The Future of the Mortgage Banking Industry ... It’s All About PR By Daniel Jacobs
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I know what you are thinking …. but it’s not “PR” as in “public relations.” Well, sort of along those lines though. The PR here stands for “Process and Relationships.” Most of us know that originating loans now feels more about a process and less about the result. Beyond completing the origination process, meeting compliance requirements and ensuring sound lending practices, what will separate the winners from the losers in mortgage banking is how the players manage their relationships. Borrowers do not understand and do not like the increasingly tedious, mysterious and seemingly inefficient process of obtaining a mortgage. The professionals who explain the process best, who properly prepare borrowers, who provide better service and communication best, will define the next generation of mortgage bankers.
OCTOBER 2012
OREGON MORTGAGE PROFESSIONAL MAGAZINE
NationalMortgageProfessional.com
Process vs. Result Let’s face it, with all of the regulatory changes and investor requirements, we find ourselves often more focused on the process of originating mortgages than the result of providing a timely, easy and pleasant experience and funding. Previously, our goal was to originate and close loans on time. Today, many mortgage professionals believe completing tasks in a prescribed order is more important than what actually gets done or when the loan is closed. The result is deadlines have lost meaning in favor of process workflows, pre-requisites and mandatory waiting periods between steps. These are the results of new regulations put in place to protect consumers. The future of mortgage banking rests on balancing the process-oriented requirements with keeping a focus on the result. Ultimately, our customers are not interested in why it takes so long to get a loan; they’re interested in closing on time with the loan terms they expect. We can be successful in creating raving fans of our customers while completing tasks correctly. We can do this by deciding what and when the desired result should be and completing the loan with a defined plan from start to finish.
Predictive vs. Reactive Consumers understand that obtaining a
mortgage today is far different than it was years ago. The media has done a very good job informing consumers that obtaining a mortgage is a different and more tedious process than before; but what they do not understand is why originators often do not better predict and explain the process. Top producing referral-based mortgage professionals have always been good at being more predictive than reactive, and have proactively explained to borrowers what to expect during the mortgage process. They explain it like a project/plan with the various steps that will take place and the expected time frames associated with each step. They warn the borrower about potential delays and the circumstances that could cause them, including ones the borrower can inadvertently cause. In this case, if there is a delay, the mortgage professional is able to remind the borrower that the delay was previously discussed and explain how it will affect the remainder of the process and reassess the expected completion. These professionals are not reacting to the delay with excuses and apologies. Instead, they underscore their value in helping guide the borrower through the mortgage maze from the beginning with Nostradamus-like predictive skills. Outlining a predictive plan for each loan, with full knowledge of the various detours that may arise, creates more realistic expectations for everyone involved. Each loan application has a series of steps, with each step taking a specific amount of time to complete. It is the responsibility of the mortgage professional to manage the transaction and relationship effectively. This means first creating a plan and then continually updating the borrower with timely updates, including letting them know where the process stands against the plan. The future of mortgage banking relies on mortgage professionals doing a better job at predicting and guiding borrowers through the process. This requires developing relationships rooted in proactive and timely communication. In the past, competition was limited to other mortgage professionals. However, technology and artificial intelligence is evolving quickly. If
we want mortgage professionals to continue to be identified by proper names rather than as “The Computers,” we must be better than the computers at guiding customers through the process to their desired result. That means we must stop being reactive and start being more predictive.
Empathy vs. Apathy
At 4:00 p.m. on the last Friday of every month, we all know that in every city and town across America, more homebuyers than we would like to admit are having that discussion with their moving company about storing all their belongings over the weekend because something got “The future of Transparent vs. delayed with their closing. mortgage banking Opaque rests on conforming to As I have spelled out, we Another characteristic similar transparency have become an industry needed to develop the relaovertaken by process versus and information tionships and results needresults, reaction versus presharing standards, ed to be successful is transadopted long ago by diction with a transparency parency. After we have set deficiency. other industries.” the expectations and the We often fall into the potential variables by being predictive, we trap of being apathetic versus empathetic. must consistently keep borrowers and Now, this is where we can really shine over related parties informed. As consumers any computer programmer’s genius by ourselves, we all expect automated developing empathetic relationships with updates and the ability to drill down into our customers. With empathy we feel or detail when we want. Think about the last can even anticipate the pain of the bortime you ordered something online. When rower experiencing the tedium of obtainyou placed the order, the retailer told you ing a mortgage. After all, we do it every if the item was in stock, the approximate day, albeit on a different side of the transshipping date and what method and how action. We must understand the stress and long shipping would take. anxiety of the first time homebuyer or the If the next day, the retailer realized move-up buyer with back-to-back closings. there was a component of your order not With that understanding and personal readily available, you received another experience of these anxieties ourselves we message alerting you of the mistake and develop empathy. And we can transform asking you how you would like to proceed. that empathy into becoming more resultsAssuming there was not an order error, you driven, more predictive and transparent. received an e-mail letting you know the Then expectations are met; we hold each item shipped and you likely received a link other accountable; we ensure avoidable to track your order. Five minutes after you delays are avoided and unavoidable delays signed for the package, you received a are communicated early enough to avoid notice alerting you that you signed for the dire consequences. And then everyone is package with instructions of who to alert if happier, the mortgage professional and it was not really you that received it. You the consumer have a more positive experido not have to call online retailers every ence and feel better about the process. day to get a status update because they The future of mortgage banking rests have mastered the art of transparency and on mortgage professionals developing automatic notifications. Interestingly, you empathetic relationships with everyone expected this level of transparency before involved in the process. This ensures that you even began the transaction, right? borrowers receive the level of service and The future of mortgage banking rests the overall experience they deserve. on conforming to similar transparency and information sharing standards, Defining the “customer” adopted long ago by other industries. We tend to think of the borrower as our Mortgage banking, as complex as we like only customer when in fact everyone to think it is, will be overtaken with a involved in the process is a customer. For more transparent, more predictive new the loan officer, the borrower is the cusentrant from the technology retailer busi- tomer, but so is the processor, the real ness if existing mortgage professionals do estate agent and other interested parties in not adapt to consumer information con- the transaction. For the processor, the loan sumption standards. originator and the underwriter are cus-