In today’s mortgage market, efficient and compliant marketing is vital to developing a client base of reliable referrals. Right now, people are looking for a professional to help them take advantage of our current buyer’s market. How are you letting them know you’re here to meet their needs? There are a number of sources for mortgage business, much of which requires a loan originator to focus their efforts on improving their marketing response. That’s not to say you’re so focused that you miss an opportunity. Marketing efforts often cost money and having your marketing focused will improve your chances of attracting prospects. You should also focus on a business source you have a passion for, such as senior citizens for reverse mortgage products. When you have a true interest, it will show in your presentation. Business sideline sources A loan originator should have one main marketing focus, or target market, with two or three sideline sources. The target market should serve as your primary market for marketing materials and advertising. This source will need to be developed into your main source of generating production. The sideline sources are generally relationship-based and may be a good source for stable business. Bankruptcy attorneys, financial consultants, divorce attorneys, loan modification specialists, certified public accountants (CPAs), bookkeepers and other professionals who work with clients that need the equity of their home or understand the value of homeownership are prime targets. These sources feed you referral business. The benefit for your business source is your professional handling of their client or referral. No one wants to make a recommendation that will cause them to hear the person complain, or worse yet, lose that person’s business themselves. Target market approach Your budget may determine your approach? Build into every client transaction, a percentage of income for a marketing budget. Marketing does not have to be expensive or time-consuming. Referrals are the cheapest as they generally only take the effort to ask for the referral, and then follow up with the lead. It is also courteous to send a thank you for the lead received. Due to privacy rights, you cannot discuss any details of the referral’s business. Follow the laws required in your state and federal advertising regulations, and focus your presentation on your target market. A first-time homebuyer and a reverse mortgage shopper will be looking for a mortgage professional who can meet their personal goals. Do not attempt the “shotgun” approach to marketing that tries to hit every prospective borrower’s goals. Your message will be lost in the maze of information. Also, your advertising should not deter protected Equal Credit Opportunity Act (ECOA) groups from accessing your services. Your first approach to any market is to get them to call you. Make your phone ring! That is your focus. Don’t try to close the loan in the first phone call. Just try to determine if they are a viable prospect, and get them to make an appointment for an application. Even if the application is over the phone, you should set a time with the borrower to call back for the application. Then they will be prepared to spend the time needed to answer all the questions, and have the documentation available to read off the information, such as account numbers and addresses. This sets the tone that you respect their time, and gives you a professional approach rather than a sales approach. If they flake on the appointment, then they never were a prospect and you didn’t waste much time. Brochures These can be nice for handouts, and make the company look more professional with a brochure that outlines their services. Professional services and templates on the Internet can help with development. When approaching professionals and human resource departments, a brochure works well to let them know the benefits of using you, your service, and your company. The benefits outlined in the brochure will need to be for your target market, and again not the shot gun approach of everything you have ever done. E-mail marketing campaign Although there are costs and work involved in setting up an e-mail marketing campaign, there are clear benefits. You can purchase a database if you do not have one, but the norm is to be invited to use someone’s e-mail. The point is that once you get started, you will find e-mailing to be cost-effective. Flyers Do not make a flyer that will attract all possible prospects. Do not let the flyer become too busy or misleading. The flyers should have a message that will meet the marketing goal, generally to generate action by the targeted market. The flyer will need to hit on the estimated motivation of the target market. What specific services will the potential borrower want from you, the mortgage professional? Gifts There are gift baskets, wine with customized company name labels, plants, seed packets, fruit baskets, new home welcome baskets, and many other ways to spend your marketing dollars. There are also regulations on gifts from people in the mortgage business, so keep gifts under $50. If you give a present to one client, you should give one to all. Excessive or expected gifts may be considered an illegal inducement or referral fee. Never use the gift as inducement to use your services. It should be an unexpected inexpensive thank you. Mailing campaign There are costs involved in this approach, and the return is estimated at two to three percent being a good response. There are marketing services for a fee that will handle the mailing for you. These services make mailing campaigns easy, as long as your database is up-to-date and accurate. Databases can be purchased, but may not be current or may be over-used by other loan originators. Farm lists from title companies can also be used for your data base. Postcards An effective mailer as most people will read the postcard before they throw it away. Postcards also cost less to mail. You have a very brief area to get your target market to take action, so make sure the message is simple and action requesting is clear. Greeting cards Holiday cards, birthday cards, and thank you cards are all great to keep in touch with past clients. It also gives you another chance to ask for referrals, keep your database current, and just basically keep your name in the fore front of their mind. Invitations Invite past and potential clients to special events, a “Homebuyer Seminar,” an open house at your office or even a holiday party. Have a door prize (less than $50 in value). Your client will get one chance in the drawing for every person they bring. How about a welcome to the neighborhood party you throw for your new client and their neighbors? Newsletters Newsletters can maintain communication between you and your clients. Marketing service companies can develop a newsletter for you or you can write them yourself. Keep in mind that most newsletters are informational and do not normally ask for the business like marketing material. Newspaper/magazine print ads These can be expensive, but if your target market reads the paper or magazine, the cost may be offset by the amount of applications it generates. Ask for a media kit to determine circulation and demographics of their readers. Ads should not be too busy. Keep it simple as you are just trying to get the phone to ring. Sometimes, doing the ad in black with white writing can help it stand out from the other newspaper color print ads. Promotional items Pens, calendars, pads, rulers, game schedule charts, magnets, keychains … go more for a useful rather than a unique item. Recipe cards are unique and often kept. T-shirts, polo shirts, hats and bags are nice, but can be expensive and are considered inducements which are illegal. Why are you giving them the promotional item? The answer may help you decide what to use, if anything. Radio advertisement Radio advertising on your local station is not too expensive, especially sponsoring the weather or traffic reports. You’ll need to run the ad at for least six months. What radio station will your target market listen too? What time? Free advertising There are many sources of free advertising. The following is just a small list of options: ► Word of mouth referrals are the best. ► Newspaper articles written about you or a press release. ► Speeches and programs for civic groups. ► Teach a course on home financing at a local community college. ► Business card on bulletin boards at stores and community centers. ► Author newspaper or magazine articles or columns. ► Speak at real estate meetings. ► Speak at high school career day programs. ► Three-foot rule, anyone within three feet gets your card and presentation. Advertising compliance Make sure all your marketing materials meet state and federal requirements. Federal laws require advertisements to be clear and not misleading. Per the Truth-in-Lending Act (TILA), any rate quotes or implied payment amounts will require an annual percentage rate (APR) disclosure. When advertising, the posted APR cannot be any less conspicuous than the rate quoted. The most recent advertising changes are from the Home Ownership and Equity Protection Act (HOEPA). It requires an advertiser to give additional information about rates, monthly payment and other loan features. The final rule bans seven deceptive or misleading advertising practices and strengthens the clear and conspicuous standards for advertising disclosures. The following is brief review of the prohibited factors: ► Advertisements that state “fixed” rates or payments for loans but rates can vary with only a limited fixed rate period. ► Advertisements that compare an actual or hypothetical rate or payment obligation unless the advertisement states the rates or payments that apply over the full term of the loan. ► Advertisements that characterize the products offered as ‘government loan programs’ even though the advertised products are not government-supported or sponsored loans. ► Advertisements that display the name of the consumer’s current mortgage lender, unless prominently discloses that advertisement is from a mortgage lender not affiliated with the consumer’s current lender. ► Advertisements that make claims of debt elimination if the product advertised would merely replace one debt obligation with another. ► Advertisements that create a false impression that the mortgage broker or lender is a “counselor” for the consumer. ► Foreign-language advertisements, such as a low introductory teaser rate, while the required disclosures are provided only in English. Types of discrimination identified by the courts and Home Mortgage Disclosure Act (HMDA) are: ► Overt evidence of discrimination: When a lender blatantly discriminates on prohibitive basis. ► Disparate treatment: When a lender treats an applicant differently based on one of the prohibited factors. This is the most concern in pricing. ► Disparate impact: When a lender applies a practice uniformly to all applicants, but the practice has a discriminatory effect on a prohibited basis and is not justified by business necessity. This practice hurts all parties involved with the lending transaction. For example, a company has all their advertising in Spanish with Spanish magazines. This may be disparate impact to other protected groups such as other ethnicities who may not speak or read Spanish. ► Fair lending laws: Require advertisements to the public disclose the equal opportunity housing symbol, Equal Housing Lender. Fair lending laws require you to not discriminate against any protected groups and comply with fair lending laws. Be mindful of the image your advertising is making. Most state laws require advertising disclose the complete name and address of the mortgage company and not just the loan originator. If the advertising is for “real estate professionals only,” this statement must be on the advertisement or flyer. Supervisors should review all advertising going out to the public. Stay in compliance with advertising and lending laws. Take a law class if you did not know about these basic advertising regulations or the laws that prohibit you from refusing or pre-screening a borrower who wants to make an application for a home loan. I have lost count of the number of Mortgage Fraud Task Forces on a city, state and federal level. Always ensure that your advertising meets the federal and state law requirements to avoid fines, unwanted attention, and an un-professional approach to the market. Linda Williams is CEO and trainer for Mortgage Trainers of North America. For more information, call (702) 990-3557.