Clicking Through The Slump


Kelly-BoothAs I write this, the nation’s mortgage origination volume has been pretty lackluster. The worst of the housing crisis is behind us and mortgage rates remain near all-time historic lows, but a combination of stringent lending requirements, lack of housing inventory and a general malaise about the benefits of homeownership seems to be holding back a true market recovery.

Considering the decline in refinance volume, you would think that retail lenders would be doing anything they could to get more applications through the door. And yet, many are ignoring the one market opportunity with an almost unlimited potential—online leads.

A recent study by Fannie Mae, “Technology Use in Mortgage Shopping,” found that more than half of all borrowers who got a mortgage within the past three years looked for their lender online, a jump from 35 percent just three years earlier. The GSE also discovered that nearly half of all mortgage borrowers got their quotes over the Internet, too. These trends seem obvious to those of us within the mortgage technology sector. But for some reason, they go unheeded by a large percentage of mortgage players. The reasons vary from “we don’t do that,” or “we tried that, and it didn’t work.”

The truth is that with some planning and the right tools, retail lenders can incorporate an online sales channel into their business. I know, because many of our clients have done it. To illustrate, I’ve pulled two examples from our client list that have found success targeting and converting online leads.

From Rapid Fire to Rapid Growth

Our first client, Cory Martilla, corporate sales manager of mortgage bank Supreme Lending Dallas, manages several dozen loan officers. Supreme Lending is another fast-growing regional lender with branches in several states. Like most lenders, Supreme Lending also has some experience with online leads, but little to show for it. In this case, it turned out that access to the right data was the key to success. Martilla needed good data to help them make smarter sales decisions about which leads to prioritize and to understand how well its sales team was performing as a unit.

Martilla’s team was using one of the industry’s most popular loan origination platforms. However, great loan production software is not particularly great sales software. It needed Velocify’s LeadManager to be connected with its loan origination platform, so that information about its sales process, contact ratios and application numbers could be in the same place.

Martilla hired additional staff—a “first contact” team of loan assistants—and placed them in charge of monitoring and steering Internet-based leads to the available loan officer whose track record indicated that he or she would be best suited for closing that type of lead. For example, some loan officers excel when they’re coaching first-time homebuyers and finding a solution that works for a borrower who may or may not have sufficient down payment or who would benefit from a better rate by paying off some debt beforehand. This “first contact” team of loan assistants would also screen potential borrowers by asking them a series of short questions before transferring them to a loan officer. This way, they would be more likely to match borrowers with the loan officers who were the most equipped to help them—and to close the deal.

Suddenly, Supreme Lending’s Dallas branch was able to prioritize its lead lists and give its loan officers the best way to respond to each of them, whether by phone or by email. The results were impressive. Within two and a half years of using Velocify to create and drive its online lead channel, the Dallas branch grew its monthly sales volume from $2.5 million to more than $30 million. Remarkable results indeed!

Sales at High Speed

Our second lender wishes to remain anonymous, so we’ll refer to them in this article as, Lender B. Lender B is a full-service federal bank with commercial, retail and wholesale residential lending businesses. Several years ago, the bank hired a sales manager to create an inside sales team to specifically target customers who were out of the bank’s market area. Before coming to Velocify, the sales manager had already tried targeting leads and had horrible results. But in the process, he had learned some important lessons about when and how to reach out to borrowers. For example, he sensed that when contacting potential borrowers, a “sweet spot” existed between the number and frequency of calls made that yielded the best results. With the right tools, the manager had confidence online leads could be converted.

First, by using our sales automation platform, LeadManager, and our automated dialer, DialIQ, Lender B was able to create and maintain consistent sales scripts and email messaging, which were used to meet state and federal regulations as well as Lender B’s own policies and procedures. Once they had these tools in place, Lender B used DialIQ to reach a speed to contact rate of 10 seconds. That means only 10 seconds elapse from the time a potential borrower submits his contact information on a third party website like Zillow or Lending Tree to the time a loan officer from Lender B has that prospect on the phone.

Within several years, Lender B had achieved an overall contact rate of more than 90 percent—that is, it was able to reach nine out of every 10 online prospects. That rate is continuing to go up, too, as the sales team is still getting loans from leads that were contacted more than two years ago. Overall, Lender B’s sales team is converting a total of 5.5 percent of all Internet leads. They’ve also learned how their loan officers performed, so they could drive more leads to their top sales people.

Thanks to the success of its online sales team, Lender B enjoys much steadier overall production across all of its business lines. The keys to success were creating a separate telesales team specifically geared and trained to handle online leads, and learning from past efforts about what worked and what didn’t. The technology was simply the engine it used to get across the finish line.

Lessons Learned

As a result of their online lead success, both Supreme Lending and Lender B are among the most successful regional mortgage lenders in the industry today. But they also learned a few things about online leads, which I think are worth sharing here.

First, online borrowers are extremely enthusiastic about paperless transactions. In fact, most actually expected an entirely online transaction, even if it was not possible. If they have not already done so, retail lenders who want to pursue online leads would be wise to adopt electronic documents and electronic signatures throughout their entire organizations. Online or off, paperless processes saves a lot of time and expense, and are often safer, too.

Secondly, the same sales platform can be used for handling any type of borrower lead, online or offline. LeadManager, for example, works for all leads, including Realtor referrals and leads that are created by marketing to past customers and prospects. LeadManager can also be integrated with leading LOS software.

Lastly, retail lenders who may have tried online leads before and failed should know that online lead quality has improved dramatically over the past several years. The most popular online real estate and mortgage websites have been extremely innovative when it comes to capturing relevant borrower information. Today, lenders can access leads with credit scores, income, addresses and more.

What’s the bottom line? An online lead channel can help retail lenders tremendously, especially at times when referral activity is slow. There’s nothing that loan officers like more than a steady, healthy supply of prospects, and for relatively little investment, lenders can keep the plates of their loan officers full during the inevitable lulls in referral business.

There’s still another reason why all of this matters, however. I believe the slump we’re seeing in mortgage origination and housing sales is not going to last, and I’m not alone. The National Association of Realtors expects home sales and prices will increase in 2015 as pent up demand begins to loosen and job growth continues. The Mortgage Bankers Association expects a 25 percent increase in purchase loan volume next year, fueled by a strong labor market and decreasing unemployment. Retail lenders that add an online sales channel will be putting themselves in place to reap more of this increase in business.

None of this is to say that retail lenders are completely sunk if they’re not selling loans online. Personally I can’t see the day when borrowers won’t have the option to sit down with a loan officer at the local bank, and get face-to-face counsel on the largest financial transaction most of us ever make any time soon. At the same time, the writing is on the wall. With lending competition as tight as it is—and with potentially millions of borrowers surfing rates online as you read this—retail lenders brave enough to make an online lead business work will put themselves in the best position to succeed.

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