Looking To The Future

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Last year PROGRESS in Lending Association named Mortgage Cadence a top innovation. The Mortgage Cadence Configuration Migration Utility (CMU) is an advanced configuration promotion tool only available through the Enterprise Lending Center. This new, patent-pending utility enables the easy migration of ACE Actions, business rules, and formulas from one environment to the next – whether development, staging, or production. The utility also dynamically discovers differences between environments, then surgically migrates the specific configuration changes to the desired environment. With the need to fluidly adapt to constant regulatory and investor requirements, the CMU allows lenders to effectively manage complex configurations efficiently and reliably. We followed up with Sarah Volling, the Marketing Lead at Mortgage Cadence, to talk about her background and what’s new at Mortgage Cadence. Here’s what she said:

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Q: You got your start in the mortgage industry in 2008 – the heart of the financial crisis. With little context on what the industry looked like prior, how has the last near-decade transition looked from your perspective?

SARAH VOLLING: Not only have I had the pleasure of seeing the industry bounce back since I started out nine years ago, but I learned at an early age the benefits of home ownership, buying my first home two years into my entrance in the mortgage industry and finalizing the purchase of my fourth home just this week. While working in the industry has taught me a lot and exposed me to its ins and outs, no other experience has shed light on the industry’s progress than being on the receiving end of a mortgage transaction. One thing is clear: The industry is not as far along as we might think.

My first home buying experience back in 2010 was, by far, the easiest mortgage origination transaction I’ve experienced to date. In theory, there should have been a lot working against this. I was a 22 year old recent college graduate and a first-time homebuyer, buying a house in the aftermath of the financial crisis. The key differentiators between that purchase and all of those that have followed can really be boiled down to three things: less regulatory requirements, great communication, and superior technology for the time.

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Q: Can you expand on the role you believe regulations, technology, and communication play in today’s origination lifecycle?

SARAH VOLLING: At the time of my first mortgage, I did a lot of online research before beginning the process, using lender’s websites to educate myself. This, in fact, is how I found the lender I ended up going with. This, in essence, was the best technology of the time. Lenders turning to borrower self-origination and education were not nearly as advanced as those today. In fact, even though technology was improving, I recall many instances where I was out of state and had to track down a printer and scanner to print, sign, and return documents to the lender. Today, many of those items simply require digital signatures. While this certainly has made life easier, many things have been made harder. My first mortgage was quick, smooth, and straightforward – all thanks to active communication from the lender, less regulations required by the lender, and the best technology available at the time.

More recently, I’ve had very different experiences. My last two homes were purchased through the same large midmarket lender. The second time around we chose simply for convenience and less about our prior experience, which was average at best. With our current loan being through them, we figured much of the process of buying a new home would be streamlined. We were wrong. We had to provide all of the information – from our names down to our 2015 W2 – that was supplied two years ago during our last origination. We chalked that up to internal compliance checks.

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Then, it got worse. Everything from the inspection resolution to the appraisal was in, and we were three weeks away from the closing date. Easy enough to push the closing up, right? Not if your lender needs to put the Closing Disclosure in the mail, forcing you to wait six business days for a document that only requires a three day turn if provided electronically. It got me thinking – how much money is lost each year due to this slowdown in the origination lifecycle? We all know the cost-to-close is higher than it has been in quite some time, and it’s no wonder. While regulations certainly have made things harder, imagine how much could be saved by simply having the means to provide documents electronically.

Also – the lack of communication could have been solved quite easily. Let us know when you receive documents, give us a heads-up about what remains, and work with us to make sure we are comfortable every step of the way. While I’m no stranger to the origination process, the mystery about where in the process our loan stood at any given time was enough to cause doubt in anyone’s mind. To me, it makes me question the lender’s abilities. They might be extremely capable and efficient, but if they don’t let me know what is going on, I come to my own conclusions. I can only imagine how much worse this must be for those new to, or less familiar with, the origination process. Even if we didn’t have active communication from our loan officer, something as simple as an online site to check loan status, upload documents, and see outstanding underwriting conditions would have gone a long way toward improving the situation.

Q: As a member of the Millennial generation, your perspective on the mortgage process is unique. Do you believe this generation is more demanding than Gen X and Baby Boomers?

SARAH VOLLING: It’s funny. Millennials have often been tied to the digital mortgage revolution of the past decade. They’ve been portrayed as this ominous, “Are You Ready?” generation set to shake up the industry forever. While it’s certainly true the idea of the digital mortgage is important, I would argue it is equally important across all generations. As a society, we are all equally accustomed to smartphones and companies designed to make our lives easier through continuous, real-time service. In fact, we recently completed a study of over 1500 US borrowers who had just been through the mortgage origination process and found that Millennials are not only the most likely generation to meet with their loan officer in-person during their home purchase, but are the ones that want to meet with their loan officer face-to-face. To some, this may come as a surprise, but to me, as a member of the Millennial generation, the reason is simple: We want to know the source. You may be familiar with a scene from a sketch comedy show that takes place in the Northwest, where the guest at a restaurant asks the waitress about the chicken. Not about how it’s prepared, but how big the area where the chicken roamed was and what the chicken’s name was. This is perhaps a little extreme, but it makes a great point: Millennials prefer to support businesses they trust, as they want to know where their money is going. Along those same lines, they want to look their loan officer in the eye and have a real conversation about such a major financial decision. Gen X and Baby Boomers not only care less about the back story, but they are also more likely to be familiar with the home buying process already, so they are just as happy to interact digitally with their loan officer and would prefer to do so.

Q: This study sounds quite interesting. What other key findings did you learn from your study?

SARAH VOLLING: Aside from the stereotype-shattering idea that Millennials are the only generation driving the digital mortgage revolution, the most important finding is that 3 in 5 borrowers would be more than happy to provide their private information – including login credentials – in order to streamline the origination process through data aggregation. Allowing borrowers to self-originate was the first step, but the majority of the industry has made that leap. Now, it’s time to think bigger, driving technology advancements that make borrowers’ lives even easier.

In fact, this is a good thing. It’s not a good feeling having to put your deadlines in someone else’s hands, anxiously waiting for a borrower to get you requested documents. Through data aggregation tools, you can take back control of the process, gaining just one more way to accelerate the origination process in the midst of an ever-increasing cost to close.

Q: As a marketer, you sit uniquely between business-to-business (B2B) and business-to-consumer (B2C) marketing worlds. What trends are you seeing that transcend all industries?

SARAH VOLLING: No surprise here: All-things-digital. To expand upon what that means, attention spans are getting shorter. The amount of time you have to get noticed with consumers is next to nothing. While videos are certainly a stronger route than traditional text-heavy websites and sales materials, I would suggest going even shorter with GIFs. These looped video clips are often 2 seconds to 10 seconds long, with content that does not need sound. I saw a great use of this on Facebook as a sponsored post for a local food chain. The ability to get in front of a wide audience through social media using a video clip that automatically plays as consumers scroll past it on their phones offers distinct benefits that traditional videos simply can’t compete with.

As it relates specifically to the mortgage industry, I would suggest keeping your efforts as honest as you can. As I previously mentioned, Millennials are interested in full transparency. To capture this audience’s attention, they want to know what you stand for and that your best interests are with your customers.

Q: With the political landscape causing great uncertainty for our industry, what is top of mind for Mortgage Cadence heading into 2017?

SARAH VOLLING: It’s hard to predict the direction – specifically related to the regulatory landscape – in which we will be heading in the next several years. What can be predicted — and what lenders should focus on for the time being — are technology advancements to support the consumer experience and provide the full transparency the next largest generation of their customers expect.

The trends I’ve already mentioned lead to some very strategic initiatives for Mortgage Cadence. We were fortunate enough to use the borrower study we recently completed to provide some real-world evidence regarding the top priorities tomorrow’s borrowers have about the origination process. This is driving many initiatives related to consumer-facing technologies. We expect to have three major technology announcements in the next few months that will really give lenders the tools needed to succeed no matter what the regulatory landscape shapes up to be in the years ahead.

Q: Your highly regarded annual user conference is just a short time away. Can you provide a sneak peek of the themes you are planning for this year’s conference?

SARAH VOLLING: Our annual user conference, Ascent, is by far the most anticipated event we put on each year. We spend easily nine months planning the agenda, lining up influential speakers, and structuring networking opportunities with the goal of topping the previous year’s events. This year is no exception.

This year, we decided to break our agenda up into tracks designed to give our customer base sessions relevant to their interaction with our technology. Not only do we offer two leading loan origination solutions, but we draw various system users – from business operations to IT power users – to our conference, and we want everyone to have content to meet their needs.

In addition, we’re excited to bring back our 2017 Benchmark Study, which will build on data collected since 2012 on key performance indicators (KPI) of our customers’ businesses. Comparing their KPIs to those of the industry at large not only gives our customers insight into how they compare to industry averages, but gives us insight into where inefficiencies lie within today’s origination processes, helping guide their future operational strategies. Ultimately, we strive to be a partner for a customers and not just a technology provider. Our user conference is one of our best opportunities for us to continue our commitment to partnership.

Insider Profile

Sarah Volling is the Marketing Lead for Mortgage Cadence, an Accenture Company. Beginning her career with the company in 2008, Sarah now oversees the marketing department, strengthening brand identity through thought leadership, industry participation and guerilla marketing. Prior to joining Mortgage Cadence, Sarah earned her Bachelor of Arts degree in Communication from the University of Colorado.

Industry Predictions

Sarah Volling thinks:

1.) While digital lending will continue to be critical to long-term success, the value of face-to-face interactions with borrowers will make a comeback.

2.) The focus of the Digital Mortgage is finally going to shift away from the consumer and more onto how all of the companies that are part of bringing a mortgage together can streamline efforts.

3.) Despite current and future industry changes and regulatory demands, the consumer will always be the biggest driver of change, pushing their expectations of greater transparency and better communication even further onto the lender.

Print Is Not Dead

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As I talk to lenders across the country there is a deep desire to discuss all things digital. With the success of lenders like Rocket Mortgage, more and more lenders are looking to how they can move into the digital mortgage. This includes many lenders looking to digitally attracting new borrowers through marketing automation, email blasts and social media.

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These are all great channels to use to attract new borrowers but these should not entirely replace print as a tool for attracting new borrowers. The most powerful marketing automation campaigns strike the right balance between digital and print to gain the maximum exposure and results for lenders.

Print Your On-Demand Campaigns with the Right Marketing Automation

The right marketing automation allows lenders to deliver custom campaigns that can be run quickly and easily on demand to any mix of contact databases: prospects, applicants, borrowers and partners. You’ll want to run a campaign whenever you spot a tactical sales opportunity – for example: a change in interest rates or other market conditions. On-demand campaigns are also an effective way of just staying in touch with your database – for example: making announcements about significant changes at your company.

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The right marketing automation empowers central marketing to set up campaigns for all or any subset of loan officers, choose the marketing activity and specify the target audience. The system then provides a range of execution options to satisfy all cultural and operational preferences:

>> Run the campaign from the corporate level

>> Run the campaign from the corporate level, but first allow loan officers to opt out

>> Set up individual campaigns for loan officers to run if and when they wish

>> Create an Instant Campaign and make it available for loan officers to run from their Home page

Participating loan officers are notified of the campaign details by system-generated e-mail and a follow-up report is provided containing each recipient’s contact details.

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The right marketing automation solution delivers a comprehensive Collateral Catalogue that allows you to purchase essential promotional materials – quickly and easily – including business cards, letterhead, pads, brochures, card products, flyers, posters, booklets and catalogues. You’ll enjoy all the advantages of “print on-demand”. What’s more, unlike traditional print shops, a fully integrated marketing automation platform and print facility does not specify minimum quantities.

The Collateral Catalogue also provides tools for you to create/upload your very own collateral materials so that you can easily maintain a “look and feel” consistent with your brand strategy.

The right marketing automation solution delivers powerful marketing tools in the form of print and digital. The right combination attracts the greatest number of potential borrowers, highest ROI and consistency needed to prosper in today’s mortgage market.

About The Author

Where Have All The Loan Mods Gone?

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In 2007, there was a recognition that the U.S. economy was slowing, but few predicted the severity of the recession that followed. The unemployment rate continued to increase and many Americans suffered a decrease in spendable income. Whether the decrease was due to reduced investment income or to loss of job, for the first time many borrowers faced the difficulty of meeting their debt obligations, including residential mortgage payments, while at the same time, watching the value of their home significantly decrease.

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Not only did many residential mortgage borrowers face the potential of homelessness, but mortgage bankers also had concerns, because they wanted repayment of their loans, not a portfolio of foreclosed and vacant real property to manage.

Prior to 2007, there were few options for borrowers who defaulted on their loans, but the financial crisis resulted in the creation of various alternatives – some which allowed a borrower to exit the property, but many which offered an alternative to a borrower to retain ownership of the home.   Government and lender modification programs allowed a change in the terms of the loan, such as interest rate reductions or a change in the time permitted for repayment of the loan.   These modifications programs were intended to allow people to remain in their homes when they were facing a significant hardship.   Although modifications permitted immediate relief in home-retention, there continued to be questions as to whether these tools worsened the borrowers’ future opportunities and investment goals.

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As the financial horizon began to improve, these modification programs continued to evolve, but the federal government modification program known as HAMP (Home Affordable Modification Program) expired on December 31, 2016. Additionally, for the second time in two months, Fannie Mae and Freddie Mac announced that they are increasing the interest rate for standard mortgage modifications – the highest that it has been in 18 months. Foreclosure activity has dropped significantly and is at the lowest level of filings since 2006.

Does this mean that the loan modification has disappeared from a lender’s toolkit for consumers facing impending delinquency? The answer is that there will always be a need for loss mitigation tools, including the loan modification, due to unexpected life events that borrowers face; however, the options are decreasing.

Historically, the delinquency rate for prime fixed-rate mortgages was 1-3% (slightly higher for adjustable-rate mortgage) until the financial crisis in 2007, when delinquency rates increased. By the end of 2016, the mortgage delinquency rate significantly decreased.

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Even with the reduced delinquency rate, there will continue to be borrowers with past due loans who seek some type of loss mitigation where they can retain their home.   Many investors and lenders continue to have proprietary modification programs – some of which have terms similar to HAMP – to aid borrowers in resuming affordable mortgage payments and bringing the loan to a current status.

Proprietary modification programs of lenders vary, but the most common features include one or more of the following:

>>Temporary or permanent interest rate reduction;

>>Extended payback period (up to 40 years); and

>>Deferral of principal (usually at zero interest).

More rare is a modification that includes principal reduction or forgiveness of debt. This option is often limited by contractual obligations related to mortgage-backed securities. Additionally, such forgiveness of debt can result in unexpected federal income tax obligation for the borrower.

Often overlooked for FHA loans, The Department of Housing and Urban Development (“HUD”) offers a program known as the partial claim mortgage, which is beneficial to the borrower, as well as the lender. A borrower who has experienced an event that caused the delinquency (such as reduction in income due to job loss or a medical event) may be in a position to resume regular monthly mortgage payments, but unable to pay the unpaid delinquent amounts. The partial claim mortgage enables the borrower to have a fresh start, while deferring payment of the past due amount.

Under the partial claim mortgage, the borrower’s loan is modified, whereby it is split into two separate loans:

>>The original FHA loan payable to the lender is reduced by the past due and unpaid amount; thus, bringing that loan to a current status; and

>>The past due and unpaid amount is reflected in a new zero-interest note executed by the borrower and payable to HUD, along with a new mortgage to secure the repayment of the note (payment is not due until the original FHA loan is paid off or the borrower conveys the property to another party).

The partial claim mortgage allows a borrower to retain his home and resume making regular monthly mortgage payments, while deferring payment on the past due amount.   The partial claim also benefits the lender, because the lender simultaneously files a claim with HUD and receives payment for that past due amount, by which the original loan is reduced.   The borrower is able to resume his normal schedule of payments and the lender does not wait until loan payoff for repayment of the past due amount.

In certain circumstances, the HUD partial claim program is available to borrowers who have previously utilized the program; thus, it is possible to have two partial claim mortgages associated with one FHA loan.   The HUD handbook and guidelines set forth the requirements for a partial claim mortgage, whether it be the first partial claim or a subsequent one.

Although some programs are ending or changing, loan modifications are not gone; these tools in some form continue to be available for borrowers. Nevertheless, there will continue to be differing opinions and discussions as to whether (1) the government (state or federal) should be involved, and to what extent, in consumer financial matters, including residential mortgage loans; and (2) whether loan modifications are only a short-term fix that ignore the long-term investment consequences to borrowers.

About The Author

Gaps In Risk Management

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In talking to financial institutions across the United States about Operational Risk Management, I am amazed at how many continue to state that they have it covered. When we talk about operational risk we are referring to Third-party Due Diligence, Business Continuity Programs, Incident Reporting, and Alert Notifications. Just tracking some of this information in an excel spreadsheet is no longer going to cut it with the auditors.

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In an article titled “FDIC Watchdog Highlights Gaps in Banks’ Vendor Contracts,” that appeared in ABA Daily Newsbytes written by Krista Shonk and Denyette DePierro, it states that “Few banks’ contracts with technology service providers (TSPs) provide sufficient detail about the providers’ business continuity and incident response capabilities and duties, according to a report issued yesterday by the FDIC’s independent inspector general. The report also found shortfalls in banks’ assessments of how providers could affect the banks’ own ability to plan for business continuity and incident response.”

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In response, “the FDIC said it would work with other Federal Financial Institution Examination Council agencies to update guidance on business continuity planning and incident response and that it would continue examinations and off-site monitoring of vendor management. Anecdotal reports from banks indicate that examiners are increasingly focusing on technology provider risk management. The report expressed concern that some banks ‘may not be sufficiently knowledgeable about or engaged in contract management.’”

It is becoming increasingly more difficult for financial institutions to keep up with and maintain the proper compliance requirements on their own. If financial institutions want to be better prepared for their next audit they need to partner with companies that specialize in operational risk management.

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The right operational risk management solution combines dynamic technology, in-depth expertise and best practices on one common platform to meet and exceed the constantly changing expectations of the regulators. An All-In-One Operational Risk Management Suite allows financial institutions to easily manage all areas of operational risk management under one platform. The all in one suite needs to be easy to use, role dependent and web based. The common platform eliminates double data entry saving valuable time and resources.

Third Party Due Diligence

Upload and store your institution’s information pertaining to locations, departments, people, vendor program, and policies. Upload and store all vendors to the system and track vendor static data. Assign different managers to the specific vendor to upload and track data.

Utilize the qualifying questionnaire to determine whether or not a particular vendor needs to proceed to the risk assessment. The risk assessment is a questionnaire categorized by FFIEC and due diligence questions which prioritizes your vendors into a high, medium, or low risk category determining the level of due diligence to perform on each individual vendor. Upload and store all relevant due diligence criteria. Log and track all conversations exchanged between user and vendor as well as an evaluate vendor performance using the vendor report card.

Business Continuity Programs

Conduct risk assessments for locations and/or vendors. Assign probability and impact ratings to individual threats to automatically generate the threat’s overall rating and define the details of impact with mitigation steps for particular threats. Create your BIA based on departments located within a specific location with details of processes, resources, and people. Includes the ability to set BIA review dates with reminder email notifications. Build your comprehensive plan utilizing data associated in the system with our predefined template. Test a particular section of your business continuity plan by selecting a team and testing their associated tasks.

Incident Reporting

Review an executive overview of most current incident status and completion progress. Create teams and associate prioritized tasks. Store your incident response and escalation policies and define customized values. Track and record the incident while it occurs defining specific details and assigning teams to handle the incident. Upload and store necessary external documentation. Create follow up reports and memos using our template questionnaire and log lessons learned.

The right operational risk management solution can help find gaps in your operational risk management plan and help mitigate risk moving forward by implementing best practices and advanced technology all on one common platform.

About The Author

This Is No Time To Panic

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Let’s admit it. Mortgage rates in the three and low four percent range were very cool to experience, and not just for mortgage nerds and econ geeks. Yes, this period of uber-low rates pulled the US housing market out of a deep, dark recession. At the same time, these rates changed the nature of housing: Owners with low interest rate mortgages are loath to give them up since they can’t be replaced, so they will likely stay in their homes much longer than they used to. Low rates were good. Now they are gone, and everyone is worried. Is it time to panic?

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The short answer is no. There is no reason to panic. Rates have risen to their highest levels since April 2014, though at about 4 3/8% for a 30-year loan, rates are far from high. Rather, today’s rates present a remarkable homeownership opportunity, one similar to the opportunity the grandparents of today’s Millennials had when they bought their first homes in the late 1950s and 1960s.

Why the comparison? Rates were about the same in the era of Eisenhower and Kennedy as they are right now. Rates were rising, then, too, from the post-WWII lows that Millennials’ great-grandparents enjoyed. Rising rates in the late 50s and 60s did not deter baby boomer homeownership; quite the contrary. Like the Millennials, Boomers were the biggest cohort of potential buyers the economy had ever seen. And buy they did, despite interest rates exceeding a whopping 5%.

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Rates matter (although rates are but one variable in the housing equation). The trouble is, rates are getting all the attention despite the fact that they are not the most important variable at the moment. Affordability, not rates, is what mortgage lenders should be talking about.

Affordability, Not Rates

While mortgage rates cannot and should not be ignored, our focus should be on the broader measure of affordability. This is where rates, along with home prices and incomes, present a more accurate answer to the question, “Is now a good time to buy a home?” This is important because affordability right now is at one of its best levels in years, though potential homebuyers may believe now is not a good time to buy a home since rates have increased.

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Fortunately, information on affordability in the form of the Housing Affordability Index (the HAI or the Index) is readily available from several sources including the National Association of Realtors, which publishes its affordability index monthly, as well as HUD, which publishes less frequently yet provides an important, long-term historical view on the subject.

Even though rates are rising to levels not seen for many years, they are, as mentioned above, on par with the low rate environment of the mid-1960s. Despite the alarmist news that rates are rising, rates are attractive and remain low. This is why it is important to look at affordability. According to data released by the National Association of Realtors, housing affordability in October 2016 was 170.2. According to HUD, the HAI for 2015 was 163.9. Since 170.2 is greater than 163.9, that would indicate that housing was more affordable in the fall of 2016 than throughout all of 2015. It would also indicate that all the ‘sky is falling’ nature of the news about rising interest rates is wrong, or at least misdirected.

What do numbers such as 170.2 and 163.9 really mean in this context? How are they calculated? The housing affordability index is just that: an index. When the index measures 100, it means the homebuyer earning the median income has exactly enough income to purchase the median priced home. When the HAI is greater than 100, as it has been, according to HUD, since 1986, then housing, using this measure, is affordable. When the index reads less than 100, as it did in the early 1980s (more on this shortly), it means buying a home is not affordable and is out of reach for the median wage earner.

Last October’s index of 170.2 means the median wage earner has 1.7 times the income necessary to purchase the median priced home. During 2015, that same wage earner had 1.6 times the necessary income. Housing is, by this measure, affordable for today’s buyers. But what about those grandparents back in the 1960s? Was housing affordable for them? The median home price in the mid- 1960s was $13,600, with a median income of $6,450. Assuming a mortgage rate of 5.50%, their affordability index would have been slightly above 200. Although better than 170.2, the environment in which they purchased their homes was roughly equivalent to what we are experiencing now. Those grandparents bought lots of homes; so should today’s consumers.

Calculating the housing affordability index is easy. The formula for doing so is:

HAI = (Median Family Income / Qualifying Income) * 100

Median Family Income data is readily available. Qualifying income is another calculation based on the monthly payment on the median priced home at then-prevailing interest rates. The Index also assumes the borrower makes a 20% down payment. There’s no need to do the math, however, as the index is readily available.

With rates rising, shouldn’t affordability be falling? The answer, as is true with so many things: It depends. It depends on the trend in median incomes, which is currently positive. So, while rates are up, so are incomes, offsetting higher rates and making housing slightly more affordable. There is one more variable in the equation in addition to median income and interest rates: The median home price. This has been rising, too, though not enough to negatively impact the Index.

The multi-variate nature of the Housing Affordability Index is exactly why affordability is a more important, more relevant story than rates, and the one everyone in our industry should be telling. Borrowers need to understand the whole picture, not just the view from the rate window.

Rates will probably continue to rise. The Mortgage Bankers Association predicts the 30-year rate will top 5.25% in 2019. That’s a step up from the lows of the past several years, though still remarkably low by historical standards. When rates were 7% and 8% in the 1970s, affordability was slightly greater than 150. This is another indication that neither lenders nor borrowers should obsess about rates.

When Do We Panic?

If you are going to panic, it’s best to do so with full information. Panic, in this case, means all or most homebuyers sitting on the sidelines because affordability has tanked.

Parents of millennials, in contrast to grandparents of millennials, know about panic, at least when it comes to affordability (and rates). As the 1970s came to a close, so did the long, many-decade run of low, single-digit interest rates. From 1980 through 1985, mortgage affordability plummeted below 100, bottoming out at 68.9, meaning that the average wage earner purchasing the median priced home had only about two-thirds of the income necessary to purchase that home. Rates had a starring role in affordability’s reversal, exceeding more than 15% in 1981 when the index hit its all-time low.

The early 1980s were a good time to panic, or at least to put the idea of homeownership on temporary hold. Having just two-thirds of the income necessary to buy anything is a strong indication that it is best to skip or defer making the purchase. That is just what many people did throughout the 1980s.

Now, on the other hand, is no time to panic. It’s time to seriously consider homeownership. Potential buyers have 1.7 times the income necessary to purchase a house. That’s good. Even better, according to an article published by Zillow on November 16, 2016, buying is a better economic play than renting in that a mortgage today consumes just 14% of income whereas renting consumes 29%.

While an extreme example, the 1980s do illustrate that rising rates have a chilling effect on home buying sentiment as well as purchases themselves. But the 1980s were a long time ago. Mortgage rates are more than 1100 basis points lower than they were in 1981. Rather than fretting over rising rates there should be celebration about housing’s continued affordability.

What Do We Do?

The first step for lenders is to stop being our own worst enemy. The mortgage business is about making loans, which depends on potential and repeat buyers entering the market. To enter the market, they have to believe their timing is right. Given current affordability levels, timing is excellent. Unfortunately the lead story is rates, a misleading and inaccurate picture of the housing market.

We should start educating the public, especially first-time homebuyers, on affordability. Rates are easy to understand: No math, no calculations, no deeper thought. Yet homeownership requires deep thought and even better understanding of all things it encompasses, especially the economic aspects. Rates are only relevant to the extent they affect affordability.

Rates are rising, but the sky is not falling. Housing is becoming more, rather than less affordable. The responsible approach, when talking about the housing market with buyers (and especially first-time buyers), is to talk about affordability in conjunction with rates. It is a good time to buy a house, and lenders should make sure that buyers understand why this is so.

About The Author

Homes Are Gaining Equity Again

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ATTOM Data Solutions released its Year-End 2016 U.S. Home Equity & Underwater Report, which shows that as of the end of 2016 there were 5.4 million (5,408,323) U.S. properties seriously underwater — where the combined loan amount secured by the property was at least 25 percent higher than the property’s estimated market value — a decrease of more than 1 million properties (1,028,058) from a year ago.

TME0102-Data Page Chart One

The 5.4 million seriously underwater properties at the end of 2016 represented 9.6 percent of all U.S. properties with a mortgage, down from 10.8 percent at the end of Q3 2016 and down from 11.5 percent at the end of 2015 to the lowest level since ATTOM Data Solutions began tracking in Q1 2012.

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The report is based on publicly recorded mortgage and deed of trust data collected and licensed by ATTOM Data Solutions nationwide along with an industry standard automated valuation model (AVM) updated monthly in the ATTOM Data Warehouse of more than 150 million U.S. properties.

TME0102-Data Page Chart Two

“Since home prices bottomed out nationwide in the first quarter of 2012, the number of seriously underwater U.S. homeowners has decreased by about 7.1 million, an average decrease of about 1.4 million each year,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “Meanwhile, the number of equity rich homeowners has increased by nearly 4.8 million over the past three years, a rate of about 1.6 million each year.

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“Despite this upward trend over the past five years, the massive loss of home equity during the housing crisis forced many homeowners to stay in their homes longer before selling, effectively disrupting the historical domino effect of move-up buyers that feeds both demand for new homes and supply of inventory for first-time homebuyers,” Blomquist noted. “Between 2000 and 2008, our data shows the average homeownership tenure nationwide was 4.26 years, but that average tenure has been trending steadily higher since 2009, reaching a new record high of 7.88 years for homeowners who sold in 2016.”

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Combat Proliferating Pessimism

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It is sad but true: Americans are becoming overwhelmingly pessimistic. And, there is no shortage of studies to prove it. Reported data shows that that a paltry six percent of Americans think the world is getting better, while yet more reveals that a staggering two-thirds of Americans think the country is moving in the wrong direction. All of this growing negativity is understandably taking a toll on America, with escalating pessimism, stress and depression looming large across the U.S. In fact, the most recent American Psychological Association’s Stress in America survey cites that over a third of adults are experiencing increased stress over the previous year while, this year alone, the National Center for Health Statistics shows suicide rates in America at a 30-year high.

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Even those seemingly dedicated to making positive changes in their lives systematically fail. For instance, while many lean on New Year’s resolutions in a heartfelt attempt to promote positive life changes, the chances of realizing those successes are slim. Reports indicate that upwards 25 percent of people who make New Year’s resolutions will already have failed at keeping them a mere seven days into January. As for those who manage to outlast the week and stick it out the entire year? That number is a dismal 8 percent.

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While the statistics themselves may be depressing, there is certainly hope for those dedicated to making favorable changes. When put into practice, there are three timeless truths that can help people take their focus off their problems in order to lead more positive, productive lives.

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1.) The first truth to productive living is to “think it.” It is widely believed that one’s mind has a powerful influence on the physical body—a belief that can be traced all the way back to the fourth century with Hippocrates. Today there is scientific data backing up the influence of the mind upon the body, which mainstream medicine leverages in a variety of treatments from biofeedback and cognitive behavioral therapy to simple relaxation techniques.

Yet, one need not be involved in medicine to use this connection quite effectively every day. This timeless truth of thinking a productive life into being is applicable to most anyone. Here’s how it works: In order to unlock inner greatness at work, at home, in social circles and with other aspects of your life, you have to maintain a transformational, positivity-oriented mindset that is open to change and adaptation. This is because your own mind has the greatest propensity to either enrich your personal growth or limit it. It has the highest potential to either advance your life or destroy it. Therefore either you tame this tool or realize opportunity loss at best or suffer grave consequences at worst.

2.) The second timeless truth to better positive, productive living is to “speak it.” Begin by identifying the lies and undermining thoughts that play over and over inside your head and then replace them with positive truths about yourself, such as a list of your favorable attributes, accomplishments, and so on. Go a step further and verbally speak those truths aloud. This practice of making audible affirmations has a powerful, positive effect that has been recently scientifically documented by several university studies. Research from Carnegie Mellon University, for instance, has substantiated that self-affirmation “can protect against the damaging effects of stress on problem-solving performance” and that it “boosts stressed individuals’ problem-solving abilities.” During this “speak it” exercise, there is no need for rationalization. It is a simple act of giving language to the positive, desirable certainties in your life—about yourself and the world that impacts you—in order to manifest more.

3.) The third truth to realizing desired productivity is to “live it.” The most powerful weapon we have to transform our mind, and our life, is to not just think and speak these truths, but also to live in ways that will serve a cause and effect to actualize and make these truths a reality. This is very much the principle at work with the scientifically-validated Law of Attraction. Want to lose 100 pounds in 6 months? Go to the gym today. Want a raise at work? Invite your boss to lunch this week and get to know him or her on a personal level and share your aspirations. Take some form of “live it” action every day toward your goals, no matter how large or small.

If you find yourself in the grip of pessimism, stress or depression, turning the tide and living a positive, productive and rewarding life can seem nearly impossible. However, all it takes is one positive thought to get the ball rolling in the right direction and counter the pessimism. That singular thought can then become spoken word relative to what you want to see happen in your life. But, don’t stop there or your goals may never be realized. Your thoughts and words should lead to action on your part, thereby creating a cycle of “think it, speak it, live it.” This simple yet powerful three-prong technique can truly transport you from mere wishful thinking to tangible transition.

When you apply these expert tactics for living life in a way that promotes positive progression, you will surely be well on your way to enhanced personal and professional success—no futile resolutions required.

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The AI Age Is Here

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Artificial intelligence has gained prominence recently due, in part, to big data, or the increase in speed, size, and variety of data that businesses are now collecting. Artificial intelligence, or AI, can perform data-related tasks with great efficiency, and it can identify patterns in the data that often eludes human analysis. As organizations strive to gain more insight from their data, it’s not surprising that the business world is looking to AI for a competitive edge.

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It’s not like this is the latest and greatest innovation! The term artificial intelligence—an umbrella concept that encompasses everything from robotic process automation to actual robotics—was coined in 1955 by John McCarthy, an American computer scientist, and it gained traction in the academic community at the Dartmouth Conference the next summer. As Daniel Crevier describes it in his book Ai: The Tumultuous History of the Search for Artificial Intelligence:

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In the summer of 1956, ten young scientists, some barely out of their doctoral studies, sat down to consider the astounding proposition that ”every aspect of learning or any other feature of intelligence can, in principle, be so precisely described that a machine can be made to simulate it.” Armed with their own enthusiasm, the excitement of the idea itself, and an infusion of government money, they predicted that the whole range of human intelligence would be programmable within their own lifetimes. Nearly half a century later, the field has grown exponentially – with mixed results.

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By the early years of the 1980s, a consensus was forming that expert systems were the future of artificial intelligence. An expert system is a computer system that mimics the decision-making skills of a person. It makes sense in theory: feed enough data to the system to create the proficiency of a human expert, and you can theoretically get human-like decisions from it. Unfortunately, such systems are prohibitively expensive to develop and have only proven to be useful in targeted scenarios. In many respects AI has demonstrated a wide scope, but shallow influence: it has touched countless disciplines, but its impact has been limited to the most simple form of call-and-response interactions.

Today’s AI research and development focuses on artificial neural networks: systems duplicating the interconnected process of the human nervous system. AI can combine the reasoning ability of the human mind with the processing power of computers, such as in Apple’s Siri personal assistant and Amazon’s Alexa. A recent article in the Wall Street Journal stated, “Spending on AI technology is expected to grow to $47 billion in 2020 from a projected $8 billion this year, according to market-research firm IDC.”

As a consequence, some business executives are working to become familiar with methods of managing the development of applications and the design of algorithms across multiple lines of business. Brian Uzzi, a professor at Northwestern University’s Kellogg School of Management, has co-developed three AI courses for M.B.A.s. In April 2017, Kellogg plans to introduce Human and Machine Learning, a 10-week elective course. The broader objective, according to Mr. Uzzi, isn’t to create a cadre of engineer-executives, but to introduce future corporate leaders to the idea of making decisions with the help of machines. Artificial intelligence is now on the syllabus at top-tier business schools.

A recent MIT Technology Review looked at a major report from Stanford University, coauthored by more than twenty leaders in the fields of AI, computer science, and robotics and concluded that AI looks certain to upend huge aspects of everyday life, from employment and education to transportation and entertainment. The analysis is significant because public alarm over the impact of AI threatens to shape public policy and corporate decisions.

The report predicts that automated trucks, flying vehicles, and personal robots will be commonplace by 2030, but it cautions that remaining technical obstacles will limit them to certain niches. It also warns that the social and ethical implications of advances in AI, such as the potential of unemployment in certain areas and likely erosions of privacy driven by new forms of surveillance, will need to be open to discussion and debate.

In December 10, 2016, Andrew Tonner published the 9 Artificial Intelligence Stats That Will Blow You Away.

1.) Voice assistant software is the #1 AI app today: Many of these voice-powered AIs still leave something to be desired in terms of accuracy, and it was surprising that voice assistants outnumbered big data in overall popularity with businesses.

2.) AI bots will power 85% of customer service interactions by 2020: Bye-bye, call centers and wait times. According to researcher Gartner, AI bots will power 85% of all customer service interactions by the year 2020.

3.) Digital assistants will “know you” by 2018: Also from Gartner, digital customer assistants will be able to “mimic human conversations, with both listening and speaking, a sense of history, in-the-moment context, timing and tone, and the ability to respond, add to and continue with a thought or purpose at multiple occasions and places over time.”

4.) Amazon, Alphabet, IBM, and Microsoft to host 60% of AI platforms: These 4 tech giants already have significant cloud computing businesses, a trend researcher IDC sees as likely to continue and by the start of the next decade, will control most of the market for AI software applications.

5.) Get excited for self-driving cars: According to a study from leading consultancy McKinsey, the impact of self-driving cars will be tremendous, saving an estimated 300,000 lives per decade by reducing fatal traffic accidents. This is expected to save $190 billion in annual critical care and triage costs.

6.) 20% of business content will come from AIs by 2018: In a potentially apocalyptic turn for members of the media reading (or writing) this, AI-powered software will write as much as 20% of business content in a mere two years’ time according to Gartner.

7.) AI drives a $14-33 trillion economic impact: In a research report to its investors, Bank of America argued that the rise of AI will lead to cost reduction and new forms of growth that could amount to $14-$33 trillion annually, in what it calls “creative disruption impact,” and that’s just the tip of the iceberg in some experts’ view.

8.) Robots will be smarter than humans by 2029? According to Alphabet director of engineering Ray Kurzweil, machines will be smarter than us by 2029. Kruzweil doesn’t necessarily see this as being a negative, though. Among many other “bold” predictions about our AI-laden futures, he believes people will start living forever around the year 2029 as well. Whether that’s the result of some Matrix-like scenario coming to fruition isn’t immediately clear, but obviously leading experts in the field believe major changes to our social fabric are only a little more than a decade away.

9.) Zero people actually know how big an impact AI will have: While it’s certainly easy to get wrapped up in the litany of predictions, it’s perhaps most useful to simply keep in mind that AI should have a major economic impact from which investors can undoubtedly benefit from today.

The one concrete takeaway is that AI will contribute to the rapidly shifting technology landscape for our industry. Organizations that want to get or stay ahead will be flexible adapters who are willing to evolve their operations to take advantage of AI-based tools that enhance the customer experience, streamline internal processes, and feed the business pipeline.

Summary: Artificial intelligence (AI) is all around us – we encounter it in our daily tasks, such as talk-to-text and photo tagging, and it is contributing to cutting-edge innovations such as precision medicine, injury prediction, and autonomous cars. AI is the next big revolution in computing and holds the promise to provide insights previously unavailable while also solving the world’s biggest challenges.

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Brace Yourself

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In his early days in office President Trump has shown that he is ready to shake up the mortgage industry. He has said that he plans to re-evaluate Dodd-Frank and he also suspended a reduction in the premium rate offered by the Federal Housing Administration to homebuyers. The reduction, relatively small, would have saved homebuyers about $500 a year. So, what do these early moves mean for this industry?

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William Fall, CEO at The William Fall Group, says, “The higher rates that we are starting to see would have happened regardless of the election outcome. I believe the MBA’s outlook in October remains fairly accurate. The fundamentals of the housing market are strong, and while there will be much less refi business going forward, I think we’ll see a very healthy growth in purchase volume. Of course, this shift in the market will impact the appraisal industry. Appraiser capacity in some markets is very high, and I expect regulatory activities will affect AMCs over the coming year. Perhaps it goes without saying that some valuation companies will be better equipped than others to manage these challenges.”

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Curtis R. Knuth, Executive Vice President at NCS (National Credit-reporting System, Inc.), believes that “the new administration will focus on a few obvious things, such as the privatization of the GSEs and what the runway for that will look like. Many solution providers and lenders were aware of the pilot programs Fannie Mae was running prior to the launch of Day 1 Certainty, which provides relief from reps and warrants, among other benefits. Although I don’t think anyone expected the program rollout to progress with a single vendor for each solution of the program. It was conducted as if Fannie were a private rather than a public entity, which is normally very careful not to pick winners or losers. It’s something we’re drawing congressional and administration attention to.”

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Jeff Bradford, President at Bradford Technologies, sees big changes to come. “I believe the Trump Presidency will have a Big Time effect on the financial industry,” he notes. “The first casualty will be the CFPB. In October the United States Court of Appeals for the District of Columbia Circuit handed a major victory to PHH, declaring that the CFPB’s leadership structure is unconstitutional and the director of the CFPB has too much power. The ruling means that a Trump Presidency will surely clip the agency’s wings. It will be interesting to see how much power the CFPB will be left with to enforce compliance and levy fines. It may not even survive.

“The second casualty is Dodd-Frank, the law that of course created the CFPB,” Bradford continued. “Trump’s transition team has recently indicated that it would like to see a full repeal of the law. Does this mean that we will go back to the Wild West that created the Great Recession, or just a milder form of it? The third major change could be GSE reform. The key will be if moderate Republicans and Democrats collaborate to create an economic shock absorber that dampens the effect of the changes the Trump administration will attempt to make.”

“The Trump presidency will have a significant effect on housing,” added Jeff Doyle, Chief Executive Officer at LoyaltyExpress. “We are already witnessing higher interest rates due to anticipated major federal infrastructure spending and stronger economic growth. A bigger economic impact, however, will come from the reversal of banking regulations. As lenders are encouraged to loosen standards (especially for middle-income households), an upswing in residential construction and debt-financed spending will serve to boost economic growth.

“More relaxed CFPB and other major Dodd-Frank regulations will lead to greater lending competition as well as a streamlined mortgage origination process. The downside of deregulation is riskier lending programs and more defaults. Caution must be the central theme so that deregulation does not lead to a recurrence of the 2007 financial crisis. But overall, growth and inflation will both increase,” Doyle pointed out.

But will Trump be a net positive or a net negative for mortgage lending going forward? “There are two different ways the Trump election victory will affect the mortgage market,” answered Josh Friend, CEO at InSellerate. “One is bad, and one is good. On the negative side, we can expect to see higher interest rates, which we’ve already seen happen since the election. Mortgage rates are up more than 50 basis points due to a massive sell-off of U.S. Treasury securities. The fear is that President Trump will be spending a lot of money to cut taxes, create jobs and rebuild our infrastructure. Those are good things, but they will cause inflation, and interest rates will rise as a result, as they already have.

“The second impact from the Trump Presidency will be a positive one for the mortgage industry and a win for both borrowers and lenders, and that is reduced regulatory requirements. Complying with all of the new regulations that have become law over the past several years has increased the time and cost of producing loans for both borrowers and lenders. Trump made a lot of promises during the campaign to reduce regulations and he seems to be moving forward on them during the transition. His appointment of Steven Mnuchin as Secretary of the Treasury, who has a mortgage banking background, should also benefit our industry.”

Rick Sharga, Chief Marketing Officer at Ten-X, theorized that “the Trump Administration will, on balance, be good for the housing and mortgage industries for several reasons. I believe that the new administration will work towards a less burdensome regulatory environment, and more specifically will unwind some of the more problematic and punitive aspects of the Dodd-Frank legislation, which has made lending riskier, more difficult and more expensive. This should encourage more retail lenders to get back into the game, and hopefully bring back some of the smaller, community banks as well, which opted out of the mortgage market due to the overwhelming costs of regulatory compliance. More lenders making more loans to qualified borrowers – people who would have qualified for loans historically but haven’t been able to do so in today’s extraordinarily risk-averse environment – removes one of the major headwinds that has been preventing a full housing market recovery.”

Sam Heskel, CEO at Nadlan Valuation, agrees that Prsident Trump could be good for mortgage lending. He says, “Trump will not do things that make it more difficult for the industry to sell homes and close loans. At the very least, we can expect some rollback or easing of regulations that have added to longer appraisal turn times. In the near term higher rates and the typical slowdown in the winter months will ease appraisers’ workload and appraisal turn times will improve.”

So, what does this all mean? Many are cautiously optimistic even if they hate President Trump. “Regardless of your political bent, let’s first remember that Trump is a real estate magnate – and thus I’d like to believe he is well aware of the dynamics of the real estate market and would be disinclined to step on the hose, so to speak,” said Sue Woodard, President and CEO atVantage Production. “Fears over removing the mortgage interest rate deduction or “MID” are unfounded – he is considering a cap (and by the way, there is a cap already) – but even if the cap was $100K as Mnuchin suggested, it would take an enormous mortgage to generate $100K in mortgage interest.

“Simplification of the tax code could impact the ability of some buyers to deduct mortgage interest at all, but I believe most folks would remain in favor of simplification. I further suspect the CFPB is here to stay, but with the current structure placing direct oversight of the agency under the President – including a right to fire the director. I expect this might mean a more business/industry friendly agency, while still protecting the consumer. Opportunity abounds, as it always does in times of change – and it’s incumbent upon lenders to use technology to consistently and professionally communicate this message so that consumers don’t miss the opportunity to build and advance their financial futures,” concluded Woodard.

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‘Speak Human’ In A Content-Crowded World

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“Blah…Blah…Blah…” This is what most consumers hear when exposed to marketing messages no matter the medium through which it’s delivered. Today’s consumer demands more than catchy slogans and slick ad campaigns. But, in what’s evolved into an overwhelmingly egregious disconnect, most companies struggle to communicate even the most essential messages that will differentiate their brand in today’s crowded, confusing and expectation-laden marketplace.

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With technology making it easier than ever for consumers to block and otherwise avoid advertising and marketing messages as they go about their online and offline lives, companies ubiquitously scramble for solutions—ultimately turning to content marketing to help them make and maintain meaningful connections with the marketplace…to the tune of an estimated $50 billion spent by U.S. businesses for 2015. However, like many marketing innovations that are incubated to solve problems, content marketing could quickly lose its impact.

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Those who are wildly successful at content marketing understand the strategy is not just starting a blog and creating social media accounts. It’s a disciplined approach to communicating with a target audience—one offering ample opportunity to tell a simple, human story that will educate, inform, entertain and, most importantly, compel customers in a way that fully captures mind–and market–share through messaging that truly resonates.

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Companies must completely re-imagine their approach to connecting with customers. How? By simply communicating with them instead of talking at them. Specifically, speak human. This is not just in a given “handshake moment,” but rather it is a continual friendly engagement with a consumer, or the marketplace at large, that is built primarily by trust and performance.

Below are three strategies that can help you make and maintain meaningful connections and create a lifetime value with customers in ways that’ll set your brand apart in a crowded marketplace, tell an authentic story, foster maximized marketplace engagement and breed brand loyalty:

1.) Recalibrate low-level communications. We have long struggled with linear, low-level or one-way communication. It is a completely timeless human phenomenon that is at the core of every conflict or stalemate, from the ones we experience at home, work and in our communities. We focus on transmitting information, but lose sight of the critical need for feedback, response or an actual “human” exchange of emotions or ideas. However, for decades this was our only way of receiving communication from advertisers and many consumers “stomached” it because there was no alternative.

Today’s social networking tools can effectively and surreptitiously disguise “reach” with “results,” often only perpetuating linear, low-level communication. For example, you’re on Twitter and Facebook and you’re tweeting and posting five times a day, and perhaps growing a fan and follower base on each like clockwork, with your “strategic” ad buy. But your zealous, disciplined approach doesn’t mean you’re doing it effectively. Who, exactly, are all those followers, friends and fans? And are you really “speaking human,” creating content or telling an authentic story? It might be that you are simply tweeting and posting just to check it off your task list, and that your followers are re-tweeting or “liking” you for the exact same reason. If that’s the case, then they’re not really followers or actual “friends” at all.

“Speaking human” involves more than just opening a communication channel for that channel’s sake, or doing social media just because someone at some seminar told you that you should. Your “handshake moment” is where people actually discover the essence of who you are as a brand for the first time. If that’s the case, what are they going to find? Will they be greeted by a sales pitch? A slogan? A press or media kit? Or are they going to find a real person—someone they might want to reach out to and greets them with a warm hello? If you’re not asking these questions, let alone answering them satisfactorily, chances are your content is simply traditional advertising disguised as substance wearing a new outfit.

2.) Master conversational media. Conversational media insists that we don’t just sell ourselves, but rather, share ourselves. And further, it informs the listener who we are, rather than what we are. We must learn the signals that tell us when to drop the jargon, cut the B.S. and simply talk, authentically and truthfully, to those we hope might buy our product or service. Yes, we sell things, and so we must provide essential information about policies, performance and the like, but good content marketing is about providing information and education. Brands shouldn’t have to sell themselves.

An effective mix of messages includes telling people what you do, how you do it, and even why you do it. Then, you draw them in to your embrace with a story that is compelling and authentic. Then, leave them alone to make the choice. Why not influence the decision making process with endearing, enlightening and empowering messages? Speaking Human is about engaging with someone for a mutual benefit: you need this information and I must deliver it in a way that you understand while you need to ask me questions in a way that makes sense. We’re having a conversation. We’re speaking human. When the conversation takes place on social channels, participate in the exchange in such a way as to achieve the coveted “handshake moment.” How do you get there? What do you say to influence them to engage with your brand, your business? It’s all about cutting through the jargon, the clutter that clogs the communication pipeline.   It’s not about selling your soul. It’s about them.

3.) Give them something to talk about. In this new economy of conversation, marketers must master the art of facilitating the relationship between the business and its consumer. For example, the company wants to run a campaign to advertise a specific product offering. The consumer is looking to meet a need or discover an innovation. Content marketers bridge the gap. They create the information the business needs to share and provide the information customers want to receive. The job of today’s content marketer is to work both in the world of traditional media as well as conversational media.

The goal is not bullying, but inviting. Not grabbing attention, but earning and holding attention. Naturally you want audiences to take action. But, it’s the rare brand that understands how the content and story must interact to add real value versus merely seeking to sell a product or service.

Storytelling is an essential human activity and must be the cornerstone of any meaningful content strategy. If story is the nest, content becomes the baby starlings that grow strong and fly off carrying compelling messages. A story can instantly communicate your history, values and beliefs, and gives people something to talk about. Unless you have a real story, loyalty is unlikely.

The Conversation Age finds brands in the midst of an evolutionary process. Social media and the overarching digital landscape has afforded them the ability to engage in a transactional dialogue, often giving them the bigger platform and louder voice. This new power forced modern companies to become completely transparent in their brand storytelling. Thus, the Conversation Age requires modern businesses to educate, inform, even entertain their customers, all while telling a story.

Today, learning how to use conversational techniques in commerce to touch the heart of the customer must be a top priority for modern marketers in any field. No longer is it effective to merely “shout” at consumers through the one-way megaphone of traditional advertising such as TV and radio spots, and billboard and print ads. Nor, frankly, will consumers stand for it! Instead, sophisticated, modern consumers are demanding transparent, honest and authentic dialogue.

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