Blog Overview: The lenders that are in business today are the ones that will most likely be in business in 2023. Those who wanted to sell. It is now up to the rest to determine who will win market share next year and who won’t.
New financial data suggests the decline may not be as severe as initially believed, meaning even those lenders that don’t gain market share in the new year should be happy to keep what they have.
Growth in 2023 will require different tactics than those employed during previous refinancing waves. We’ve turned the money into a business. Even if interest rates reverse their course, it will take time before a critical mass of existing borrowers can financially benefit from refinancing. In this market, growth comes through critical partnerships with business referral partners.
Today, and for the past six months, real estate agents who haven’t heard from a loan officer in years are getting a lot of attention.
Reducing this noise will require LO to provide more than other competitors. Here are four ways borrowers can WOW their business referral partners now and set themselves up for success in 2023.
Make it a habit to talk more
High on the list of mortgage transaction frustrations is the confusion caused by not knowing what the lender is in the process of initiating.
One of the complaints that almost every lender heard was that their partners suffered from a lack of communication during the refi boom. There is no excuse for that today.
With reduced loan volume and increased capacity at many lending shops, it’s the perfect time to start making some new habits. Leaders will train everyone to keep each partner, whether they are real estate agents, lawyers or financial advisors, fully aware of what is going on in the transaction.
Modern borrowing technology has made it very easy to provide status updates to each partner at any time during the process. Active communication to referral partners is now a fundamental element that all leaders will automatically offer in 2023.
The referral partner is always correct
Over the past few years, the mortgage industry has come to terms with its responsibility to create meaningful and satisfying borrower experiences. Now, it’s time to realize that the referral partner is as important, or even more important, than the borrower.
It will always be important that we provide the best possible experience to our borrowers. This is how we will win future business from the borrower as a new loan or referral to someone they know. But these gains are dwarfed by the business-generating power of referral partners.
Our borrowers, about 70% of the time, represent a single transaction for multiple loan officers. A good referral partner can bring many transactions every month. To win them over, we must look beyond the transaction to the lifetime value of these relationships.
Because few LOs do this, startups that treat business referral partners like valuable assets will undoubtedly set themselves apart.
Organize your tech stack
Legacy mortgage software is no better at meeting the needs of business referral partners, especially when it comes to effective communication. Lenders who take the time to adjust their technology stacks now will be more effective in meeting the needs of their stakeholders in the coming year.
Of course, this assumes that it is possible for lenders to change their technical stacks. Lenders with older platforms find that developing new workflows is time-consuming and expensive and they often turn to their preferred LOS developer partners.
Modern LOS software offers a powerful set of APIs that lenders can leverage to create exactly what they need to process loans efficiently, communicate effectively and close faster. In addition, these next-generation tools have moved beyond the desktop and are now available on mobile devices, allowing LOs to communicate with their stakeholders from anywhere.
Real estate agents and other stakeholders are already experiencing API-driven efficiencies in other areas of their business and so it is quickly becoming a necessity for all lenders. Using an old tech stack just because LOs are familiar with it will be a mistake in 2023.
Expand your loan menu
In the past, closing speed probably appeared on this list. In the peak of the housing market, being able to close a loan quickly was often the difference between a winning bid or a losing one. But today, in a cooling market with fewer buyers competing for similar homes, it really depends on the ability of more borrowers.
For many lenders, this will mean offering a wide range of loan products that will meet the needs of potential home buyers. You can’t build a strong relationship by telling your referral partners that you can’t fund their clients. At the very least, setting the right expectations for the agent’s clients will improve the experience for both the agent and their client.
When a lender qualifies a new home buyer, the agent will likely want to see a pre-approval, not just a pre-qualification. By telling your partner that the transaction will work as long as the title and appraisal work are both the seller’s responsibilities, the lender provides the kind of clarity that builds trust.
In the past, it was difficult for lenders to offer the kind of experience that is possible today because their capacity could hardly keep up with the demand for loan products. There is no excuse for lenders not to make these commitments now.
This will require lenders to consider ways they can provide a better experience to their business referral partners and the home buyers they serve. All of this should be part of a sound business development strategy that will drive LO operations in the coming year.
Lenders who emerge as industry leaders in the coming year will be bold in their approach to equipping their LOs with the best technologies that can make it easy for them to WOW their business referral partners.
Joe Camereri is Executive Vice President of Sales and Strategy at Mortgage Cadence.