In the latest issue of its monthly Insights Report, STRATMOR Group, a data-driven advisory firm for the mortgage industry, provides tactics lenders can follow to greatly improve the borrower experience.
The January Insights Report features STRATMOR MortgageSAT Director Mike Seminari’s article, “The Seven Commandments for Optimizing the Customer Experience,” in which Seminari discusses critical findings from STRATMOR’s MortgageSAT Borrower Satisfaction Program. According to data from the program, which measures the experiences of more than 130,000 borrowers annually, monitoring and improving key areas of the loan process can turn unhappy customers (who are highly likely to badmouth their lender) into promoters (who are highly likely to recommend their lender) at an impressive rate.
“It takes more than a testimonial to drive repeat and referral business,” Seminari says. “We’ve pinpointed some relatively easy tactics lenders can use that will provide substantial improvements in overall borrower satisfaction But, perhaps more importantly, these tactics significantly reduce the number of highly dissatisfied borrowers who may poison a lender’s reputation by posting negative comments on social media and disparage the lender to family and friends.”
For example, when problems arise during the loan origination process, lenders should make every possible effort to resolve them as quickly as possible. “Roughly one in in every six loans will experience a problem in the course of origination,” Seminari says. “Problems with the appraisal, title, verifications or a change in circumstances can all present unanticipated problems that may cause delays, changes in the interest rate and/or the down payment. Many of these problems can be resolved, and the sooner the better.”
One best practice that has helped STRATMOR clients in this regard is to “set proper expectations with borrowers early in the process, letting them know that the loan process is complex and that experiencing a few bumps along the way is normal and can be expected,” Seminari says.
He noted there is an assumption that positive testimonials given to loan originators will translate into referrals. However, lenders that have highly rated loan originators still have trouble improving referral rates because they haven’t improved the overall experience. “Referrals and repeat business are driven by creating a delightful experience for the borrower from the start to the finish,” Seminari said.
Providing a delightful borrower experience “translates to actual loans,” added STRATMOR Senior Partner Garth Graham. “This is why the loan originators of MortgageSAT clients have realized an increase of more than 20 percent in loans produced per month.”
In a second article on the borrower experience, “Prepare to Thrive in a Purchase Market,” Seminari offers tips on how lenders can succeed under more challenging market conditions. He cites the Mortgage Bankers Association 2020 Forecast, which anticipates a 24.5 percent decrease in refinance originations this year. Purchase originations, on the other hand, are expected to increase by a modest 1.6 percent. The forecast also predicts margin pressures like those seen in 2018 are likely to reappear in 2020, and that the industry will continue to be challenged by higher costs.
According to Seminari, lenders can improve their chances of success by measuring and pinpointing problem areas with a program like MortgageSAT, then working to fix those problems. Doing so has already helped MortgggeSAT clients realize impressive gains in their borrower satisfaction scores, and can have a remarkable impact on the likelihood that borrowers will recommend a lender to their friends and family, he said.
Seminari points to data from the 2020 MortgageSAT survey that show document collection and underwriting issues comprise roughly a third of the problems borrowers report with their lender, while communication breakdowns make up another third. “Notably, less than 20 percent of the issues are related to cost,” Seminari writes in his article.