Diversification

Diversification

A TRIED AND TRUE STRATEGY FOR UNCERTAIN TIMES

By BRUNO PASCERI, INCENTER

Here we all are, halfway through winter, optimistic yet uneasy about what the next several months will bring. Despite the data-driven forecasts and projections, no one really has a handle on what’s ahead. We’ve never seen such a unique and confounding set of variables influencing our business.

Purchase demand is high but inventory is so tight that the idea of home sales replacing the refi boom is simply not logical. Student debt is directly impacting the purchase timeline for first-time buyers. Will the anticipated default surge turn out to be a wave or just a big ripple?

While the exact circumstances may not be identical, I’ve seen this movie before. And if there’s one thing that gets mortgage companies through uncertainty, it’s the ability to continuously diversify into new product lines and, even more importantly, new relationships.

Emphasizing product expansion and relationships sounds like common sense, but after coasting on refinances pouring in without much marketing/sales effort, proactive “friend making” will be far from intuitive for many. It’s time to pay closer attention to:

• The products that will meet borrowers’ changing needs

• Back-end technology to work smarter and faster

• And most importantly, growing relationships within the industry ecosphere to widen your customer base

NEW PRODUCTS

As the industry migrates from a refi to a purchase market, diversification is clearly in order.

The pace of first-time homebuying is still strong, and mortgage originations will continue to be an important source of revenue. But price appreciation, inventory shortages, unemployment, and student debt have driven many potential buyers from the market. Companies must diversify their products and engage with a new set of borrowers to fuel continued healthy performance.

It’s time, for instance, to reach into the homeowner segment with a broader product shelf. Whether prospective borrowers need renovation mortgages to repair an older home, or home equity loans for a swimming pool, companies need to be ready. Purchase reverse mortgages for Baby Boomers planning to downsize could become important sources of revenue, too.

Unless companies cultivate and expand their referral networks, their more diverse range of products will stay on the shelf, gathering dust.

ADVANCING CUSTOMER RELATIONSHIPS

Take a moment to assess your relationship ecosphere. Does it include all gateway intermediaries who could send referrals your way? In addition to real estate professionals, how about developers, builders, attorneys, CPAs, and financial advisors? These referral sources are your true customers.

If you already have a diverse mix of relationships, how are you proactively supporting the individuals in your network? Could they be wondering where you have been since the pandemic began? Do they know about the new products that you’re highlighting?

Develop a new habit: Meet with these people regularly, in person or virtually, to catch up on how you can help one another. Educate them on changes to the buyer and property credentialing process. Empower them to pass qualified borrowers to you.

Find ways to expand your referral pipeline, too. COVID-19, ironically, has broken down traditional networking barriers. For the first time, it’s easy to attend some of the breakfast meetings that were arduous to drive to. Pop in, scout out the people in allied professions, and invite them to meet virtually, one on one. Get to know them socially and professionally, and expect a new source of referrals as you build mutual trust.

Then service those referrals like your livelihood depends on it. It does.

DEMONSTRATING EXPERTISE

When borrowers are making the biggest financial decisions of their lives, including first-time homeownership, inperson service is the Holy Grail.

I learned this years ago as a loan officer, and it still holds true. Early on, I remember being astonished at how anxious borrowers often looked. Even corporate giants would come to me quaking inside, worried that despite their high salaries, a single misstep with their mortgage application would prevent them from closing on their dream home.

I understood then why in-person meetings are so powerful. No technology can replace the handholding these borrowers need and truly value.

Every interaction is a chance for loan officers to demonstrate that they can bring these transactions to the finish line, addressing each “mysterious nuance” with unquestionable expertise.

STARTING IN THE KITCHEN

It’s only fitting that the best place to build the relationships nervous borrowers are starving for is the kitchen, physical or virtual.

Step into or take a digital tour of their homes, and notice the pictures on the walls, the degrees in their offices, and the photos that shed light on who they are and what they love to do.

Then relax and get to know them better over coffee, asking questions about their families. Bond over common interests and then delve into mortgage details.

In the process, your expertise will shine and these borrowers will want to work specifically with you. Prove that they made the right decision by attending every closing, physically or virtually, and their positive impression will be confirmed. You’ll gain profitable new borrowers for life and more business as the people who referred these borrowers hear their glowing reviews.

ROBUST TECHNOLOGY

While you’re delivering great care and service on the front end, technology can be hard at work on the back end, streamlining the mortgage process and helping to deliver a great borrower experience.

For example, new AI-based decision engines shorten title searches from days or hours to minutes while appraisal management platforms are providing keen insight into appraiser turn times, report quality and borrower satisfaction.

ALL ABOUT RELATIONSHIPS

Who will lead the mortgage industry in the months ahead? I’m rooting for the companies that keep customers and borrowers close, understanding that no matter how markets change and products evolve, the value of relationships is evergreen.