Tackling Industry Innovation

The PROGRESS in Lending Innovations Award Winners gathered to talk about the future of mortgage lending. Over 100 mortgage executives came together to attend PROGRESS in Lending Association’s Eighth Annual Innovations Awards Event. We named the top innovations of the past twelve months. After that event, we wondered what would happen if we brought together executives from the winning companies to talk about mortgage technology innovation. Where do they see the state of industry innovation right now? And what innovation is it going to take to get our industry really going strong? To get these and other questions answered, we got the winning group together. In the end, here’s what they said:

Q: Some say innovation has to be sweeping change. Others say innovation can be incremental change. How would you define innovation?

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MICHAEL KOLBRENER: At PromonTech we are very careful with the word “innovation”. While we strive to be innovative, whether or not we succeed isn’t our call, but our clients’ and the market’s. At the end of the day, innovation is in the eyes of the user. And innovation can manifest itself differently; it can be a “big bang” like Apple’s iPhone, or it can occur more gradually and quietly like Internet availability. Fannie Mae and FormFree are great examples in our industry of how significant technology opportunities require time in order to be realized. Day 1 Certainty is destined to be a game-changer, but adoption may take time. Just like it took time for the amazing tools in FNMA Desktop Underwriter to be appreciated. As technologists, it’s our job to celebrate the important technology opportunities and help our user communities keep working on adoption.

JOHN PAASONEN: Innovation, especially in our industry, takes many forms. Innovation pushes forward a process, changes a mentality, or reforms the way something is thought about or done. We’re seeing all forms of this in mortgage, whether it is Day 1 Certainty, upfront underwriting, or shared-equity financing. The best kind of commercial innovation sweeps people along with the change in the present, not 10 years from now, bringing actionable ideas to market quickly, iterating those ideas, and ultimately delivering meaningful impact to the experience, P&L or relationships in a business.

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PHIL RASORI: Traditionally, I would say that innovation in our industry has been more of a gradual, step-by-step approach with new products, services and enhancements being launched as vendors identified demand and areas for improvement.  However, the introduction digital mortgage movement, which has been rapidly building over the past few years has been sweeping, with an array of fintechs and new ideas being spawned to build a better overall lending process. The trick now is going to be the rate of borrower and marketplace adoption of these new technologies.  Think about this: even adoption of now comfortable mainstays such as online shopping with Amazon or online trading with Schwab didn’t happen overnight. Adoption took time, and it will in the mortgage space, too.

GARTH GRAHAM: At STRATMOR, we see the innovation as a combination of People, Process and Technology, a variation on the classic 3Ps of People, Process and Product. You can have innovation that applies to any of the three, but it’s best is when it’s applied to all three together.  In fact, that was a key message in my presentation at the most recent MBA Technology Conference — that changing across people, process and technology is what drives big changes.

SANJEEV MALANEY: I would describe innovation as significant positive change resulting from fresh thinking that creates value for its user. It’s a result. It’s an outcome. It’s something one works toward. There are no qualifiers for how groundbreaking or world-shattering that something needs to be, only that it needs to be better than it was before. Innovation is evolutionary, not revolutionary — like Einstein’s theory of relativity.

KELCEY T. BROWN: At WebMax, we believe that innovation means identifying a problem and coming up with a unique solution. Whether it be sweeping or incremental, that unique solution changes things for the better. Innovation, especially in mortgage technology, has been defined by streamlining processes, reducing operating and origination costs, and delivering a better borrowing experience.

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ADAM BATAYEH: For us, it’s all about progress. Almost any amount of progress will do no matter how incremental the change is. If you create something that is cool and trendy but doesn’t necessarily push things forward in a way that betters people/process/industry, that “innovation” was more novelty than anything and will likely find itself extinct.

So in terms of impact, the amount of impact/progress isn’t as important because of all that happens downstream that we may not see immediately. You could make an incremental change that has monumental implications years later. In our space, it’s sort of like the butterfly effect.

LUKE WIMER: Innovation is the achievement of a consistently better outcome for time invested in an activity. I think creative problem solving needs to be encouraged, so we need to think of it as incremental change, and then allow for sweeping change to be the aggregation of persistent innovation. In our industry context, we might refer to the ability to electronically sign a mortgage as an innovation and the ability to digitally process a mortgage end-to-end as the sweeping change we are all driving toward.  Innovation is also often the result of fostering a culture of continuous improvement. In our company, we set long-term aspirations, then we ask everyone to set improvement or innovation goals for the next quarter or half year. We don’t specify how to improve; we don’t want people to be constrained. Then we measure results, talk about what happened, and set goals for the next round, rewarding examination and striving rather than hitting the target itself. The pace of creativity is increasing as people get comfortable taking risks.

NEIL FRASER: Innovation, in most cases brings incremental change. Over time many incremental changes bring about what can appear to be sudden sweeping change. As the mortgage industry moves towards the sweeping change being called the Digital Mortgage, many innovations have been, and continue to be tried and tested. This is the necessary process for moving an entire industry towards a significantly different model.

At Paradatec, we are continuing to innovate in an effort to support the industry’s long term move towards a more efficient and accurate process for originating, servicing, and auditing mortgage loans.

More specifically, we define innovation in our particular niche as “the application of artificial intelligence to the problem of document recognition”. This could mean the creation of a new, more automated, document classification solution for a servicing world where scanned images of documents, that were originally paper, are still key, or it could mean the creation of new recognition capabilities for e-signed documents that never were paper. Regardless of the application, we at Paradatec are committed to an ever-expanding document recognition stack that covers origination, servicing and auditing mortgage loans.

Q: How would you define the state of innovation in the mortgage industry? Is it thriving or in a state of decay?

MICHAEL KOLBRENER: The mortgage industry is in an unprecedented phase of technology adoption. There is no doubt that Rocket Mortgage deserves lots of credit for truly introducing the “Internet” to the mortgage industry. Rocket has shown all lenders that technology is an integral part of the future of mortgage originations. Additionally, we are seeing lots of new technology companies competing in the mortgage space (including PromonTech!) We’re just beginning to realize the many opportunities to improve efficiencies.

JOHN PAASONEN: Twenty four months ago, my answer may have been different. But today, it is a thrill and a privilege to participate in the transformation occuring in the mortgage industry. For nearly a decade — in the wake of the financial crisis, the passage of Dodd-Frank, the creation of the CFPB, and major regulation like TRID — investment dollars were poured into compliance, not advancement. I’m incredibly encouraged by the increasing openness to the work of many innovators, from both inside and outside the industry, to incite progress. Innovation is alive and needs to be spurred forward.

PHIL RASORI: Post the mortgage crash and subsequent introduction of a myriad of new rules and changing regulations with Dodd-Frank and enforcement by the CFPB became a huge concern and instantly drew everyone’s attention to compliance adherence, which arguably distracted from technology innovation. Now more than ever, the mortgage industry is on a fast-track to achieve far-reaching changes via new technology, which is being fueled by anticipated demand for borrower automation and lenders’ positioning themselves to remain competitive, thus driving innovation across the board. We’re not only thriving right now, but some say we’re drinking from a firehouse. Again, adoption will be key to these innovations becoming reality.

SANJEEV MALANEY: The industry is ready for innovation and we’re starting to see major transformation impacting the end-to-end mortgage process. New companies are flush with venture capital. Lenders are funding innovation centers using their own capital investments. People from outside the industry with diverse sets of skills and experience are being hired to drive this transformation. We’re going to see more innovation in the next twelve months than we’ve seen in years.

KELCEY T. BROWN: Innovation in the mortgage industry is thriving thanks to the continuous flow of new ideas and products, and growing interest in technology from lenders. We’re seeing point-of-sale products become more intuitive and borrower-friendly, and financial data retrievers’ rules engines making loan processing faster and more efficient. Lenders’ interest in digital mortgages continues to grow as today’s home buyers lean more and more toward a digital borrowing experience. That said, a great deal of the industry still needs to transition to digital mortgages. Growing interest, paired with a sizable unaddressed market, makes a perfect storm for thriving innovation.

As much blame is put on regulation for technical stagnation, we like to thank it. It put our backs against the wall and forced companies to make major changes that they couldn’t handle or weren’t willing to take on. It led to that consolidation, and most importantly, it led to massive amounts of investment in what we like to call “foundation over feature” and that has helped increase transparency, accountability, and more. It’s what laid the groundwork for all the innovation you are seeing today.

ADAM BATAYEH: Innovation is thriving, thriving, thriving. If this were 2013, the answer would have been massive decay. The thing is, that decay was necessary and led to all of the innovation we are seeing today.

LUKE WIMER: Mortgage is a bit late to the innovation party compared to payments or online banking, so we are still more focused on automation and efficiency and just starting to affect true change to the consumer experience.  But we should not underestimate the potential for change and innovation. The industry has been gearing up over the years with steps toward digitization, creative partnerships, driving new standards, and these will allow a fast pace of change once the scale is tipped. I am thinking of how one of Hemingway’s characters went bankrupt: “Gradually, then suddenly.”

NEIL FRASER: Innovation in the mortgage industry is definitely thriving today. For the last twelve years, we at Paradatec have focused on building our mortgage technology through advanced OCR using artificial intelligence and an ability to learn over time and provide increasingly more significant innovations.

In the last twelve years, we have not only increased our ability to innovate, but have further greatly accelerated this ability to innovate from our partnerships and integrations with others in the industry. This is a trend we expect to continue for years to come.

GARTH GRAHAM: I think that innovation is truly accelerating, but too often people define innovation as simply technology. They think the next software product, the next shiny object will transform their business. At STRATMOR, we often see companies with good people and good process being able to overcome substandard technology, but rarely do we see a company with great technology that can overcome poor people or process. This does not mean tech is not important, in fact I believe that we don’t spend enough on technology — but if you don’t have the people and process lined up to implement change, then the technology alone will not drive the results you seek.

Q: Lastly, if there was one innovation that you would say the mortgage industry desperately needs to happen over the next twelve months, what would it be?

MICHAEL KOLBRENER: All of us, in lending, need to evangelize the potential of technology and encourage our user audiences to understand the role it can play in the future of originations. Over the next 12 months, we need to keep pushing data providers to make applicant data more readily available, particularly around income verification (and tax supporting docs). At PromonTech that’s where we believe that next big breakthroughs will come.

JOHN PAASONEN: We’re just beginning to see the early signs of moving beyond “digital paper.” Over the last 10 years, the mortgage industry has largely taken a paper-bound process and digitized it. A loan application acted much like its paper counterpart, just with the ability to type answers, for example. In the next 12 months, regulators, lenders, investors and innovators need to continue to push forward with initiatives to all-together remove the tremendous burden on borrowers, loan officers, processors, appraisers and others created by our legacy of paper-driven process. The winners will be those who realize first that data availability and fidelity is too rich, and computing power too strong, to be ignored.

SANJEEV MALANEY: While we have witnessed significant innovation over the past year, there remains a series of key friction points that must be addressed for the mortgage process to truly be reinvented.

Perhaps the most critical enabler in our space (not unlike other verticals) is the use of data, and by extension, how to extract insights from that data to make faster and better decisions, which is where Capsilon is focusing its innovation efforts. It is worth noting, however, that while “big data analytics” has suddenly become a go-to catchphrase for many in our industry, our own experience in the space suggests that the challenges associated with implementing and realizing value from big data are more subtle.

For the past 14 years, we’ve been helping clients collect, validate and leverage the data to drive automation and improve productivity in the mortgage process. Those who succeed will master the harvesting and delivery of relevant data at the right time so every user (borrowers, LOs, underwriters, processors, closers) in the loan process are provided the information and tools they need when, where, and how they need it to remove friction in the loan process.

KELCEY T. BROWN: Faster adoption of digital mortgages. The faster lenders adopt digital mortgages, the better off their business will be, from their balance sheet to borrower satisfaction. It is evident that through technology, lenders can close loans faster, with more efficiency, for a better cost. At the same time, that boosted efficiency means borrowers get in their homes faster and are more satisfied with their mortgage experience. Real estate agent satisfaction grows as their listings get filled and closed faster as well, which can boost referrals. Imagine that your company waited to adopt email, how would that have worked out?

ADAM BATAYEH: To use our internal phrase again: foundation over feature. It seems that everyone is racing to be first with the next big thing and it’s very tempting to follow trends. At the same time, it can confuse lenders and can make it harder on them to make a decision. We can create all the new features we want, but if they’re hard to integrate and implement, we’ll find ourselves pigeonholed.

An example I can give is Windows vs. Mac OS and their respective web-browsers. The Operating System was the “foundation” and the web-browsers were built as “features”. Buy the OS, get the browser for free. The browser would work flawlessly with its respective OS.

Google Chrome came out of nowhere as it’s “foundation vs. feature” priority was the reverse. Knowing the future was in the Cloud, they built an agnostic browser, which resulted in Windows and Mac users collaborating in a new way. As Microsoft and Apple built browsers that were feature-focused and complimented their foundational Operating Systems, Google was busy playing the agnostic game and with Chrome has quickly emerged as the leader.

LUKE WIMER: There are so many different needs. I would like to see clarity on where federal regulators are headed. I would like to see some of this mortgage application automation technology make its way further into the loan origination process. We appreciate the need for increased security and rigor in vendor management, and are pushing for increased acceptance of SaaS and the tools many of us are making available to offer plug-in solutions. I believe it will be a collection of innovation and providers, which will be needed to really transform. It is a resilient sector that rolls with the punches, and is complex enough that no single innovation will win or solve the problems of every player. Therefore I am glad there are many of us working on improvement from different angles.

NEIL FRASER: Accurate data which reflects the terms, borrower, lender, and property information from Mortgage loans’ source documents will continue to be a critically important requirement. As a result, there will continue to be a need to audit the accuracy of the data as it relates to the legally definitive required source documents. As loans and their servicing rights are passed from investor to investor and servicer to servicer, a more efficient process for efficiently and accurately onboarding these loans as these transactions occur is desperately needed. At Paradatec, we are continuing to innovate and this need is one of major focus for us in the coming year.

GARTH GRAHAM: So, there certainly has been a significant amount of technology innovation at the point of sale — dynamic applications are more commonplace.  I think it’s what occurs BEFORE the application that is critical for the next year.  The reason is that we are pivoting to a heavy purchase market — only 25 percent refinance — down from roughly 50 percent refinance (or more) for the past 20 years.  This is a MAJOR difference and will really stress originators who are not equipped to handle purchase opportunities.  At STRATMOR we have a methodology of creating a digital roadmap for lenders, and we often find that they are not adequately valuing the tools that are required prior to application. We refer this to Lead Engagement — the ability to interact with purchase consumers across multiple touch points and for longer periods of time.   We also feel that price competition will become more acute going forward.  Thus, we think innovation needs to tackle the functions that typically are considered CRM functionality — managing customer interactions over long periods of time — as well as presentation to clearly show what customers are going to pay for their mortgages.

Also, we think that there is going to be a lot of industry consolidation, both for mortgage origination companies and for the technology vendors that support the lenders it.  At STRATMOR we are active in M&A and have never been busier with lenders looking for strategic alternatives, and with buyers who are well positioned for the future, and are actively looking to acquire other entities to gain market share during this difficult period.  Vendors are finding a similar climate, and some smaller vendors are seeking capital partners. New capital is entering the market to acquire additional technology capabilities.

PHIL RASORI: I hate to use what many feel is an over-used term these days, but acceptance of the “digital mortgage” and what it encompasses will be key to much of what is to follow. We are seeing that successfully be streamlined right now at the point-of-sale for borrowers. Digitization of the secondary market is also picking up speed, which is what we at MCT have been focused on. Technology integrations are essential for lenders to keep systems operating in real-time, while automation is streamlining processes. Digital whole loan trading is revolutionizing the loan sale process. Embracing the digital mortgage at every step in the process is helping lenders to increase efficiency and profits.

The “Digital” Mortgage: Reality Or Sci-Fi?

One of the defining characteristics of American life, from the end of World War II, through the 1980s, was a focus on the future. Running parallel to the U.S./Soviet space race, children’s television programs like Buck Rodgers and The Jetsons envisioned a utopian future that included everything from ray guns and jetpacks to meals in pill form and push-button solutions to everyday challenges. While I’m still waiting for my own flying car, those of us who have spent our careers in the real estate finance industry have been excited to see seismic shifts in the business in recent years, and with each new product or service, we inch closer and closer to a truly digital mortgage experience. “Digital mortgage.” That’s a term that you’ve likely heard repeatedly over the past few years, and may even connect with existing companies or products (“Rocket Mortgage,” for instance). But what really is a ‘digital’ mortgage? Is it reality or still a sci-fi fantasy that’s years away from realizing?

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To answer the question, we need to start with defining what we mean by ‘digital’ mortgage. A true digital mortgage is a home loan (or refinance) that you can apply for, submit documents (paperless), be approved, and close, all from the comfort of your living room couch. By that definition, we are basically there. The mortgage industry is in the midst of a tech boom, and we have made huge strides towards the goal of fully digitizing the mortgage process. As I see it, we have two main challenges remaining: built-in manual steps in mortgage underwriting and closing; and state/federal policymaking.

In many ways, it makes very good sense that so much of the mortgage process is deliberate, slow, and manual. After all, consumer and corporate risk on a $30,000 car loan gone bad pales in comparison with a $500,000 mortgage that ends up in default. The good news here is that at the front end of the mortgage loan process, digital lending platforms like Quicken’s Rocket Mortgage, or white-label solutions from companies like Blend, Roostify, and Mortgage Hippo, have transformed the application process. Consumers now have a smooth, mobile-friendly way to connect with lenders, and the loan process has shortened considerably (shaving off 12 days by some estimates) thanks to these new innovations.

Following the financial crisis, the Ability-to-Repay (ATR) rules have taken a lot of the guesswork out of underwriting.

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Technology has automated much of the process to verify these requirements, including:

Gathering current or reasonably expected income or assets. Instant verifications are available through The Work Number, a solution offered through Equifax Workforce Solutions, but only if the applicant’s employer is included in the database. This is true for borrowers working for more than 82% of the Fortune 500 companies. However, for those that don’t participate in The Work Number, manual verifications need to be performed.

Current employment status. This requirement can mostly be met through The Work Number, but again, not all employers are included, so manual verifications are required in many cases.

The monthly payment on the covered transaction. The lender provides via the 1003 form.

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The monthly payment on any simultaneous loan. Again, this is provided by the lender, who will provide a copy of the note.

Current debt obligations, alimony and child support. This information is provided through credit reports, undisclosed debt verifications, and 4506-T verifications. All available and able to automate using current technology.

The monthly debt-to-income ratio or residual income. This is also provided through employment and income verifications; and through consistent, auditable manual verifications, 4506-T verifications and tri-merge credit reports.

Credit history. Lenders obtain this by utilizing digitized trended credit data/tri-merge credit reports.

However, there are still crucial steps in the process that aren’t fully digital yet, including:

Appraisals. These value estimations are key to determining sales prices and loan amounts, and while efforts to incorporate drones or augmented reality show promise, there is simply no substitute for sending a real person (IRL, if you will) to check the condition of a home, and provide a better perspective than Google Earth, Zillow estimate or other AVM models. In particular for homes that haven’t sold in decades, it can be difficult to obtain recent and relevant data, necessitating the in-person appraisal. It can take a week or longer from ordering the appraisal to having the completed report in hand.

Compliance. The complex and ever-expanding web of state and federal mortgage finance-related laws and regulations make it very difficult to automate. While there are tech-driven solutions out there, this will always be a challenge for lenders to navigate, particularly multi-state and national lenders with multiple channels.

Non-standard borrowers. If your borrower has pristine credit, an employer who is participating in The Work Number, and is looking for a simple GSE-backed Qualified Mortgage, automation and digitizing the process is much simpler than the alternative. What do you do for credit-worthy borrowers with damaging credit events on their reports who are self-employed and looking for jumbo loans? In order to service borrowers outside of a very narrow range, lenders will continue to rely on some combination of paper and people.

Closing. This is currently the most paper-heavy part of the mortgage process, with borrowers required to meet in person with a notary and sign/initial a thick stack of documents, plus provide physical fingerprints. Part of the challenge here is that a handful of states (mostly along the East Coast) require an attorney present when closing a mortgage loan. While this part of the transaction may seem lightyears away from being digitized, the future may be closer than you think. Several state legislatures have passed bills authorizing the creation of a remote online notarization (RON) process, and many more are currently considering similar proposals. Not only would RON address the need for a physical meeting, but it would improve security and even do more to protect against fraud.

One of the biggest innovative tools that lenders and industry vendors are utilizing to help make the digital mortgage a reality is the API, or Application Programming Interface. In order to fully understand how the digital mortgage is evolving, it is crucial to have a working understanding of API architecture.

Perhaps the easiest way to define an API is to think of it as a way to connect one networked website or program to another. They are intermediaries that carry information and data, and help programs communicate with each other. The advent of APIs means that companies can take enormous amounts of data, combined with several different programs running various operations and ensure they can all talk to each other, and that LOs, underwriters, compliance officers, and more can all access and update the data as necessary.

There are two categories of APIs, which serve different functions. Public or “open” APIs are created from code provided by companies like Google, Facebook, or House Canary. Developers are encouraged to utilized the code to create new applications to interact with the sites and programs. Facebook’s F8 platform alone hosts well over 10,000 applications. Private APIs are used internally at companies to manage multiple programs and streamline communications.
APIs are the key to the future of mortgage lending, both for the lender and the consumer. APIs provide access to all the relevant data for the lender, ensuring that different programs throughout the mortgage process can communicate and transfer that data efficiently. For the borrower, API infrastructure raises the bar for what lenders can provide and addresses the top complaint from borrowers who have gone through the mortgage process. Ellie Mae’s Borrower Insights Survey finds that the Gen X and Baby Boomer borrowers would like to see the speed of the transaction improved. For Millennials it’s nearly a toss-up between desiring a faster process and adding more face-to-face interaction with their lender. API-based architecture allows for simple, data-driven processes to speed up, which provides more opportunity for lenders to focus on improving and personalizing the quality of each “touch point” throughout the process. One change that borrowers are seeing is increased transparency and communication throughout the mortgage process. An enduring complaint from borrowers has always been that they feel “in the dark” during the extended time period between approval and closing. APIs allow lenders to keep borrowers updated with to-the-minute status alerts on their mortgage, provide a heads-up on next steps, and much more. The new sense of clarity that borrowers have will dramatically improve their experience. I believe these changes are not far from becoming standard practice. At that point, we’ll be very close to having a true “digital” mortgage!

Until that time, industry tech providers and lenders need to continue to work together to develop the tools and processes to take the next step – beyond the flash and pizazz of the new application-focused programs to a more holistic approach to revolutionizing mortgage lending. A start-to-finish “digital” mortgage is not just what tomorrow’s borrowers will demand; it’s what today’s borrowers expect. Let’s deliver it.

About The Author

Greg Holmes

Greg Holmes is Managing Partner at Credit Plus, Inc. a third-party verifications company serving the mortgage industry. He can be reached at gholmes@creditplus.com. Credit Plus provides state-of-the-art verification services from pre-application to post-close that give mortgage professionals greater confidence when making lending decisions.

3 Key Methods To Shorten Your Sales Cycle

In a recent Gallup poll, sales professionals were ranked lower on honesty than Congress. This exemplifies why consumers are increasingly looking to their peers, rather than companies, “gurus,” and experts for advice on what to buy, eat, listen to, read and watch. Amazon, for example, can attribute much of their success to mission-critical consumer reviews—raw peer-to-peer interaction that carries an enormous amount of weight in the hearts and minds of wary consumers.

As more people participate and contribute to social media, consumers are getting savvier by the day. The companies that thrive in this extreme vetting environment are the ones who boast salesmen who don’t actually sell!

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Over two million success and marketing books are published each year, and most of them are fluffy and useless. When added to the thousands of marketing articles that also come out annually, there is a ton of information to sort through to the point of information overload. This as online entrepreneurs and business owners face a tremendous number of obstacles when it comes to marketing their Internet-based companies. I know because I’ve been through them all and, in working through these adversities, I have developed a precise methodology to achieve long-term online marketing success.

As examples, here are three methods you can use right now to shorten your sales process and start to close sales without actually selling:

Garner reviews on both your website and third party websites that you do not control (Ex. Yelp, the BBB, and Google Business Pages)

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From my experience, people have an aversion to asking for reviews from customers. It is an uncomfortable part of the conversation if not handled correctly. There is a right way and a wrong way to do it. The most critical key is timing. The best time to ask for a review is after the service is complete and the customer is entirely satisfied and happy with the product or service. So how to do know when that is?. From my experience, customers appreciate the question and it and shows to them that you care about their happiness. After they have confirmed they are happy is the time to ask for a review. There is no need to be pushy about it. Plant the seed and let them know you will send them an email with a link to where they can post their feedback. It is as simple as saying, “is it alright if I send you a feedback email?” After the customer confirms, you have a commitment.

When sending the feedback request email, include a link directly to the URL where the customer can post a review. We want to make it as easy as possible for the customer.

It is best to get feedback on your website first because it is feedback that you control and have the option not to make public. If the customer provides a 5-star review on your review system, then email them again with the exact comment they posted, and include links to 3rd party sites like Yelp, the Better Business Bureau, and Google Business.

Leverage your online reputation for building trust with potential customers

If you have garnered reviews on your website and third-party websites you are halfway there. It pains me to see companies with great reviews not make them visible on their sites. I think people consider it a form of bragging to display reviews. It is certainly not. From my testing, I have found that the last thing a customer does before making a purchase is a Google search for your company name followed by “reviews” or “complaints.” People want to verify that you run an honest business.

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I have found that displaying links to third-party review sites on your website shortens the sales process. People do not need to spend time searching your company online or contacting references. Potential customers know that you value your reputation. By leveraging your online reputation, you have built trust and conveyed accountability. This is the cornerstone of becoming a salesman who doesn’t sell.

Delegate, systematize, and automate the sales process so you can shorten the sales process and sell while you sleep

You have built up reviews and have them prominently displayed on your website. To keep the reviews coming in it is vital to make obtaining 5-star reviews a company-wide initiative that you can delegate. We have all our salespeople, and customer service representatives ask customers to leave feedback. We have found it helps to incentivize employees with bonuses tied to their reviews.

Reviews are a big part of shortening the sales process, though there are other sticking points. Make your frequently asked questions and terms and conditions visible to potential customers. As potential customers flow through your sales funnel, systematically answer their questions and concerns. What is your return policy? What is the time frame for delivery and shipping costs? Who do I contact for problems? Offer a way to make the purchase risk free by offering a free trial or money back guaranty.

To further lessen the resources needed in the sales process, automate as much as possible. Email software such as Active Campaign can send out an automated drip of emails. Tie into shipping carriers such as UPS, FedEx, and the USPS to automatically email tracking codes. Upload sales data to QuickBooks accounting software. Utilize a ticketing system like ZenDesk to answer customer service requests. There is a multitude of software solutions available to businesses to make conducting business more manageable.

Establishing an online reputation is like building up assets that produce dividends. Every time you contribute to your assets, you are building a foundation that will continue to bring in revenue for the long haul. I have two golden rules. The first is to treat your customers with the same quality of service that you would like to receive, and the second is that happy employees mean happy customers. With these fundamental concepts, businesses can build lean enterprises that will serve their customers, employees, and profits in the most successful manner.

About The Author

Brian Greenberg

Brian Greenberg is a multi-faceted entrepreneur currently serving as a founder and executive of multiple online businesses, including serving as President of True Blue Life Insurance. Recognized as one of the most creative people in the insurance industry, Greenberg is in the world’s top one percent of life insurance and financial services professionals. He may be reached online at www.TrueBlueLifeInsurance.com

Marketing Outlook: 5 Ways Merging Big Data, AI, And Blockchain Tech Is Rectifying The Marketing Gap

One of the biggest challenges marketers face today is customer acquisition and retention. The key to both acquiring new customers and retaining current customers is possessing the critical data that can help you, one, communicate effectively with the highest qualified contact possible and, two, further identify the needs of your current customers to foster long-term loyalty. Unfortunately, the today’s data industry is both far too complicated and highly fragmented, offering a confusing glut of choices that are overwhelming marketers who are in desperate need of this mission-critical information. The existing data marketing ecosystem of data and direct marketing list owners, managers and brokers is wildly inefficient and often ineffective, costing businesses untold millions in unnecessary time and money, and untold more in opportunity loss.

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Even so, given the fundamental truth that data is the backbone of both digital advertising and marketing and traditional direct marketing, marketers have just struggled along with what the market has been able to provide, for better or for worse. Global advertising revenue for 2017 was $591 billion with $209 billion of it dedicated to digital advertising. A conundrum as effective data sources are becoming even rarer as the need for—and actual dependency upon—data becomes more essential. The escalating demand for big data sources that provide quality and complete data has skyrocketed in today’s digital age.

Unfortunately, it’s the fundamental big data sources that have been the very crux of the problem for marketers. Today, an individual, entity or brand looking to acquire a specific data set will have to spend extensive time and resources locating sources that meet its target audience, negotiate costs, and establish privacy standards for the transferring of the data. This leads to a decrease in quality and data record duplication. These three challenges not only make it extremely cost prohibitive to identify and acquire the various parameters required to compile the exact dataset that is needed but, for small and medium sized businesses, it creates a actual barrier to enter the data marketplace.

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As problematic, attempting to generate revenue today from existing datasets brings its own unique set of challenges. The first is the time and money it takes to create data cards and collateral for the data owner to monetize. At the same time, they need to identify the right organization or marketplace with the widest reach—one that represents the highest demand for their data. The second major challenge is integrity and accountability. Data owners do not trust outside organizations to properly store, manage and monetize their data.

The last major concern surrounds the security of the storage environment. Data abuse and lack of transparency in the revenue share business model are underlying fears that will ultimately prevent a list owner from making his/her unique data set available for purchase.
So with all of problems running rampant in the big data industry, what is needed to put this key facet on course? Below are 5 reasons why merging big data, artificial intelligence and blockchain technology will revolutionize data-driven marketing worldwide, across all industries:

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Empowerment. A blockchain-based system empowers data source providers to monetize their data and better capitalize demand, allowing data source providers to access the large global marketplace. In the same way that eBay provides a marketplace for vendors of physical products, a blockchain-based digital marketplace can create growth potential for data source providers of all sizes, while also reducing barriers to entry into the industry.

Transparency. A blockchain approach provides data providers with full transparency, traceability and auditability, overcoming many of the hurdles data providers currently face in the existing marketplace. Anyone who has operated in the big data space knows that duplicate data, false data, and questionable sourcing are unfortunate industry truths. However, a blockchain-based approach provides complete transparency, allowing buyers to see where the data has been and where it came from prior to purchasing.

Confidence. A more transparent vetting and grading system for data will improve confidence building between the end user and data sources. Currently, most data purchases are practically blind transactions, whereby buyers won’t really know what kind of data they’re receiving until they actually buy it, because no vendor would ever reveal the data prior to money changing hands. Once you have the data, it’s then up to you to determine its quality but by then the money has been spent. Rather than this archaic process leaving much to be desired, having a 3rd party scoring system improves quality and increases trust in the marketplace, facilitating more transactions and leading to overall higher levels of confidence in the industry as a whole. Giving business and consumers quality and verified data that’s vetted and scored externally allows for the reduction, if not elimination, of false or outdated data—a significant problem currently plaguing the industry.

Simplification. By simplifying and aggregating world data transactions into a single point of sale, the result will be an “Amazon” like marketplace, where economies of scale and data aggregation will facilitate a smoother, cleaner and simply better checkout process; creating more data trade worldwide. Giving end users a simplified, easy-to-use and robust interface with a quick and secure payment system between the business or individual and data sources is a requisite means toward this end.

Artificial Intelligence. “Smart Indexing” Engines are now utilizing predictive analytics (a type of artificial intelligence using data analysis and machine learning) for “Confidence Scoring” to provide continual real-time accurate data. Based on immediate business conditions, this will allow for record sets that can be a single individual that matches all parameters or millions of records that match desired parameters.

Ultimately, democratizing big data levels the data playing field by providing the most comprehensive marketing data solution to all businesses and individuals. It will provide a robust interface between the business or individual and the data sources. The backend systems will ensure full confidence in data quality for the end user as well as transactional finality for the data providers.

About The Author

Adam Mittelberg

Adam Mittelberg is Chief Marketing Officer of DataBlockChain.io, a Media Direct, Inc.-partner company at the forefront of democratizing big data and leveling the data playing field. He oversees the most comprehensive marketing data solution available to all businesses and individuals featuring a robust interface between users and data sources and transparent backend system ensuring data quality, confidence and transactional finality. He may be reached at www.datablockchain.io.

Frustrated With Loan Fallout? Don’t Reject…Redirect.

Quality leads. In the wake of the federal regulations imposed after the 2008 recession, consistent access to quality leads is often regarded as the “X factor” that will make or break a loan officer’s career. Unfortunately, they usually prove to be as costly as they are difficult to come by, and no one method of lead generation has definitively outperformed the rest. Two of the most common lead generation techniques are the purchase of leads from companies that specialize in lead aggregation and direct marketing on search engines such as Google or Bing.

There are many lead generation companies that claim to be more cost effective than others or provide batches of leads at prices that often sound too good to be true. However, more often than not, those cheaper leads are priced so “competitively” because they have already been contacted ad nauseum and are simply not viable sources of potential business. Like most other things in life— you get what you pay for.

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It should also go without saying that a loan officer can’t successfully build his book of business simply by purchasing the most expensive leads available. For instance, a lender might have more success if it markets directly to consumers who are actively seeking out the products being offered by that lender. Depending on the target audience and the nature of the product, lead generation via direct marketing might prove to be more cost-effective and produce better results.

Before investing considerable resources into the various lead generation mechanisms, veteran loan officers apprise themselves of the available generation options and methodologies, their respective costs, and establish procedures and/or partnerships to maximize their return on investment.

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Purchase Leads from Third Parties

One of the more prevalent avenues through which many loan officers and mortgage companies cultivate leads is via third parties that specialize in lead aggregation. These companies have online databases which contain consumer information which may include income, age, current home value, and desired loan amount. Then, depending on the third-party website, lenders have the ability to filter potential customers based upon that information and target only those consumers that meet the lenders’ criteria.

It is common knowledge amongst those who purchase leads from third party lead aggregators that quality is often reflected in the price per lead, and the price per lead can fluctuate widely. The question is, then: What factors influence the quality of any particular lead? First and foremost, the exclusivity of the lead will often be used as the prime indicator of its quality. Exclusivity refers to how recently, and the frequency with which, the lead has been contacted by other lenders. While there is no exact metric for the duration of time elapsed since the last time a lead was contacted, a lead that is sold as exclusive should not have been contacted by another lender for several months and, in some cases, has never been contacted. These leads often provide the best opportunity for a lender to close, which makes them more valuable and, in turn, more expensive than non-exclusive leads.

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Non-exclusive leads, as the name suggests, normally mean that the consumer information has been disseminated to several other lenders who are all vying for that consumer’s business. A lower average closing percentage is reflected in the lower price per lead. Normally the more lenders that receive the lead, the cheaper that lead is.

There are several other characteristics that should also be taken into account when assessing the quality lead. For example, the depth of a lead, or the number of datapoints attributed to each consumer, determine how comprehensive a view the lender will have of prospective clients. The greater the depth, the more informed a decision the lender will be able to make when establishing its marketing strategy. Accuracy of the data is another factor that should be considered by a prospective buyer. The name of a consumer, coupled with incorrect or out of date contact information, is obviously nowhere near as valuable to the lender as those leads for which that information has been verified.

All of the aforementioned characteristics factor into the price of any particular lead or batch of leads. Depending on the source, the actual dollar amount of two seemingly identical leads can vary. One of the highest, if not the highest price per lead was reported by hubspot.com in 2017. Hubspot reported that the average cost per lead in the financial services industry was $272.00. However, this figure has been rebuked by many industry professionals as extremely high and most likely inflated. More conservative estimates place the cost for leads of the highest quality (exclusive, with a plethora of data points, and verified information) anywhere between $70.00 to just over $100.00 per. The price for leads that are semi-exclusive, lack as much depth, and/or lack any of the other important characteristics of the highest quality leads usually decreases proportionately to their information disparity.

Search Engine Marketing

Search engine marketing (SEM) is another method by which many cyber savvy lenders have begun to generate leads. The basic premise of SEM is to advertise directly to those consumers who are searching on Google, Bing, or any other popular search engine, for precisely the products being offered by the lender. For instance, if a lender is looking to target consumers who are in the market for a new home or looking to refinance their current home, that lender can utilize AdWords on Google or BingAds on Bing to ensure that their website and ad copy is displayed at the top of the search results when those consumers’ search terms contain certain keywords chosen by that lender such as “mortgage” or “refinance”. This method of marketing allows the lenders to track certain metrics, such as how many people are clicking on their advertisements and cross-reference the number of clicks with the actual number of applications they receive.

Search engine marketing is a popular tool for those companies who wish to generate fresh leads in-house using their own customized criteria, and who have the human bandwidth to measure and track results. This method, however, can prove to be a double-edged sword. Although the advertiser is only responsible for paying fees in the event that a potential lead clicks their link, if the search parameters are too broad, or the potential lead is looking for something unrelated (such as a college student writing an economics paper about refinancing), all of those excess clicks could prove to be very costly without yielding desired results. A lender using AdWords can expect to pay upwards of $124.00 per lead, which is on the high end of the lead generation spectrum when compared to leads purchased from third party aggregators. In this instance, however, lenders have the opportunity to cut out the middle man and market to consumers, directly. If done right, the lender can target specific consumers with pinpoint accuracy, eliminating wasteful spending. But if done incorrectly, it could prove to be a costly exercise in futility.

Maximize Lead Value

The aforementioned methodologies are meant to serve as two examples of how many lenders choose to generate quality leads and connect with promising prospects. Both have the potential to generate new loan opportunity but, if not properly researched and executed, both have the potential to devolve into expensive albatrosses around the necks of loan officers. Regardless of the outcome, lead generation, although necessary, can, and often will, prove to be a costly endeavor. For this reason, it is imperative to implement strategies to ensure that lenders will wring out all the value they can from the leads they purchase.

In the mortgage industry, a subpar credit score is one of the biggest hurdles to successful conversion of leads. All too often, leads who look great on paper in terms of employment status, income, and other assets, have a disqualifying FICO score. In fact, more than one-third of all Americans have a FICO score of 620 or below. Unfortunately, this means that lenders could wind up shelling out serious cash for leads that would otherwise be considered the highest quality, only to discover that those consumers fall outside their products’ parameters.

Because this problem has become so commonplace, many lenders have begun to partner with organizations that specialize in rehabilitating and recapturing those leads. Why let thousands of dollars’ worth leads, and millions of dollars’ worth of potential business, fall by the wayside because of credit scores? Well, now you don’t have to. Lenders have begun to solve this problem by referring those otherwise qualified consumers to non-profits that specialize in credit remediation and rehabilitation. Although the non-profits were established to benefit consumers, lenders have become an indirect beneficiary. Now they are able to recapture those leads in which they’ve invested so heavily, thus maximizing the return on their investments in the form of millions of dollars in new loan closings.

About The Author

Elizabeth Karwowski

Elizabeth Karwowski is the CEO of GCH360, a technology company that has developed a proprietary process and solution, which seamlessly integrates with the lenders’ loan origination software (LOS) and customer relationship management software (CRM) in order to create new loan opportunity and recapture leads. GCH 360 helped their partners create over $100M of new loan opportunities in 2017 alone, and plan on continued growth in 2018. As a recognized credit expert, Elizabeth has been featured on NBC and Fox News, and published in a number of financial industry publications.

How Is The Market Really Doing?

Veros Real Estate Solutions (Veros), an award-winning industry leader in enterprise risk management, collateral valuation services, and predictive analytics, has released its second quarter 2018 VeroFORECAST, which predicts that over the next 12 months residential market values will appreciate at a national average of +4.4%, a slightly higher rate than predicted in the previous report.

Each quarter Veros releases a new VeroFORECAST report, developed by projecting the impact of various key predictors on real estate values at four future time horizons: 6, 12, 18 and 24 months. The report released today, which covers the 12 months from June 1, 2018 through June 1, 2019, integrates data from 1,005 counties, 354 metropolitan statistical areas (MSAs), and 13,877 zip codes that cover 82% of the U.S. population.

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“Washington State and Nevada occupy six of the ten highest-appreciating MSAs in the U.S. and the remaining four are in California, Oregon and Idaho,” said Eric Fox, VP of Statistical and Economic Modeling at Veros. “This is the 24th quarter in a row where this index has forecast overall appreciation. Interestingly, the metro markets that are projected to appreciate the most over the next 12 months in this VeroFORECAST release are also among the most populated, while the markets that are expected to depreciate most are all among the least populated. For example, the average population of the top 25 metros is 1.7 million and the average population of the bottom 25 metros is 318,000.”

The new report reconfirms what has been experienced over the last several years: high demand for housing and historically low housing supply remain the key determinants of where any given market is expected to be on the appreciation-depreciation spectrum.

There is also a geographical component to real estate appreciation predictions. Not only are the projected top ten trending U.S. markets, as determined in the current VeroFORECAST, concentrated in the West, but the ten that are predicted to depreciate slightly or remain the same, are in the East and South.

For the 12 months beginning June 1, 2018, Veros predicts all ten of the highest-appreciating MSAs and 21 of the top 25 markets will be in seven contiguous far west states, from Washington and Idaho in the north, down through Oregon and California, and east to Nevada, Utah and Colorado.

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“There are several factors driving up home prices in the Seattle area, including a thriving economy and a lack of buildable land,” said Economist Matthew Gardner, with Seattle-based Windermere Real Estate. “There is also growing demand for housing thanks to the substantial in-migration of technology workers from the Bay Area who are relocating to Seattle because of the robust job market and relatively inexpensive home prices when compared to those in San Francisco,” Gardner concluded.

Despite migration to Seattle from California’s Bay Area and Silicon Valley, the San Jose market is one of the top five markets for appreciation this quarter, ranked fourth at +9.5 percent.

“The San Jose market remains exceedingly strong with a supply of homes at an extremely low 1.0 months, while its population is continuing to grow steadily. Its unemployment is an extremely low 2.6%. The Silicon Valley continues to attract workers for high tech jobs, and there isn’t enough housing to fill demand, making this one of the strongest markets in the country,” Fox said.

Much like San Jose, this quarter’s fourth highest appreciating market Reno-Sparks is experiencing extremely low housing inventories in conjunction with rapidly growing population.

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“For at least eight years now Reno-Sparks has been experiencing incredible growth, with an influx of companies in the technology space from California and other states,” said Craig King, TITLE, Chase International. “Tesla is currently building a 14 million-plus square foot gigafactory here, which, upon completion, is expected to be the biggest building in the world. With so many people moving into the area from higher equity regions, there is a great deal of pressure on the housing market to catch up and builders are still under building. This phenomenon has been going on for at least 5 to 6 years now and we are still 20,000 housing units behind what’s needed,” King concluded.

The supply of homes in Reno is 2.7 months and continues to fall. Combined with an unemployment rate of a low 3.8% and rapid population growth of 15%+, this is one of the forecast’s strongest markets in the country.

Nearly one-half of the bottom 25 markets are in the northeastern states of New Jersey, Connecticut, New York, Maine, Pennsylvania and Maryland, with eight others in the deep south: Louisiana, Alabama, Arkansas and Mississippi.

Among the ten MSAs projected to have the highest depreciation over the next 12 months, only three were in the previous VeroFORECAST bottom ten, and the rate of depreciation is significantly less. In the last report, Atlantic City was predicted to depreciate at nearly 3%, and it now is forecast to depreciate at -1.0%. Cumberland, Maryland-West Virginia MSA, which was not among the bottom ten MSAs in the last report, now has the worst forecast depreciation, albeit only -1.6%.

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.

You Need To Know About SEO

Search engine optimization (SEO) seems pretty straightforward. You pick a few keywords, and voilà! Your page is optimized for SEO, right? Not yet.

Many people understand the basic principles of SEO, but a lot has changed in the last decade, according to Rachel Leist, in her article entitled “The Definition of SEO in 100 Words or Less.”

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She concludes that the SEO that we know and love today is not the same SEO that we knew and loved (or hated) 10 years ago. And that’s why SEO is something marketers should continue to define, and redefine. Here’s a brief definition in under 100 words:

SEO stands for search engine optimization, that much has stayed the same. It refers to techniques that help your website rank higher in search engine results pages (SERPs). This makes your website more visible to people who are looking for solutions that your brand, product, or service can provide via search engines like Google, Yahoo!, and Bing.

What hasn’t stayed the same are the techniques we use to improve our rankings. This has everything to do with the search algorithms that these companies constantly change.

SEO works by optimizing a website’s pages, conducting keyword research, and earning inbound links. You can generally see results of SEO efforts once the webpage has been crawled and indexed by a search engine.

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Looking deeper: There are a ton of ways to improve the SEO of your site pages, though. Search engines look for elements including title tags, keywords, image tags, internal link structure, and inbound links (also known as backlinks). And that’s just to name a few.

Search engines also look at site structure and design, visitor behavior, and other external, off-site factors to determine how highly ranked your site should be in their SERPs.

Organic search refers to someone conducting a search through a search engine and clicking on a non-paid result. Organic search is a search marketing channel that can be used as part of inbound marketing to increase website traffic.

Looking deeper: In present-day SEO, you can’t simply include as many keywords as possible to reach the people who are searching for you. In fact, this will actually hurt your website’s SEO because search engines will recognize it as keyword stuffing, or the act of including keywords specifically to rank for that keyword, rather than to answer a person’s question.

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Nowadays, you should use your keywords in your content in a way that doesn’t feel unnatural or forced. There isn’t a magic number, it all depends on the length of your keyword and article, but if you feel like you’re forcing it, it’s better to ignore it and continue writing naturally.

An SEO marketing strategy is a comprehensive plan to get more visitors to your website through search engines. Successful SEO includes on-page strategies, which use intent-based keywords; and off-page strategies, which earn inbound links from other websites.

Looking deeper: Before you create a new site page or blog post, you’ll probably be thinking about how to incorporate your keywords into your post. That’s alright, but it shouldn’t be your only focus, or even your primary focus. Whenever you create content, your focus should be on the intent of your audience, not how many times you can include a keyword (whether it’s long tail or short tail) in your content.

Organic traffic is unpaid traffic that comes from search engines such as Google or Bing. Paid search marketing does not increase your organic traffic numbers, but you can optimize your website using inbound marketing software to gain more visitors.

Looking deeper: One of the biggest changes in the last decade is the way other user behaviors shape the SERPs a user sees on search engines. And today, social media can have a big impact on your organic traffic trend line. Even just a few years ago, it didn’t make a difference who was finding your content through social search. But now SEO takes into account tweets, retweets, Google+ authorship, and other social signals.

Social search also prioritizes content and people that are connected to you. That could mean through a Facebook friend, Twitter follower, or connection through another social network. Sometimes social search will even prioritize content that has been shared by an influencer. Social search understands that you may be interested in content that your network feels is important to share, and therefore it’ll often get surfaced to you.

This all means when you’re thinking about your SEO strategy, you need to think about how your social media strategy fits into the puzzle, too.

Direct traffic consists of website visitors that come to your website by typing the URL into their browser, rather than coming from another website, a search engine, or social media.

Looking deeper: Think of search engine optimization as “search experience optimization.” It’s not just important for your users to find your website, it’s important for them to stay on your website, interact with your content, and come back later. Direct traffic doesn’t just increase your “page authority” in the eyes of Google; it creates more opportunities to turn someone, who first discovered you organically, into a customer.

SEO actually takes into account whether or not your visitors are staying on your website and engaging with other content. If you rank well for a keyword and attract a visitor who isn’t relevant, it won’t actually help your website.

Think about your visitors and the content they are looking for more than how many people you can attract to your website.

SEO is important because it helps people find information and discover pages on the world wide web. SEO is especially important for businesses as it ensures they’re answering their audience’s biggest questions on search engines, while driving traffic to their products and services.

Looking deeper: In the past, SEO success was measured by whether or not you were ranked high on the first page of Google. But even if you ranked well for a term, does that actually mean you’re going to see results?

Not always. You might rank really well for terms that aren’t ideal for your business. So you appear high on search engines, get a ton of traffic, but then your website visitors realize your company isn’t what they were looking for. You don’t convert customers from this traffic, and ranking high for this particular keyword is essentially fruitless.

Also, you don’t necessarily need to be in the top three slots to be successful. In fact, if you rank well on subsequent pages, you may still have a high click-through-rate. That’s great news for marketers who can’t seem to bring pages into those top slots or off the second page.

We said it before and we’ll say it again: The amount of traffic to your page is less important than how qualified that traffic is.

SEO can cost between $100 and $500 per month if you do it yourself with a keyword research tool. It can cost between $75 and $150 per hour for a consultant, and up to $10,000 per month if you hire a full-service marketing agency. Small businesses generally spend less on SEO than big brands, but they can still get the same or better results if they focus on SEO and align with experts that can help them along.

About The Author

Michael Hammond

Michael Hammond is chief strategy officer at PROGRESS in Lending Association and is the founder and president of NexLevel Advisors. They provide solutions in business development, strategic selling, marketing, public relations and social media. He has close to two decades of leadership, management, marketing, sales and technical product experience. Michael held prior executive positions such as CEO, CMO, VP of Business Strategy, Director of Sales and Marketing and Director of Marketing for a number of leading companies. He is also only one of about 60 individuals to earn the Certified Mortgage Technologist (CMT) designation. Michael can be contacted via e-mail at mhammond@nexleveladvisors.com.

Taking LOS Integrations Further

By now, most lenders can agree that there are countless benefits to integrating their Loan Origination System (LOS) with a technology provider’s software. For one, it eliminates the front-end data entry of having to visit multiple vendor websites and rekeying data they have already entered into the LOS. With a true “lights out” integration, the lender doesn’t have to ever leave the LOS; they can order everything they need within one system, saving valuable time.

In addition, LOS integrations eliminate copying and pasting on the back-end of the process once the order is complete. When the report is delivered back to the lender, not only is the PDF imported to the “manage files” section of the LOS, but key data elements populate important data fields. When done correctly, the LOS automatically populates the legal description and vesting information from the title work, the value of the property from the Automated Valuation Model (AVM), desktop valuation or appraisal, and valuable flood zone and HMDA data from the flood certification. Populating these key data fields saves the lender from copying, pasting or rekeying the information into the LOS. It also mitigates the risk of potential human errors associated with manual data entry; for example, the “w” and “e” keys, located right next to each other on the processors keyboard, could be accidentally keyed incorrectly which would present a problem for legal documents and recordation if “E. MAIN ST.” inadvertently becomes “W. MAIN ST.”

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Lenders partnering with a provider that enables a true “lights out” LOS integration surely experience benefits. However, if their provider is not a middleware aggregator, they are still missing out on ways to improve their loan processing. By partnering with an aggregator, lenders can take their LOS integration a step further and distinguish themselves among competition.

In most LOS integrations, a technology provider integrates into a lender’s LOS in order to enable access to their own brand of products and services. An aggregator, on the other hand, provides lenders access to all brands within one platform. Even if a lender wanted to integrate with multiple providers, the process to include all of their vendors could take months to complete. With an aggregator, lenders can go live with hundreds of vendor choices available to them on day one.

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Some aggregators even give lenders the ability to add their own vendors that may not be integrated with the aggregator; such as small, local title companies or appraisers. With User Defined Vendor (UDV) technology, the lender selects which vendor they would like to utilize and the aggregator delivers the order to the preferred vendor. Local vendors looking to access an aggregator’s system on the back-end can easily upload their documents to the system with data elements and the PDF so that the aggregator can convert the forms to XML and deliver them back into the LOS. UDV technology enables lenders to add their preferred companies into their LOS in days as opposed to months.

Another important tool that lenders should look for when choosing an aggregator is escalation intelligence. This type of technology programs the systems to automatically know what the lender wants to do next if orders receive a “no hit” or if the underwriting guidelines dictate that a more robust type of product needs to be ordered. For example, if a lender orders an instant property valuation and there is not enough information on the property for the system to return an AVM, the system will automatically order a desktop valuation, drive-by appraisal or full appraisal, depending on the underwriting guidelines, risk tolerance and cost savings objectives of the lender. The same technology can be applied to instant title searches, full property reports and title insurance products.

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Finally, an aggregator has the ability to mimic the lender’s underwriting guidelines to provide additional efficiency and “automated decisioning” technology. They provide configurations that intelligently know what products to order based on credit scores, loan amounts, LTV and other underwriting criteria, then auto-order the appropriate products and services that are required for that specific loan. This type of technology eliminates the need for the processors to determine what to order and when to order it, thereby reducing the risk of human error.

LOS integrations with middleware aggregators result in reduced processing and closing times for lenders. The aggregator delivers faster integrations with more vendors, manages vendor turnaround time on behalf of the lender and even calculates Loan to Value (LTV) and Combined Loan to Value (CLTV) to automatically populate on the lender’s system. While general LOS integrations are beneficial, it is clear that the most competitive lenders use middleware aggregators to take their integrations to the next level.

About The Author

Tedd Smith

Tedd Smith is chief executive officer of Austin, Texas-based FirstClose, provider of end-to-end technology solutions to mortgage lenders nationwide. The FirstClose reporting suite is the first, comprehensive solution with capabilities to deliver title, flood, valuation and other important data elements in one report. For more information, visit www.firstclose.com.

A New Era Of Lending Emerges

According to recent data from TransUnion, the size of the personal lending market has more than doubled over the last five years. The reasons for this staggering growth can be attributed to a number of factors, but most notably, it has been a result of higher total employment coupled with rising household incomes. Megabanks, fintechs and alternative lenders have dominated this increase in personal lending, and as a competitive reaction, TransUnion predicts that we will likely see more personal lending activity from community banks and credit unions. The challenge for them, however, will be how they differentiate their lending experience.

Interest Rates & Speed No Longer Enough to Attract Borrowers

Historically, loan products have all looked the same, leaving community financial institutions with little to compete on. In fact, most institutions have focused on rate and speed of application process, which is necessary to staying competitive based on what consumers have indicated as primary drivers of choice, but these are not the only factors driving their decisions. We know that rate ranks among the most important, with minimum monthly payment following close behind. Application experience and fast lending decisions are also important, but they are not what drives a consumer to choose one institution over another.

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In a recent report, “Reinventing Consumer Loans: How Community Based FIs Can Win the Millennial Lending Market,” released by Cornerstone Advisors, Ron Shevlin, Director of Research, emphasizes the need for community financial institutions (FIs) to find new strategies to better compete with large banks in the lending markets. While many mid-size FIs believe they have superior rates and service, millennials, for instance, are often selecting the megabanks and large regional banks they already bank with for their borrowing needs.

If community-based FIs can no longer differentiate themselves based on price, and borrowers are finding less value in application ease or speed of approval, how should FIs attract borrowers? The answer, as Cornerstone discovered, is that community FIs can compete by offering loan features that improve the borrower’s experience during the life cycle of the loan.

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New Take-Back Concept The Key to Differentiate Loan Products

Cornerstone outlines three tactics in its report, which include providing flexible credit terms, bundling accounts and offering access to future funds – a new concept called a take-back loan. A take-back loan allows borrowers to pay ahead to reduce debt, but take that extra back if they need it, eliminating the fear of parting with ‘extra money’ while also enabling the borrower to make better financial decisions like paying down debt faster.

Access to a borrower’s own extra payments or take-backs is important, but actually seeing the impact of those changes is critical. Combining this concept with a sleek, mobile dashboard allows borrowers to manage debt by showing the loan’s status instantly. One step further – borrowers can also see the impact of payment changes before making them, giving them even more control and enabling them to make better financial decisions.

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For the FI, the take-back functionality coupled with a mobile user interface not only provides a competitive advantage during a time when lending becomes more competitive (rising rates), but it also reduces the risk of delinquency because the consumer is able to make better financial decisions – better for FIs, better for consumers, better for the economy.

Consumers Love This Concept

According to a recent consumer study conducted by Kasasa, nine out of ten consumers prefer a loan where you can take extra payments back over comparably prices loans. Moreover, 98 percent of consumers say they would refinance existing debt at the same rate to get the take-back functionality. Consumers also say they are willing to put more money into a loan and willing to pay more for the ability to take back extra payments if needed. Clearly, rate, minimum monthly payments and speed are not the only factors consumers are considering when shopping for loans.

Megabanks and alternative lenders do not offer take-back loans at all, giving traditional lenders a true competitive edge. Instead of talking to prospective borrowers about having the cheapest rates, now they can talk about something completely new and unique.

As the personal lending market continues to get more competitive, offering a lending experience that allows borrowers to take back extra payments and then see the impact – something megabanks and other lending competitors do not offer – is a game-changer that will only fuel greater growth.

About The Author

John Waupsh

John Waupsh is Chief Innovation Officer of Kasasa, an award-winning financial technology and marketing technology provider. For more information on Kasasa, visit www.kasasa.com, or visit them on Twitter @Kasasa, @KasasaNews, Facebook, or LinkedIn.

Compliance Auditing And Monitoring Matters

Lenders can’t forget about compliance. But technology vendors are helping. For example, Mortgage Cadence, an Accenture company, has integrated ComplianceAnalyzer, a compliance solution from ComplianceEase, with the Enterprise Lending Center (ELC), Mortgage Cadence’s proprietary loan-origination platform. The integration enables ELC users to systematically audit loans for regulatory compliance without leaving the platform.

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ELC facilitates lending for forward and reverse mortgages in retail, wholesale and correspondent lending channels and across a multitude of mortgage products, including home equity lines of credit. The integration of ComplianceAnalyzer provides a comprehensive, real-time auditing and monitoring solution within the ELC.

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“The cost to produce a loan has been on the rise, largely because of compliance demands that have given way to inefficiencies and slower speed to close for many lenders,” said Trevor Gauthier, Mortgage Cadence’s president and chief operating officer. “Mortgage Cadence is committed to providing lenders with the tools to help solve for these increased compliance demands, and our integration with ComplianceAnalyzer will do just that.”

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ComplianceAnalyzer enables lenders of all sizes to improve asset quality and value, reduce compliance risk, negotiate better execution with secondary market investors, and capture the data needed to prepare lenders for regulatory exams. The solution performs audits for federal high-cost and higher-priced loan regulations, the Secure and Fair Enforcement for Mortgage Licensing Act, state high-cost and anti-predatory regulations, and state license-based consumer lending laws and regulations, as well as compliance guidelines from secondary market investors and government-sponsored enterprises. It also performs TRID, RESPA 2010 and pre-2010 forms tests to validate California’s per diem interest calculations, a key differentiator in the market, as compliance for California originators remains a top priority to avoid penalties and fees.

“Our automated loan-level compliance technology helps lenders comply with federal and local regulations and minimize operational risks,” said John Vong, ComplianceEase’s president. “We’re pleased to partner with Mortgage Cadence to help more lenders improve loan quality, reduce risk and increase profitability.”

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.