Residential Magazine

Fighting Shape

Originators must polish their skills to succeed in a purchase-centric market

By Chris Harrington

If you’ve been in the mortgage business for more than a cycle or two, you surely understand that the refinance boom is coming to a close. Refinance loans heat up the mortgage market, but these surges always end. This past April, the Mortgage Bankers Association called for the end of the refi-dominant market, projecting that interest rates would rise to 3.7% by year’s end and past 4% in 2022. 

There simply aren’t enough borrowers with higher interest rates to sustain the refinance business. Some people will say, “But that’s 2022.” These people don’t realize how much work must be done to prepare today’s frontline mortgage originators to succeed in a purchase loan market.

It’s keeping mortgage company executives awake at night. From the CEO to the branch manager, the conversations revolve around the same problem: Today’s mortgage originators do not have the skills required to sell in a purchase-money market.

Too many years of easy refinance business can erode the prospecting and closing skills of even veteran originators, let alone those who are new to the business. Many originators have never had to sell in a purchase-money environment and have only a few referral partners in their contact database.

This isn’t to say that today’s professional loan originator can’t sell; it’s just that they haven’t had to do it for so long that it will be painful when the refi business ends. They aren’t used to talking to real estate agents and homebuilders, and picking up a box of doughnuts isn’t going to cut it.

Management has to be wondering if they should have planned better for this situation, but even a casual glance at their calendars over the past few years will reveal that every moment was spent keeping their companies in shape to close transactions. They’ve been so busy doing their jobs that it’s been virtually impossible to do the work of preparing their sales staff to succeed when the easy days are over.

Unfortunately, when refinances stop coming in the door, there won’t be a lot of warning. Interest rates will rise above a certain level — the experts debate what this number is — and the refi business will stop like someone turned off the fire hose. The trickle that’s left will leave lenders scrambling, but it doesn’t have to be this way. 

Risk prevention

Selling in a refinance market is fairly straightforward from a compliance standpoint. The borrower comes in looking to save money, the originator finds them a product with a lower interest rate and the loan processor takes over. This is a simplification, but compare this to a purchase loan transaction.

In purchase scenarios, everything the originator says to the consumer is being monitored by federal regulators. There are traps all along the way and any misrepresentations can lead to serious problems. As lenders prepare their teams to sell, they must look at the sales process and all of the materials that go along with it from an enterprise perspective. There should never be communications being sent by a loan originator that the company hasn’t approved.

No company can monitor every single piece of information that goes out. What they can do, however, is to preapprove materials and make them available to mortgage originators on a platform that includes an audit trail. This means that the lenders who will succeed in the future will be using an enterprise-grade customer relationship management (CRM) platform. Anything less will expose them to unacceptably high compliance risk.

What the lender needs is enterprise control while giving mortgage originators individual responsibility for how they use the preapproved material. But what materials do originators need to be successful?

Of course, no automated system can take the place of a well-timed call from the originator. … Originators who make these calls will outperform those who do not.

Powerful messaging

Mortgage originators will need access to any and all sales tools that will allow them to connect effortlessly with consumers and referral partners. They will need content that adds tangible value for prospects and partners, and a system smart enough to deliver it to the right party without the originator’s intervention.

Marketing-automation technologies have matured. What sets CRM providers apart is largely a matter of the content they provide to the mortgage originator and how easy their platforms are for salespeople to use. Originators want the power to determine which marketing materials are sent to which contacts and when, but they don’t want to have to program all of the details on their own.

Compliance should happen automatically so that every text, email and video that comes from the lender or originator is fully compliant. This technology exists today. Finding a rich collection of industry-specific content to send is more difficult but still possible. 

Lenders that settle for platforms that aren’t capable of providing the most compelling, valuable content to consumers and referral partners will lose business to those that do. Two marketing factors that will set lenders apart in the near future are in-process marketing and video marketing. 

In-process marketing was previously referred to as loan-status updates, but these consumer and real estate agent communication opportunities are so much more than that. Triggered automatically when a loan origination milestone has been reached, these simple messages are the key to higher levels of borrower satisfaction and, more relevant to this discussion, more repeat and referral business. In cases where the real estate agent doesn’t already have a relationship with the lender, these messages can open the door.

Touchless tools

The key to effectively using these marketing tools is to have management define their own milestones. Don’t settle for those built into your loan origination system software or the few offered by a CRM provider. Set your own milestones and make them appropriate for the way you do business. It’s a fantastic differentiator.

What’s most exciting about these alerts is that once they’re set, they go out to the relevant parties on behalf of the originator without any intervention on their part. It works to get them more business while they’re busy doing other sales-related tasks.

When it comes to differentiation, nothing works as well as video. When the loan originator appears on the prospect’s or partner’s screen with the company’s logo, there can be no confusing your institution with any other. 

Video marketing has come a long way in the past decade and lenders can now easily integrate video into email, allowing an originator to schedule emails to go out to contacts in advance. The tools are available today. Now, all lenders must do is train their teams to use them.

Tangible value

CRM platforms are a marketing tool that should be easy and so intuitive that anyone can use it on the first day. What today’s sales professionals need is a refresher on how to add value for referral partners and how to provide answers to the questions that prospective borrowers have.

As for the latter, studies have shown that consumers will do their research online, and by the time they submit a loan application, they already know if the lender has the answers they will need. Some of this information comes from the lender’s website, but much of it comes from the marketing materials they’ve received from originators.

Business-referral partners are different. They are not looking for answers. They are looking for value. To build a referral relationship, the originator must add value. The right CRM will make this easy by offering valuable content that the lender can schedule and send to partners on a regular basis. Video-based information that real estate agents can use to attract more homebuyers is particularly attractive and is available in modern CRM systems.

Of course, no automated system can take the place of a well-timed call from the originator. The CRM system should provide regular alerts that give the originator a reason to call on partners and the information required to add value. Originators who make these calls will outperform those who do not.

This can be quite effective for real estate agents but even more so for homebuilders, who generally receive fewer calls from mortgage originators. Builders have a longer sales cycle than real estate agents, so it’s important for them to stay in touch with prospects during the homebuying process. It’s impossible to know whether their potential clients will find the right home or turn back to the builder for a custom home.

Originators who can provide this kind of drip campaign to a builder’s prospects have found a way to add real value to their partners. By sending out material that focuses on the builder-lender relationship, it builds a stronger bond that will deliver more business.

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All of these offerings are available in modern CRM platforms developed specifically for the mortgage industry. But it must become a normal part of the originator’s day to use these tools for prospecting and building stronger relationships with referral partners. Helping your partners get more business is the best way to get more business in return. Lenders that train their originators to do this before the purchase-money market gets here will succeed, both in the upcoming cycle and the current one. ●


  • Chris Harrington

    Chris Harrington is president and co-founder of Usherpa, the company that developed the original CRM technology for the real estate and mortgage industries. She has more than 25 years of experience in high-tech real estate and mortgage relationship management.

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