Author: Morgan Brown (page 2 of 2)

Mortgage Banker

May 7, 2007

The lead to loan cycle of an Internet lead aka Distrust Mountain

by Morgan Brown

Mortgage Banker

My mortgage company works primarily with Internet leads — we’ve found it far more effective than direct mail, telemarketing or any other of the dying mass marketing techniques. We’ve developed and implemented systems and processes to effectively convert Internet leads in to customers and those customers in to repeat and (hopefully) long-time clients. As the marketing guy at our company I spend a lot of time looking at Internet leads and where and how we are converting them. I look at our successes and our failures and try to build marketing to support our chosen business channel.

I wanted to share with you all the lead to loan cycle that is typical with an Internet lead in terms of trust. Everyone talks about being a trusted advisor to your client, but what does that mean and really look like through the loan cycle? I’ve developed a (crude) graph that I show to all of our sales people to explain the challenges of working with a person who has solicited a refinance or purchase quote via the Internet. I call the graph Distrust Mountain.

While I’ve documented the Internet lead here, you can apply this with varying levels of correlation across all lead sources. It also does a nice job of documenting how much better referrals or repeat business are, because that initial hump is so much lower.

As an originator, when you first receive an Internet lead, you must understand that although that person has expressed a varying degree of interest in some part of the refinance or purchase transaction they haven’t expressed any interest in you or your company. When you conduct the first phone call you are faced with a very high barrier to earning the person’s business. You are calling them (one of four or five people) and soliciting your services. They may have talked to others before you and will definitely talk to people after your initial conversation. Their defenses are up and they are looking for any reason to not continue the conversation with you.

This is the most difficult part of the transaction for inexperienced loan officers. The Read more

April 25, 2007

For Originators – A Weak Baseball Analogy

by Morgan Brown

Mortgage Banker

Here is an email I recently sent to our sales team in regards to the leads that they receive and work on a daily basis. My company uses internet leads to generate new business on top of our referral and repeat business (which makes up about 1/3 of our monthly volume). I received some good response to it from our folks so I thought I’d pass it along here to any new originators who read this blog for advice.

My email:

I love baseball and used to play it (poorly) for the better part of my youth. I was watching some highlights last night and it got me thinking about what we do here.

When I used to play I would really look forward to the 3 or 4 at-bats I would get each game. I knew that I would only have 3 or 4 chances to get a hit and improve my average. In baseball before you are “up” you are “on deck. I remember vividly being on deck going through the following checklist:

Who’s pitching and what have they been throwing lately? What pitches are their favorite? How have they gotten people out before me? What did people who already have hits against this guy do to be successful against him? How many outs are there? What’s the game situation? Who’s on base?

The big question I was asking myself was “What am I trying to do in this at bat?” Was it move a runner over? Was it get on base no matter what? Was it try to get in scoring position? And so on. I KNEW the answer every time I stepped in the batter’s box.

Here you may only get 3 or 4 at bats a day with your leads. Sometimes you’ll get less than that. Do you know what you’re trying to do with each and every at bat you get? What did you think about on deck before you picked up the phone? What were you trying to specifically accomplish with each at bat?

Hint: the answer is not “get a hit/take an app” That is the generic Read more

April 22, 2007

Ethical dilemma with the current market

by Morgan Brown

Mortgage Banker

I like to think of myself as an ethical person. Then again, I am sure that most people feel that way about themselves too. We all are victims to the Lake Wobegon effect at some point in our lives. But in general I obey all laws, pay my taxes, am a good father and husband, run an honest business and try to make my customers happy. So I am faced with an interesting dilemma that the current market has brought upon me. I don’t think my dilemma is unique; in fact I bet it is so commonplace that it is on the desk of a large percentage of loan originators at mortgage institutions all across the country. It is an important issue to discuss, so important that I originally planned on penning this post for my blog, but figured the traffic and exposure of Bloodhound would be a better platform for debate and discussion.

Here is the dilemma. I was given a referral to a woman who I do not know personally. She lives in Florida, is a substitute teacher and lives in a condominium with a waterfront view. She has a good credit and a decent rate, interest only loan right now — it does have a prepayment penalty. She is also at 90% with her current loan to the value of the property. Unfortunately she has a bit of a cash crunch right now and would really like to lower her mortgage payments.

There is no way that using traditional mortgage products can drop her payment any further. First, I know interest only loans are not traditional. Second, before you talk to me about 40 and 50 year terms remember she’s already in an interest only loan — there won’t be much change, certainly not when you factor paying off a prepayment penalty in to the new loan. The only loan that would dramatically lower her payments is a payment option, negatively amortizing loan. If she made the minimum payment she would drastically lower her monthly cash outflow. I’ve explained to her the negative amortization part of the loan, faxed Read more

April 19, 2007

When Banks Compete, You Lose

by Morgan Brown

Mortgage Banker

Brian Brady wrote a great series of articles on how to obtain the best mortgage loan by shopping for a mortgage originator first, and then the loan second. His brilliant advice is a bit counter-intuitive but dead on. If you are considering shopping for a mortgage by using the internet, keep his advice in mind as you read the rest of this post.

My company primarily uses internet leads for new business. Of our approximately $12 million a month in loan originations $4 million comes from repeat and referral business and the rest comes from new business originated by internet leads. We spend about $30,000 per month on internet leads and get about 4 to 1 on our marketing dollar. I like to think we’ve figured out how to win business while competing with other banks. We use the big boys like LowerMyBills.com; but have stayed away from LendingTree.com — we don’t want to have to pay the lead provider off the HUD at closing.

There are a lot of misconceptions about internet leads both from the consumer and the industry side. We’ll focus on consumers in this post. For more in-depth information on the subject please read my Zillow Real Estate Guide article on 6 things you should know before shopping for an interest rate online. To summarize here the 6 things:

Plan on getting a lot more than 4 calls from the 4 lenders that are supposed to compete for your business — get ready for a ton of calls.
Plan on drinking from the mortgage information “fire hose” while different lenders pitch their products and expertise.
Be prepared to spend some serious time on the phone.
Don’t just go for the best up-front offer, keep some contingency offers in your back pocket.
If an offer is too good to be true, it probably is.
Know who you are working with.

But even before you read these 6 things, read Brian Brady’s post. When you shop online for an interest rate and fee quote INSTEAD of shopping for the mortgage professional first, you are opening up yourself to be the victim of bait and switch tactics. Think Read more

April 11, 2007

What We Can All Learn from the Union Square Caf&233;

by Morgan Brown

Mortgage Banker

Have you ever heard of the Union Square Caf&233;? How about Blue Smoke, Tabla, Gramercy Tavern, or The Modern? If you’re not a foodie or from Back East you’re granted a temporary reprieve; but it will pay huge dividends for all of us in the RE/mortgage industry if we get to know them real fast. They are all New York restaurants owned by one of the country’s finest restaurant entrepreneurs Danny Meyer. What in the world can restaurants teach us about real estate and mortgage? In one word: hospitality.

In his new book “Setting the Table: The Transforming Power of Hospitality in Business” Meyer outlines the business philosophies that he has used to grow his organization in to a collection of the finest, highest-rated restaurants in the country. This book is worth buying by any sales or customer service professional, and in particular those in the RE/mortgage industry.

While he has many excellent philosophies and business practices the one I want to highlight here is “The Art of Hospitality.” From the book:

Understanding the distinction between service and hospitality has been at the foundation of our success. Service is the technical delivery of a product. Hospitality is how the delivery of that product makes its recipient feel. Service is a monologue — we decide how we want to do things and set our own standards for service. Hospitality on the other hand, is a dialogue. To be on a guest’s side requires listening to that person with every sense, and following up with a thoughtful, gracious appropriate response.

Mr. Meyer makes a point here that is so often missed in our attempt at providing excellent customer service. If we’re fanatical about customer service, and we should be, we’ve done a lot of legwork in developing a customer experience that utilizes best practice customer service elements. Having a real human answer the phone, returning phone calls, providing expert insight and opinion, are all necessary parts of the execution of excellent customer service. The top agents are able to consistently, predictably deliver excellent customer service. They are technically excellent, and that separates them from the rest Read more

April 9, 2007

The New Bait and Switch

by Morgan Brown

Mortgage Banker

The term “bait and switch” is a favorite amongst consumers when dealing with mortgages. It’s a refrain heard every day in our industry. Somehow uttering this term gives consumers personal strength and a sense of confidence. “I’m not going to fall for any ‘bait and switch'” is a chant designed to ward off the specter of the deed made famous by unsavory mortgage brokers and loan officers. I can’t blame consumers for doing it either, I do the same thing to car salesmen by saying “I’m not going to want the dealer warranty” before I even take two steps on the lot. Even if it isn’t the perfect elixir, it feels empowering, which is something. What most mortgage borrowers don’t realize however is that their old foe the ‘bait and switch’ has morphed, like any terrible virus, in to a new strain of deceit which is being exacerbated by the current market.

First, let’s recap what the “old,” unsophisticated bait and switch schemes consist of. The “bait and switch” consists of promising loan terms that are good enough to get the borrower committed (“off the street” in industry parlance) and then, after they put their time and energy in to the process, delivering significantly different terms on their loan documents at the signing table. The hope being that the customer is too exasperated or desperate to put up much of a fight, and they accept the new terms. This can take the form of any of the following (and more based on loan officers’ personal proclivities):

A low rate that is suddenly higher
Loan type is suddenly different (i.e. from a fixed rate to an ARM)
Loan fees are suddenly significantly higher, much higher
Prepayment penalties suddenly arise
Significantly less cash returned to the borrower than anticipated

Luckily consumers can be vocal, and were in complaining about these unsavory practices; hence the “bait and switch” buzzword arose to describe this industry practice. However, while the “old” way of bait and switch was outed; a new, more subtle form has quietly arisen. The worst part? It is completely legitimate under existing laws; and very hard to prove.

The new Read more

April 5, 2007

Loan Officers – Don’t Just Sit There!

by Morgan Brown

Mortgage Banker

Russell Shaw’s great post “I want a LOT of money — would you tell me how to get it?” got me thinking about loan officers who constantly ask me about how they can make “a lot of money,” especially in a tough mortgage market. They lament the current market situation, tell me that people are scared to refinance, that underwriting guidelines are more difficult, that property values are falling. They complain that these factors are squeezing their customer base and making it harder to win business. “What can I do? It’s soooo hard out there right now” is a common refrain I hear constantly. I keep looking for a way to disable the “repeat button.” After having this talk ad nauseum I’ve found that I can ask 6 questions to help loan officers refocus on capturing success. Those 6 questions tend to generate between 4 and 5 AHA!s per person. This realization is rather scary to me as many of these loan officers achieved high levels of success during the “boom” years. It makes me want to ask “How much more could you have made back then if you were actually trying?”

Today I’ll cover questions 1 & 2, and then get to the other three in my next post.

The first question is somewhat rhetorical; “How hard are you working; and, how smart is the work you’re doing?” That usually gives the inquiring loan officer pause. They look at me like a deer in the headlights, frozen by the realization that they’ve been working half-speed for as long as they can remember, stammer a bit, and then finally go quiet. Sometimes you see a little light bulb go on over their heads. That light bulb is the first step in an important process. Question one is my warning shot, to let them know that I have no time for their pity parties and that if they want advice they are going to get it — served cold.

I have found that the average loan officer spends too much time placing responsibility for their success on external factors instead of taking the responsibility to Read more

March 30, 2007

Surprise and Delight Us

by Morgan Brown

Mortgage Banker

“Surprise and Delight” is a mantra that has been engrained in my consciousness from my pre-mortgage education in the world homebuilder marketing and customer experience modeling. “Surprise and Delight” is a very straightforward concept; however, the astounding lack of implementation in the marketplace (especially the mortgage and real estate market) makes this strategy an untapped powerhouse waiting to be used to your advantage. “Surprise and Delight” strategy is just what it sounds like — surprise your customer with a small delight when they least expect it; taking their experience with you from acceptable to exceptional. Propelling past acceptable to exceptional gives you the ultimate power in marketing — the power of remarkable service.

Surprise and delight can be traced from concepts well outlined in Seth Godin’s Free Prize Inside, and Harry Beckwith’s Selling the Invisible (both must reads). The basic tenet is excellent service is no longer enough, superior knowledge is not enough, a “great deal” is certainly not enough. None are enough to make your service remarkable. There has to be something more – something worth remarking on. It’s important to define remarkable service as service that is so extraordinary it makes your customer share the experience with people they know. And not just share, advocate on your behalf because of it. Anything less than their advocacy means you’ve failed to render a service to the degree of remarkability.

An example. There is a little flower shop in Laguna Beach, California named The Black Iris. They are not just another flower shop – they are flower artists that create imaginative works of art with flowers and other flora. The first time I saw one of their bouquets I was blown away. I inquired about it from the person who had purchased it and they raved about this little shop. I had to order one for my wife’s birthday. $150 later, my wife had an exquisite arrangement that actually made her weep with happiness. $150 is a lot for flowers; it’s a piddling price to be a hero to your loved one. I immediately told my brother-in-law about them and many other Read more

March 28, 2007

Reality-Based Success

by Morgan Brown

Mortgage Banker

“We see things not as they are, but as we are.” — Anthony de Mello

For my first at-bat in the big leagues, and taking a queue from the kind introduction from Greg, I wanted to talk about a concept that we use with great success in providing our customers with a sense of stability in the current turbulent marketplace. If you think that this market is “not bad,” “just going through a rough patch,” or similar, please keep reading. The concept is called “framing reality” and it intentionally puts us in our customers’ shoes so that we can provide solutions that impact and make sense in their reality rather than just in our own.

The concept stems from the quote above, and is based on the premise that everyone, us included, has varying degrees of ego-centrism that distorts our worldview in one way or another. We each have a lens that we view the world through, and whether it’s rose-colored or other, it skews our world view — our perceived reality. When we as consultants, guides, Sherpas, whatever you want to call us (just please not hucksters and thieves) are able to align our view of reality with the customer’s, both of us stand to gain much more than if we provide a solution that is based solely on our frame.

An example of what “framing reality” is not are the new Realtor&174; ads that feature the tag “now is a great time to buy”. While it may be true in various parts of the country and in specific circumstances, it’s a tough sell to Joe Public right now. It rings a bit hollow if you’ve spent any amount of time talking with home owners, seekers, sellers. The prevailing mood is not one of “great time” it’s a bit more angst filled. The ad doesn’t do a good job of framing the reality as its perceived by many in the target audience and so it misses the mark. It’s a poor ad.

Another example of what the concept is not is “selling fear.” Selling fear is a despicable tactic, illegal, and definitely Read more

Author: Morgan Brown (page 2 of 2)

The lead to loan cycle of an Internet lead aka Distrust Mountain

by Morgan Brown

For Originators – A Weak Baseball Analogy

by Morgan Brown

Ethical dilemma with the current market

by Morgan Brown

When Banks Compete, You Lose

by Morgan Brown

What We Can All Learn from the Union Square Caf&233;

by Morgan Brown

The New Bait and Switch

by Morgan Brown

Loan Officers – Don’t Just Sit There!

by Morgan Brown

Surprise and Delight Us

by Morgan Brown

Reality-Based Success

by Morgan Brown

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