Writing a weekly blog post on National Mortgage News, I'm not always sure how many people read it or what their reactions might be. I know some folks read it because when I show up at trade shows or visit clients, I am sometimes greeted with my own jokes. Ah, to be so influential.
Also, I occasionally poke a bull by suggesting that underwriters can impact customer service, that loan officers perhaps aren't particularly busy, that automation is changing the very nature of the lender/customer relationship, and other topics. Then folks tell me that I am crazy and defend their turf or their view of the status quo. And occasionally, I also get comments from people who jump in with support of my observations, especially when I talk about customer satisfaction and how measuring customer satisfaction is among the critical parts of success in the mortgage business.
Last week, for instance, I was particularly gratified by the number of people who not only read my commentary regarding why the closing table is so critical to driving conversion, but actually provided specific examples of how it's impacted their business. Most agreed with me that it's an under-utilized opportunity to generate referrals and ensure that the loan you spent so much time working on ends up with a happy experience at the closing table. So I want to revisit this topic again today, based on additional content provided by readers.
A loan officer in the Midwest offered three solid reasons for attending loan closings. The first reason is that attending closings offers critical face-to-face time with Realtors. How else would a mortgage lender find themselves in the same room with a captive referral source for an hour or so? When a loan officer drops in a real estate office, it's very likely the front desk attendant, whose job description probably includes ensuring you don't get past the front desk, will stop you in your tracks. Unless you have a pre-arranged meeting with a top producer, or have some documented need to be there, dropping in and wandering around as if attending an open house is rarely allowed.
My research shows that the average Realtor does only about four to five mortgage-related transactions per year. So, even if you get into a real estate office, what are the chances the really nice Realtor who asks if they can help generates enough business to think of you for referrals? And no, asking, "Hey, do you do enough business for me to talk with?" is never appropriate. Nor is it necessary. You certainly know that the realtor at a closing has at least one transaction involving you. And when they're sitting there at that closing table, they're typically happy to be there. Even if it's only four to five times a year your paths cross, that's one of the four to five times a year they're happy to see you as they ponder all the ways they are going to spend the commission check they're about to earn.
After all, one of the key selling strategies is to not sell someone a service, but try to relate the service to something emotional that matters to them. Well, the Realtor is sitting there already think of what the money does for them, so this is your chance for them to associate you with that experience.
And third, this Midwestern loan officer said, so many Realtors today are mobile, they're not even in the office when an LO drops in. So, even if you can get in, bribe the front desk jockey with donuts, get back with your stack of rate sheets and/or other paraphernalia, the people you are finding are likely not the busy ones. The busy ones are mobile, and have all their mobile devices and are out working deals. So the best thing to do, frankly, when you get a deal, is be sure you get that opportunity for the face-to-face.
Another commenter wrote that, when you get to closing there are up to nine people that you could get referrals from at the closing table. This of course depends on the area you're in, but there is a listing and selling agent who are happily gonna be there and split that commission; there's a seller and buyer attorney (depending on which state you may have one of each), who are also people who are active in the real estate business and the closing process and are going to be very impressed that you're just sitting there; there's a seller and a buyer and there's a very good chance that seller's buying another home, whose loan officer may not show up at their closing, and theirs is back to back, occurring later that afternoon, maybe in that same spot.
All these people sitting there assessing your professional approach. They conclude that you care enough to attend the settlement, you've handed them your business card, and you'll provide their families and customers with equally professional service in the future. Juxtapose this scenario against one in which the loan officer fails to show up to participate in the closing conference. All nine or so who attend that closing, perhaps just a few hours after yours, have a stark example of how committed you are as a loan officer versus the LO who opted not to show up.
Of course you have your buyers as well. They're also the biggest opportunity for referrals. In fact, one of the things we see in our Mortgage Satisfaction research is that, when a buyer's overall satisfaction with the loan process increases, the likelihood of their offering a recommendation likewise increases on a 1-to-1 ratio. So, committing to being better in overall satisfaction, which showing up at the settlement table is surely going to help, can have immediate positive results through referrals and recommendations.
I was given another example by an LO who said that, on the very day they read my column they received a call from somebody they simply could not recall. Little wonder. The caller last spoke to the LO back in 2003, some 11 years after the LO had done a loan for this person. The caller said, "Hey, we're moving. Can you help me with my new loan?" You guessed it, this LO is one who's attended all of their closings—refinance and purchase. And made a lasting positive impression in the process.
In fact, here is her direct quote: "I always attend all my closings, refinance and purchase, and make that last contact a good one." When Bonnie does that, Bonnie Stocker, the loan officer who shared this story with me, former customers often become current and future customers simply by remembering her. People spend hundreds and hundreds of dollars in advertising, putting their face on park benches, putting their face on billboards to try to associate a face with a name. And when you're at closing, that's the last thing they're gonna remember when they bought that home (hopefully a good experience): your smiling face and that business card you handed to them. And here's an example of 11 years later, it paying off when they got their next home. And that's type of return customer is the least expensive and the highest converting lead that Bonnie Stocker is gonna end up getting this year.
The final comment I'll elaborate on in this article came from a fellow consultant in the mortgage industry who commented that they are a hardcore negotiator for rate and fees, and that they've gotten every single loan from a local loan officer. They like meeting face-to-face. They like negotiating rates and fees. Why they like it, I have no idea. I don't particularly enjoy it. But they like it and they've done it several times over the last dozen years, when they've pursued the best interest rates in purchase and refinance. And in those several transactions, they've never had a loan officer show up at closing.
So this is a borrower who values the face-to-face, values the opportunity of negotiation, and certainly would welcome that face-to-face at the final closing table and has always wondered why loan officers would not show up and take that opportunity to finalize that closing.
I also received dozens of comments on the fact that defense is sometimes the best offense, meaning when you don't show up, you surely are going to be blamed. And I got all sorts of commentary on the horror stories that occur. But beyond the horror stories of not being there at closing, meaning you'll be blamed for everything bad that happens at closing, is a trend that we see clearly in our research. In our customer satisfaction research, we see that the borrower's level of satisfaction on a scale of 1-100 drops 20 points when they don't close at their expected rate and fee. And that may seem obvious to us in the mortgage industry. If you give them a different rate, they're going to be really unhappy. But the borrower's perception, as I pointed out in my last article, is that even if it's different from their perception, they're going to be dissatisfied. And their perception might be very small differences within the range of tolerance on very small fees. They're not gonna call you about it. They're not gonna get up from the settlement table and ask why the title fee or the escrow amounts were off by $50.
It's not worth it for them to make that call. They're just going to sit there and stew and nobody at the table is going to explain tolerance. What they're doing to say is, "Well, that's the way the lenders operate sometimes." But if you're there, you have an opportunity. You're there, you're prepared, and you're a good communicating loan officer. You should be able to explain to them why it occurred, diffuse that situation, and ensure that they do not walk away from the settlement table thinking that they did not get the deal that was promised to them.
So it's great when my columns engage people to provide additional content, and I really appreciate all the feedback I received. Obviously, this is a good topic but it's still a topic where (and I would challenge all the originators out there) the vast majority of LOs do not attend closing. And if they want to remain valid and important local face-to-face professionals, they ought to take that one major face-to-face opportunity and make it part of their overall sales and conversion strategy.
Garth Graham is a partner with Stratmor Group, and has over 25 years of mortgage experience.