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Conversation, Not Examination

FEB 19, 2014 5:29pm ET
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WE'RE HEARING there are many conversations that take place during the mortgage process. A lot of them are conversations between players in the industry, such as the loan officer asking the processors to chase documents and the processors trying to explain everything to the underwriter in order to get the loan approved.

We invent systems to drive this process, which we refer to as Loan Origination Systems, which makes sense to us—our ultimate goal, after all, is the creation of a loan. But I am pretty sure that is not the goal of the consumer. And if you don’t align with the customers goals, and explain the mortgage process in a way that they can understand, they are far more likely to bail on the loan application, drive down your conversion, and cause your future business to suffer. And as I have said in past weeks, 2014 is the year of conversion!

First off, we need to consider every interaction with the consumer as an opportunity to move the borrower closer to their goal, and that goal is normally something that matters to them. No one goes into the loan process because they want debt, or because they really want to pay some closing costs, or be submitted to a process that rivals a proctology exam for intrusiveness. (Please note I am not a proctologist and am merely speculating on how intrusive such an exam may be. For actual medical advice, consult a physician.)

Customers are trying to reach a goal that matters to them, and the best way of building rapport with a customer is demonstrating that the goal they have is the same one we have. Their goal is to get that new home, with the big yard or the extra bedroom.

The more you can get the customer talking about that, and the more empathy you can show for that situation, the more you can connect with them and get what you need from them to get the loan done. Sometimes it’s as simple as asking “why.” For example, when they say “I bought a new home,” maybe your first question should not be “how much is the house and how much are you putting down?” (By the way, putting down in itself is not exactly a positive connotation…) How about saying “wow, that’s great, how did you pick the house?” or “how long have you been looking?” or “what did you like about it?” None of this makes it onto the loan app, but it all makes more empathetic and more aligned with what the customer wants to talk about.

This may sound obvious, and you may think that all originators know this, but many forget it, especially the 10th time they talk to the customer, or during the 10th application interview they might take in a week. Well, we can’t forget it because every time you lose the chance to connect with the customer, you decrease the chance to convert the loan. So, my first challenge to all originators (and processors!) is to be sure you focus every conversation, communication and interaction on what is important to the customer.

The second suggestion is one of style. Too often, I hear mortgage professionals explain to consumers why they need something in technical terms. That would be like the proctologist explaining every step of the exam without answering the most important question—“will this hurt?”

After all, borrowers need information as badly as we do. They need to know what loan they qualify for, what their payment will be and whether they can really afford it. They want to know how to explain the deal to their family or Realtor in such a way that they sound like they’re making the right decision about buying a home and about the loan they picked.

All of those things come from trading information instead of just interviewing them, which is how to create a collaborative and consultative approach. You’ve got to ask the right questions and relate the questions and answers to what matters to them.

We often think of the application process as a series of technical questions that must be answered—information that is needed to get the deal done. But it’s also an opportunity to cement the relationship and increase the likelihood of conversion. For example, early on in the process, an LO needs to pull credit, to see if it affects price, and to see if the deal is doable. That is why the LO needs it, but the consumer often does not have any information about their credit at all. That is a need they have—to learn more—that the originator can help with.

You may have noticed that Discover has created little ads designed to demonstrate that they treat you like you treat you, which I find kind of creepy. The ads feature these people who are narcissistic enough to think that the person they are talking to is just like them.

Anyway, these creepy ads demonstrate that one of the things Discover is doing is giving away a credit score. Now, that’s not creepy. People love that. It’s a way of offering the consumer value from the very start. Loan officers have the same opportunity and it will increase their conversion rates. Imagine if you could say to a borrower, “Look, we’re going to get started and I’m going to pull your credit and then I’m going to share it with you and we’ll discuss it. I’ll tell you how it’s calculated and what impact it will have on the next loan.”

Our MortgageSAT offering has confirmed that taking this approach with borrowers builds deeper relationships and creates higher levels of customer satisfaction which brings with it more repeat and referral business. And it makes sense. You’re giving your borrower a piece of information that they really want and that’s the beginning of a great relationship. When lenders hoard information the borrower needs, those borrowers will seek out someone who will give it to them.

Sometimes, I hear mortgage folks talking to consumers as if they were a hostile witness. “Isn’t it true, Mr. Jones, that you were late on your JCPenney’s credit card!” Interrogation is not a tool for building strong relationships. If you really want to drive up conversion, you’re going to need to learn to trade information with the consumer. If you’re only a taker, yelling, “tell me more! tell me more!” as you try to complete the app, you’re falling into the same trap as the government did with its health care website. Asking for too much and delivering too little is a sure way to get borrowers to bail and send your conversion ratio into the tank.

Now, today’s column focused on the application process and how that can help drive conversion. But this is something that impacts the customer throughout the process. It may start with the loan officer, but this approach must be continued through funding. And unlike a proctologist, I can promise it will not hurt.

Garth Graham is a partner with Stratmor Group, and has over 25 years of mortgage experience, from Fortune 500 companies to startups, including management of two of the most successful mortgage e-commerce platforms. He was formerly with Chase Manhattan Mortgage and ABN Amro, where he was a senior executive during the sale of its mortgage group to Citigroup.

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