most recent data available. Don’t believe me? Google it. See what I mean? It has worked its way into our language as well. Like many businesses, mortgage lenders have traditionally used the Internet only as a way to provide basic company contact information content to provide a phone number and physical address. But when it has come to using a Web site to solicit and foster loan applications, most lenders have missed the gravy train. Estimates on the numbers of loans originated online vary between seven and 12 percent. Instead of initiating the transaction online, these lenders are missing out on the opportunity to close loans. This is not to say lenders are completely at fault. Early on, security concerns about private data required when applying for a loan made consumers skittish. However, as technology security has grown, the convenience of initiating transactions from the computer, and the lower cost of managing accounts online, many lenders see this channel growing as more lenders offer online mortgage capabilities. However, the days of simply slapping an Adobe PDF version of a 1003 or a short form to be followed by a series of follow-up calls by a loan officer are long gone. People want answers, including rates, payments and whether they are approved, now. There are two primary keys to making a lender’s Web site a growth channel for online mortgages. The first is creating a site that is useful, informative and easy for potential borrowers to find. The second is creating a work-flow to your back-office that removes obstacles and enables interested borrowers to begin the loan process immediately and prevents rekeying or a laundry list of follow up questions from your originators. Where are you on the Web? The number one method borrowers use to locate information online is the search engine. While Google is the current market leader, Microsoft’s Bing, Yahoo! and other sites also provide search results to millions of Web surfers each day. When you are sitting at your computer, do a search for “Mortgage Lenders,” followed by your state and/or city. If you’re not on that first page, you will not be found by potential borrowers. So how can you ensure that your Web site appears high on the results list of your potential customers? By utilizing simple techniques, referred to by online marketers as Search Engine Optimization (SEO), that makes your site search engine friendly. These are not tricks or unscrupulous methods but focused marketing. It’s like a tall man wearing a red cap in a crowd. Easy to find. A lot has been made of those “red hats” that Web site developers who create your Web site put in the code. But that’s just a small part of it in today’s search engine-crazed world. Relevant content is more crucial, which means placing articles, information and tools that are useful for a potential homebuyer on your site. This can include items such as mortgage preparation checklists, daily interest rates, advice on the mortgage process and a selection of calculators. It is not difficult to create this kind of content … it’s just time consuming. Lenders can partner with online content providers to assist with developing a site that is search engine friendly and contains content relevant to borrowers. These partners can provide articles, calculators, daily rate updates and other tools that help borrowers quickly find the information they need. This content must be kept fresh with updates as often as possible. But like most things in technology, the devil is in the details. Two sites might look identical with the same images, colors and content. Build it right and you’ll rise to the top of the searches. Build it wrong, and you’ll never be found. Scary but true. Converting window shoppers to buyers The biggest challenge in turning the online mortgage portal into an origination channel is converting Web site visitors to borrowers. Visitors to a lending Web site ultimately seek one of three things from the Web site: Research, contact information for initiating a loan in person or an online loan application. Most visitors to the Web site are merely seeking research. They may be comparing rates, learning about the lending process or vetting local lenders to see whom they wish to contact. The best way to keep these borrowers tied to your lender is to encourage them to take action. Offer an informational e-mail newsletter with tips on buying a home or regular rate updates. Invite them to subscribe to an educational blog or social networking page, such as Facebook or LinkedIn. The next level of loan shopper is uncomfortable completing a transaction online, but they are interested in using your loan office to originate the loan. There are two things that this shopper needs. The first is simple instructions on how to call or visit the office to being the loan application. The second is an online pre-qualification form, which also requests that the loan officer to contact the borrower. Online lending software should be able to provide a form that links this form directly into the sales channel, so that originators can follow-up on a qualified lead. The final level is the online buyer. This borrower demands an online system that lets them search for the loan they want, provides a full mortgage application online, supports the uploading of financial documentation and initiates the underwriting process. The online lending system should be able to confirm receipt of the application and ensure that the loan is immediately entered into the underwriting workflow. Though you can’t generalize about age, in general, the older the borrower, the less likely they are to apply or do any transaction online. Going after first-time homeowners or reverse mortgages? Build your Web site accordingly. Choosing an online lending system Today’s market is about making money, and that begins on the Web with a well-built consumer-facing Web site. But what then? Lenders have several choices when it comes to lending platforms. The overwhelming favorite choice? You guessed it—the one they have in place now. No one likes change, and most lenders tend to use software they know, warts and all. But the constant flow of costs on developing, implementing and maintaining the software have prompted even the most change-averse lenders to consider changing to a Web-based lending platform that saves them time and makes them money. Only online loan origination software (LOS) systems can offer all that. When selecting a mortgage software partner, verify that the system will truly make the loan application process more efficient. Many online lending programs only provide nice-looking Web sites. When a customer needs to contact the lender, the forms generate e-mails, which then must be processed by a loan originator before the customer can move to the next step in the loan process. At best, this means time-consuming and error-prone data re-entry into the LOS. At worst, this can mean a delay in contacting the customer, enabling them to originate the loan with a more responsive competitor. These days, all online lending systems should tie directly into the LOS, eliminating the data re-entry and pushing the loan directly into the workflow. The best systems also support eMortgages, providing paperless options for disclosures, closing documents or even the signing. Lenders should also seek an online partner who will provide the tools needed improve SEO. These tools include keyword testing and Web pages enhanced to promote relevant search terms. Lenders should also expect their online lending system to provide the tools needed to build relationships with the customers. Tools to manage e-mail newsletter systems, online referral programs and consumer-focused articles are all available in today’s online lending programs. The World Wide Web has evolved significantly over the past two years—and it has changed us all. What was once a virtual brochure and channel for just delivering information has become an online playground where users interact with friends, family and places of business. Build an online lending channel that truly saves time and money while simultaneously building relationships with borrowers. J.P. Kelly is president of operations for OpenClose, a developer of Web-based mortgage lending software. 
Sep 29, 2009
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