We've been talking about how boosting your conversion ratio starts with the loan officer. Remember, 2014 is the year of conversion, and conversion can really be improved if you manage the interaction between your loan officers and your new loan applicants. We talked last week about effective ways to get that conversation going between your loan officers and new loan applicants. But that's just the beginning. We have to keep those conversations going into the processing department.
To keep your conversion rates high, loan processors have to continue the conversation that the loan officers hopefully started during the application process. It makes the borrower feel like you are visiting with them, developing a relationship. It's just pleasant conversation and every so often you are throwing a question in there that is about how the customer feels.
Like asking, "What did you like about that house?" while you are trying to nail down the contact person for the appraiser. Or, if you are asking about income, "How do you like that job?" sort of lubricates the conversation. Throughout this process, you're building rapport and helping the borrower feel like you understand them, even if some of the information you learn doesn't fit into a box on the 1003. This can be done over the phone just fine, and may be even more important when you don't have the advantage of being face to face.
Of course there may be more documentation and information that you're going to need, and you can't always be sure what may come up during the process. Having a conversation with a borrower, whether you're a processor or an LO, and then documenting it, is much better than having the customer feel like they are being assigned work to do. For example, instead of asking for an explanation of the JC Penney late payment, you can call the borrower and visit for a few minutes to review what is on the credit report. You give them the good newsó"you have excellent payment history on your mortgage" or "you don't use a lot of credit cards," and then ask, "Do you have a JC Penney card?"
Sometimes the explanation comes out immediately (they returned an item and didn't get credit, etc.) but it's better to prime the pump with the easy stuff first, rather than launch right into, "You got some 'splaining to do!" If they give you the story, the processor can write it up, send it back to the borrower for review and then get it back by mail or email with the borrower's signature.
We even work with banks who routinely ask their customers for bank statements on accounts with the bank itself! That shows that the loan really is a transaction and not a relationship, and it undermines the efforts of the bank to cross sell mortgages to their customers. If you want to make a big investment, you can even explore data aggregation tools that pull the asset and income information in automatically. Sure, this is a bigger investment in the borrower, but it reduces risk and drives conversion, and that drives more referrals and more return business from your customers.
Another way that data can improve the process is around the valuation. One of the things the leading online lenders do is instantly ping an AVM as soon as the borrower gives them an address. That way, if the borrower says that their house is worth $500,000 and the AVM comes back $420,000, you can start the conversation right away about value.
Now, don't just exclaim, "$500k!? You have some 'splaining to do!" Just ask them about the neighborhood, and values, and why they think their home is worth that much. You may hear about recessed lighting and a bunch of other improvements they have made that really won't impact the value very much, but that will at least give the borrower a chance to give their view before you explain how the appraisal process works.
It is better to cross this bridge early rather than going to the expense of a full appraisal and then finding out you have a problem. This is far more applicable in a refinance situation, but the fact is that you can integrate this kind of data into your refinance process and know whether you have a deal that can be closed up front, which (once again) helps you keep your conversion rates high.
In Stratmor's work with banks around the country, particularly through the deployment of our MortgageSAT tool, we can see that this approach increases customer satisfaction. More than that, it drives the type of actions that lenders need their customers to make, referring new business and recommending the bank to others. The numbers bear that out; continuing the conversation throughout loan processing will drive up your conversion rates and increase customer satisfaction.
Now, if you would like to keep the dialogue going, just reach out to me on LinkedIn. I have no problem "'splaining" it some more.
†Garth Graham is a partner with Stratmor Group, and has over 25 years of mortgage experience.