HSBC's U.S. mortgage revamp fuels international borrower growth
HSBC anticipates its mortgage underwriting volume ramping up significantly after recent initiatives to provide loan officers with more tools and time to address the complex needs of affluent customers, often from overseas.
"We want to be the preference for our internationally oriented customers, including recent immigrants, expats working in the U.S. for four or five years, and foreigners who want to buy property in the US for investment purposes or second homes," said Raman Muralidharan, head of U.S. mortgage at HSBC.
That's a natural niche for the 150-year-old global bank. Upwards of 20% of those customers, for example, don't have U.S. credit histories, disqualifying them as prospects for many mortgage lenders. HSBC has developed a global system to analyze customers' home-country credit profiles, including employment, residence and credit status. The bank trains loan officers to incorporate that information into its flexible U.S.-mortgage underwriting process designed to accommodate prime mortgages, including the jumbo variety common among its U.S. customers.
"Secondly, there are often repatriation and other cross-border rules around what you can and can't do for a customer from a specific country who is looking to buy property in the U.S.," Muralidharan said. Loan officers may be well acquainted with the rules in certain jurisdictions, and for the others the bank has developed a help desk to inform bankers precisely how to pursue that business.
As an HSBC loan officer, it helps to speak Cantonese, Mandarin, Spanish and other languages common among foreign nationals and immigrants seeking homes in metro areas along the East and West coasts, where HSBC has most of its footprint. More important is empathy for customers, Muralidharan said, helping loan officers to follow three bank directives: Treat customers like you know them, make the process easy for them, and earn and keep their trust.
For international customers, that means considering in the lending decision their overseas relationships with HSBC.
"Loan officers can say, 'We already know this about you, so you don't need to submit that documentation, or we have a lot of your income details, your cash flows' and that makes it simpler for customers," Muralidharan said.
Recently adopted technology also plays a role by facilitating and speeding up the mortgage process. To that end, the bank rolled out the Roostify sales platform in June, allowing customers to complete the application process through one channel or a combination, as well as permission their attorneys to play a role, if appropriate. It has also provided loan officers with a rate modification product, allowing them to offer customers a lower rate without going through the full-blown refinancing process and for much lower fees.
"We've just rolled out a process called Easy Reset that allows customer to do this digitally with few clicks," Muralidharan said. "We invite them to go in digitally, and if they accept the modification document, they're done."
This year it adopted LoanBeam, which digitalizes the often-complex tax returns of mass-affluent borrowers and performs the ratio analysis in minutes instead of hours, enhancing loan officers' ability to advise customers.
"They can use the tool to analyze customers' income and help them decide which loan product is best for their needs," Muralidharan said. He added that in April the bank launched an automated loan underwriting system similar to systems for conforming loans but designed to provide pre-approvals meeting its own mortgage portfolio's specific criteria. "Instead of taking one to three days, depending on how busy underwriting was, now they can give a decision to customers in 15 minutes for 70% of loans."
Automating the mortgage process and enhancing loan officers' advisory capabilities are key reasons behind the 70% increase in underwriting volume the bank anticipates this year compared to last, Muralidharan said.
The bank has also launched new products designed to provide loan officers with a competitive edge, given the high demand for housing in the coastal cities where HSBC's business is concentrated that often results in bidding wars.
Six months ago, for example, the bank rolled out Direct to Underwriting Submittal, which allows experienced loan officers confident about the quality of a customer’s loan package to review it with their managers and submit it directly to underwriting. That process now takes two or three days rather than seven or eight, enabling loan officers and their customers to meeting urgent closing dates. Another product allows customers to purchase a property with cash, followed by a "technical refinance" under the terms of a purchase loan.
"So they can take cash out of the property they purchased and re-invest it back in liquid instruments, if that's their choice," Muralidharan said.
Shedding its correspondent- and broker-oriented business after the financial crisis, HSBC focused on its retail mortgage business and brought originations in-house in early 2018. Muralidharan describes the bank as a midsize mortgage lender, with 110 loan officers, that views mortgages as a relationship anchor with the bank.
"We find that when a customer gets a mortgage with us, bank revenue from that customer increases tenfold, and revenue from their nonmortgage products — cards, wealth, deposits, etc. — goes up threefold," Muralidharan said. "And their attrition rate falls by 80%."