It’s been a crazy year for the mortgage industry, and originators across the country have had to adapt in some way to stay afloat and improve, or at least maintain, their current volume.
As summer turns to fall, originators have a chance to make one final boost before everyone checks out to focus on holiday endeavors. So where should you spend your energy these next couple of months to finish out 2018 strong?
Raymond Bartreau is the senior vice president of lending partnerships at Digital Media Solutions, and says that in his experience, Q4 is always a bit of a downer, which makes this time that much more important.
“People are just distracted by the holidays on both sides (on the mortgage side and on the consumer side), and so I think a lot of mortgage companies make the mistake of spending a lot of dollars on acquiring new leads to keep their numbers up through this time,” he said. “It’s cheaper and more effective for companies to plug in with a technology company that will help monetize the leads they’ve already spent big money on throughout the year.”
Even though leads can come at a significant cost to a mortgage business, only a small percentage of these leads close. But, Bartreau says, don’t forget that these leads are all opt-in and TCPA compliant, and can all be marketed to for several months after they were obtained. Don’t waste any more money on leads at the end of the year when your numbers need a boost; instead, go back and find a way to work your existing leads.
“The model of spending more in Q4 to keep your numbers the same is ridiculous. I think you could spend less to keep your numbers the same because you already spent nine months out of the year acquiring leads. So you have all these leads in your database that haven’t closed, work that,” Bartreau said.
As any originator who’s been in the business for any significant length of time knows, people need mortgages for any number of reasons. Personal situations can change quite quickly, and the leads that didn’t close six months ago could now be ripe for the picking.
In this purchase-heavy, high-equity climate, there’s another reason that existing clients might need help with their existing mortgage, and that’s needing cash. The Q2 2018 Mortgage Consumer Profile Report published by Best Rate Referrals found that the majority of refinance mortgages are focused on cash-out objectives instead of the rate-reducing objectives previously prioritized. Mortgage rates are higher than they’ve been in recent years, and coupled with people wanting cash as the holidays approach, originators can capitalize on that. While most originators have switched their tactics to focus heavily on purchase business (if not focused on it already), there are times where purchase isn’t going to be the solution.
“In certain markets you can still do purchase, but purchases slow down during the school year, they slow down during the winter months, and everyone right now is trying to transition into this purchase model and it’s bad timing. But all the leads that they bought prior to, for refinance, there’s value in that data,” Bartreau said. “We could make three or four different touch points to their existing data for cheap. Way cheaper than it is buying fresh leads,” Bartreau said.
There’s certainly value in originators focusing on one niche or demographic, and learning everything there is to know about certain products that serve that particular demographic—single-close construction loans or products for first-time home buyers, for example. But, Bartreau said, “you can’t live in that world,” nor that of cash-out refinances.
Rather than trying to squeeze blood out of a stone, another option is for originators to examine new products that have come onto the market and determining whether or not they’d apply to current clients or potential new ones.
“There’s got to be some dedication toward building out the purchase, whether it’s buying purchase leads, qualifying them, giving them to agents to secure the relationships with agents, build the agent that way, but I also think that as new products are coming out, people need to understand them, they need to adhere to them,” Bartreau said. “Really in the last three months, a lot more lenders are opening up products for non-QM. I don’t think a lot of people have access to those programs, or it’s something new that now they’ve got to go learn, but really, it’s another consumer that you can help.”
These products might not fit everyone, but if an originator can understand what’s available and possible for any borrower that comes in, there’s a much better chance of turning that into a closed loan.
Figuring out how to best serve existing clients and leads versus scrounging for new ones at the end of the year is a great way to become more customer service oriented and give business a boost during what’s traditionally a slow time of year for business.