Lenders are all after the same borrowers, regardless of where they are in the home buying process. Consumer direct outfits often have a leg up when it comes to grabbing customers, and are increasingly fierce in their attempts to reach them before anyone else.
Borrowers to be in process with one originator but an online search or other activity sets them right in the sights of a competitor. Originators need to know what they’re up against.
“You’re seeing most customers start online now with the arrival of Zillows and Redfin of the world, and if you’re not top of mind with the consumer and they get to a lender before you via online, you’re at risk of losing that customer relationship,” said Chad Smith, EVP consumer direct, Caliber Home Loans. “Most consumer direct shops are calling your customer more times in two hours than what you may do in a year. That’s just the landscape, so how do you prepare for that landscape?”
While the increasing amount of online data is generally seen as a positive development for consumers that allows them to educate themselves, it also means that a number of consumer direct companies are gaining access to those borrowers and inserting themselves in the process, as explained during the Consumer Direct panel at the AIME Mortgage Expert Workshop in Irvine, California.
The world is all about big data, which is only getting more profitable and more targeted. As the market’s gotten tougher, specifically on the refi side of lending, Smith said that people are buying more and more data in order to target even more customers. Because people have equity in their homes and need cash for whatever reason—be it home renovations to credit card debt to a major life event—they’re willing to sacrifice their record-low interest rate for a slightly higher one with a cash out refi. Their first instinct is to go online, Smith says, where they get targeted by robo dialers, and if their previous originator hasn’t been top of mind, they’re quickly roped into someone else’s sales funnel.
The big players in the consumer direct space are buying leads and calling within seconds, and that’s a problem for originators who are waiting for their customers to come back to them when needed.
“We know that 88% of the consumers are going to go with the first or second lender that they speak with,” said Mike Eshelman, head of consumer finance at Journaya, a data-as-a-service (DaaS) company that organizes and provides access to consumer behaviors. “If you have additional data to know when they’re in market, when they’re reading the emails, and you place that call strategically, you have a huge lift in that opportunity.”
Consumers might not even be online for mortgage information, but instead make an inquiry related to an insurance quote, for example, and that data eventually gets sold. The companies are literally just dialing a person with a name and a phone number, Smith said. It does rattle some consumers, and can certainly be a turnoff. But that kind of aggressiveness is what originators are up against.
Some lenders are trying to keep leads in the databases of individual originators, but originators don’t always grasp those leads with any sense of urgency. Smith said that his department watches consumer behavior and sends alerts to their wholesale partners, only to have customers call back within a few days and say that they never heard from an originator.
Even when originators do follow up on that lead and get a borrower back in the fold, Smith said, the desire is to lean back and take a breath. But there’s no time for that; the big players of consumer direct are relentless in their pursuit.
“We’re sending aged customers of 13 days back to them to see if there’s an event, and then we trigger it again. A lot of what I would call mid-sized consumer direct shops make their living off aged leads, and they put them in data sets like these and then as soon as there’s an alert, they’ll just pounce on it and just rip it right out of your pipeline.”
He advises that originators invest in enhancing the customer’s journey through the pipeline, reemphasizing what they can expect, make the extra calls and/or add those additional touch points that highlight a personal connection. Those aspects are where individual mortgage originators shine, and have a big advantage over the consumer direct giants. There’s no relationship with the consumer direct loan officer or even the company, whereas other originators have built their business on relationships with both referral partners and borrowers.
Keeping relationships personal, setting up automations, and acting on alerts and hot leads before the robo dialers get a chance to grab hold will all help keep borrowers. Originators need to be active, not passive in their strategies, for the wolf is always at the door.
“If you’ve done that customer and you’ve got them a home over the last three years, someone is buying that and trying to figure out how to get them a cash out refi. And it’s not someone—it’s 15 people. Just know that everyone is out there is trying to survive by eating your lunch, and how do you defend against that? When you get the alert, jump on it and protect your customer,” Smith said.