Finding Feasible Customers

There are three pillars to help identify viable mortgage borrowers and keep them from falling through the cracks and going to another originator: the use of data to provide customer insight, the use of systems for the creation of a better experience and what support can be provided for the loan officer and the customer to make a quick and intelligent decision.
Anil Raibagi, business head at Wipro Gallagher Solutions, explained that many lenders have let cost issues affect their ability to have more customer insight.
Wipro Gallagher advises lenders to have “a 360 degree customer view,” he said. They should use their customer relationship management systems to pull up data involving past history to allow the loan officer to become more knowledgeable about the customer.
Even if the CRM data is not available, the loan officer should be empowered to get certain data about the customer. This includes pulling credit and a number of quick checks including fraud and citizenship checks. Raibagi says he recommends doing this at the front of the process, not during processing. “It may cost you $30 or $40 extra per loan,” he said, but the amount of time it saves from dealing with customers who will not likely pan out is worth the expense. “The more customer insight you get, the more you will be able to focus and prioritize on the customers you think will be able to make it through the loan process,” Raibagi said.
As for the second pillar, creating a better experience through the ability to generate information, there are many ways to do this. But the most popular is what Wipro Gallagher, a provider of end-to-end loan origination technology and fulfillment services, calls “dynamic scripting,” a list of questions to ask the customer. The interaction with the customer is based on the answers.
With the third pillar, support systems, the back-end provides analytic systems that allow the front-end interactions to happen. This allows for the creation of scenario builders, Raibagi said, and includes a product calculator and other analysis tools the loan officer can use.
If there is an eligibility issue, the loan officer can create a scenario based on what best fits the borrower’s situation and come up with a counteroffer.
The lender’s front office system can do some of these tasks “very effectively and dynamically,” he said. It is information that is already to available to the originator.
Joey McDuffee, head of marketing for Wipro Gallagher, added that loan officers concentrate on the products that they are comfortable with to sell.
But even in today’s environment, where conforming and Federal Housing Administration products dominate, there are niche products out there such as the U.S. Department of Agriculture Rural Development program or city or state housing finance agency loans which could help certain consumers.
In the past, loan officers didn’t want to sell these loans because they didn’t understand them, he said.
So having a decisioning and support system that can help the customer who might be challenged in one area or another is important. Loan officers can show these customers, McDuffee said, a comparative analysis using some of these niche products, which might be the only ones they qualify for.
So while knowing your customer is important, having the system that can show the various different products available beyond the 30-year fixed rate loan is important as well, he said.
Raibagi said it is more than knowing your customer and knowing your customer’s options and marrying the two, there need to be solid decisioning tools in order to create the best rate analysis.
It is about segmenting your customer base, McDuffee said. Levels of risk adverseness vary from lender to lender, but it is important to have the tools to segment the data and add to that customer scorecards and credit analysis models to support it.
“It becomes more of an advisory role versus a 'what box you offer’ role. I think that really is a big component of the way in which the world is going today,” he said.
Another tool for the front end, but only for refinancings, Raibagi said, is the use of an automated valuation model. It is important to know whether or not the customer’s ability to refi is backed up by the property’s value.
One of the main obstacles for lenders in a refi is that because of the decline in property vales, the borrower’s equity in the property has fallen as well, to the point where it would not support a refinance.
So doing an AVM can eliminate those people early on in the process, he said.
The important thing is that lenders have this information on hand and that it can be made available to their sales staff so items can be checked at the start of the process. Give the empowerment to the front line, so they can give the customer an immediate response.
Between the credit check, the fraud check, the automated underwriting system and AVM, Raibagi said, “In less than five minutes you can have the entire information (on the borrower) pulled from different systems and populating the loan application form.”
With those four things ordered, the loan officer can get “a perfect view” of the customer’s file and their eligibility in mere seconds, he continued.
Originators should be careful and choose a system which can handle all of this functionality. “Not all systems can do that; that is the problem,” Raibagi said.
Another key element in attracting and retaining viable customers is to have an effective way to track marketing campaigns and referral sources, said
McDuffee.
Wipro Gallagher has customers tracking the effectiveness of their marketing through its LOS. The lenders look at what channels—billboards, television, radio and newspaper advertising, etc.—are most effective based on approval rates. They can go down to as far as to what radio station the customer heard the advertisement.
So getting continuous feedback on marketing is a big part of identifying which customers might be the best for your business, no matter what type of lending you are doing, he said. If you see a significant number of clients coming in from one segment, the lender should be making more of an effort in its marketing to challenge that segment.