Regions Bank, like many lenders, has seen its refinancing volume shrink dramatically as a percentage of overall originations over the last few years, prompting it to refocus its mortgage bankers on very different purchase originations.
Bob Cabrera, head of the mortgage division at Regions Bank, said the bank has established three areas of focus to free up bankers' time and give them a consistent sales approach. One has been investing in technology over the last 18 months to relieve bankers of administrative tasks so they can devote more time to talking to customers about their financial goals and ensuring they get the correct type of loan.
Late last year the bank introduced an online mortgage portal allowing customers to upload documents needed to process the loan. It introduced an income and asset aggregator to facilitate customers' information retrieval, and the portal provides real-time updates regarding the status of the mortgage. And it has implementing e-signature capability and a fully online mortgage application.
Another area is sales management training within the company, including a performance playbook that walks bankers through a typical sales process and helps identify customers' needs and common questions. The bank has partnered up with Xinnix, a firm specializing in mortgage sales training.
"Beyond scripting, we give our bankers training tools, both internally and with third-party vendors, to help them be as professional and consistent as possible," Cabrera said.
A third focus area is general promotion and marketing, which Cabrera says can be especially effective at Regions Bank because 2.4 million of its 4 million customers are already homeowners. The bank has identified eight "touch points," such as birthdays and anniversaries, that provide opportunities to remind customers the bank is eager to do business with them in the future.
The shift to purchase loans isn't a big surprise, since homeowners have spent the better part of the past decade refinancing at rates even lower than today's. At Regions, mortgage refinancings made up 50% of originations between 2006 and 2016, and by 2018 they fell to near 20%, when total mortgage volume was $4.8 billion compared to $5.9 billion two years earlier. Cabrera noted that refis jumped to 32% of originations in late March, when rates dropped a quarter of a percent, and fell again to around 25% over the next few weeks as rates nudged up.
"That’s really the level we’re expecting on a go-forward basis," Cabrera said.
He added that when refinancings made up half or more of the business, bankers spent much of their day on the phone.
"Today, that commissioned loan officer has to go out and get the business," he said. "That means networking and establishing really strong, new relationships and cementing existing ones."
About 30% of the Regions mortgage bankers' referrals come other Regions bankers and 70% from external sources.
Regions Bank has 73 mortgage production offices housing 500 mortgage loan officers. The offices are spread throughout 15 states, primarily in the South but reaching up into the Rust and Corn Belts as well as Texas. Cabrera said that some markets may be "hotter" than others. Demand in general, however, has been strong and should remain so as long as rates remain low and housing values continue to rise, although at some point the latter will likely slow, especially if home values start out-pricing wages.
In terms of demographics, over the past year 28% of Regions Bank's loan volume stemmed from first-time buyers, a bit above the bank's peers, Cabrera said.
"We've been talking about and surveying millennials (born between 1980 and 1999) for what seems like decades, but in reality many of them are in their 30s now, and just like their parents they want to get married and have kids and a home with a white picket fence," he said.
Cabrera also cited confusing coverage of the housing market and its effect on consumers. He recalled a recent headline that said U.S. consumers are souring on the housing market, and another the same morning saying that pending homes sales are roaring back. Luckily, he said, the recent mortgage-rate dip set coverage on a positive course and seemed to encourage borrowers.
"It's a great time to buy a home. Interest rates remain near historic lows, and the outlook for real estate values continues to be in a northerly direction," Cabrera said, adding in a mid-April interview that "the last three weeks has been our strongest application volume since August 2016."
