The opening for the independent mortgage banker or mortgage broker exists in today’s marketplace because of the things the big banks have done which have
Jeff Lotman, CEO of Global Icons, a corporate brand licensing agency, said the first thing that might be hurting the banks is that they have made underwriting criteria so tough that it has become difficult for consumers to borrow money.
He did note that during the boom period of the last decade, underwriting criteria at companies like Countrywide (now part of Bank of America) became almost like a “free for all.”
But the pendulum swung the other way and it became unless you had money in the bank were these companies willing to lend. Goldman Sachs said it was entering private banking to attract high net worth individuals, he pointed out.
“What needs to happen is that the banks really need to go back to becoming community lenders again,” Lotman said, pointing out that when you walked into a bank branch, the people there knew who you were. These people were out in the community to build business and build a lending base, and that is what needs to happen again, Lotman said.
Recently, Richard X. Bove, an analyst with Rochdale Research, made waves when he wrote in a research report on Wells Fargo that “service is less important than selling. Service is far less important than effective financial management. Wells is a master at both.”
Ironically one of the things that led Bove to his conclusions was his attempt to refinance his mortgage at Wells and running into a number of walls, so much so that he withdrew the application.
This was one of the experiences that would also lead Bove to start ending his banking relationship with Wells and move his accounts to JPMorgan Chase.
He became a Wells customer in the first place because of the failure of Wachovia. Wachovia was excellent at customer service, but had to be rescued by Wells.
In fact, echoing Lotman’s point above, he said when the branch was under the Wachovia banner, the manager greeted customers in the lobby and assisted with solutions to their problems.
Bove comments he believes Wells is the best-run bank in the country. His experiences lead him to conclude customer service “may be a detriment to success not a source of it.”
Lotman said banks could still manage their retail offices locally, even though they are owned globally. A lot of the franchise companies, such as McDonalds, are operated that way.
And there in lies the opening for the locally owned mortgage originator or regional bank; even a company like
Consumers are viewing these firms as friendlier and less scary than the big banks because of the issues that have emerged.
Almost everyone who buys a home needs a mortgage loan (or in today’s environment is considering refinancing their loan), but consumers “want to be treated respectfully and not like a machine,” Lotman said. Getting closer to the customer is the answer for the big banks to shift the tide and stay in the consumers’ good graces.
The way to build consumer trust back is to be there for them to answer their questions and be responsive to their needs, he continued.
A complicating factor is that many loan officers at all levels seek to build their own brand and when they move companies, take their past customer database along with them.
If these loan officers truly understand the needs of their customers and have delivered in the past, that could encourage the consumer to jump ship.
When asked if banks could advertise their way out their reputational issues, Lotman said if they were able to deliver on their service promises, then they would be successful. Consumers “watch your feet” and what you do, he said.
For example,
But with the competition in the marketplace, the consumer today has more power than before, he said.
As for the Bove research note, Lotman said what Bove argues in favor of might result in more profits in the short term but is not a good long-term solution.
Even in Bove’s case, where he is switching from Wells to Chase, “his feet don’t necessarily follow his mouth,” Lotman said. Bove left Wells because of how he was being treated.
