Oh, how the mortgage market has changed over the past few years. It really wasn’t long ago we had a steady stream of incoming refi applications which took next to nothing to source, a four-inch-thick paper file was the norm as most lenders were not yet paperless and there was no pressure from senior management or the board to develop a lending process ‘as slick as those Rocket Mortgage commercials’. And let’s not get started on what things used to be like before TRID.
While making the rounds to various mortgage shops throughout the country, the most pressing question and concern is how to succeed in this purchase market. In fact, I’ve had a few people recently ask how they should prepare for the purchase market and my initial thought was; ‘we’re already there my friend’.
I recently had the pleasure of discussing this topic with a group of high-performing mortgage lenders and what they are doing to ensure their long-term success. There were certainly different approaches which varied based on the lender’s strategy, local market factors, market presence, existing strengths or limitations, as well as staffing constraints and competencies.
Below are some areas where top lenders are focused to improve their success in a purchase market:
Loan Officer Support – With all the pressure on Loan Officers to drag in new business, they must also provide the necessary support and be accessible to the borrower and Realtor. Many lenders take the stance that Loan Officers should be out selling and supporting roles should provide the service, but typically the lenders who have clients raving about service are the ones where Loan Officers are engaged and available throughout the entire process.
After-Hours Availability – Some lenders are in markets where “after-hours” support for Realtors and home buyers is the exception, not the norm. So, top lenders are focused on communicating and delivering their after-hours support message to the market as it is clearly a competitive differentiator. The need for Realtors and home buyers to discuss their loan as they shop for homes after-hours and on weekends is something that must be considered in a purchase market.
Special Loan Programs – Successful lenders are approaching the purchase market with a variety of special loan programs tailored towards purchase borrowers as well as first-time and low-income borrowers. The ability to offer fixed-end equity loans is also being reconsidered by many lenders as it has been highly neglected since TRID.
Front-Line Mortgage Training – While most lenders tend to have walk-in borrowers referred to a Loan Officer for taking applications, high-performing mortgage lenders are heavily focused on providing extensive, continuous mortgage loan training to their front-line staff. There is a definite correlation to highly successful mortgage shops and the investment they make in training their front-line sales staff and Loan Officers.
Staffing-Up Loan Officers – A top strategy for most lenders now is to staff-up their Loan Officer pool to ensure they can proactively generate more purchase business with true sales staff vs. relying on the refi application order-takers of the past. However, attracting and retaining quality Loan Officers is a genuine struggle for most community banks and credit unions and the Loan Officers who are worth getting are also the hardest to retain. A clearly defined value proposition around total compensation package and the lenders available referral network must be positioned to land quality Loan Officers who may otherwise join a local mortgage broker.
Realtor Campaigns – Maintaining a strong relationship with Realtors in a purchase market is key, causing some lenders to build out and centralize their analytics on Realtors to determine the highest performers in their markets and ensure Loan Officers are building the right relationships. This is a more proactive approach than just hiring more Loan Officers and assuming they will bring a strong book of business and trove of contacts with him/her.
Market Reputation - By far the most common theme in discussions with lenders regarding success in the purchase market is having a strong presence and reputation in their market. The largest contributor to maintaining a solid reputation in the market is to provide excellent service. Realtors know all the top-tier lenders, are familiar with their products, service, reliability and they will keep coming back – if the service is good. Providing good customer service for Realtors is table stakes and if they don’t get it they will simply move on to the next lender.
With service and delivery capabilities being such a huge factor for mortgage shops across the country, the need to monitor reputational risk in the market is very high. Lenders just don’t have the luxury of viewing poor service on one loan or missing a closing date on another loan purely as isolated incidents. It only takes one loan to create a ripple effect of bad reputation due to the high word-of-mouth chatter in the Realtor market.
Lenders who want to be successful in the Purchase Market must take a proactive approach to increase their originations. It is not an overnight success story, but rather the culmination of investments in customer service, sales training, Realtor campaigns, borrower workshops, specialized loan programs, proper staffing, analytics and strong digital marketing campaigns. In short, you need to let the market know you can deliver, but more importantly make sure you do.
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