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Blog View: Creditors still in business today are likely to run in 2023. Those who want to sell are on that path. It remains to be seen who will win market share next year and who won’t.
New financial data suggests the downturn may not be as severe as first believed, meaning even lenders who didn’t gain market share in the new year should be happy to hold onto their share.
In the year Growth in 2023 will require different strategies than those that have worked in past financial waves. We have evolved into a money-for-purchase business. Even if interest rates change course, it will take time before many current borrowers can refinance. Growth in this market comes from critical partnerships with business referral partners.
Today and for the past six months, real estate agents who haven’t heard of a loan officer in years are getting a lot of attention.
Cutting through this noise requires Lowe’s to offer something more than its competitors. Here are four ways credit originators can wow their business partners now and set themselves up for success in 2023.
Make it a habit to overcommunicate
High on the list of mortgage transaction frustrations is the confusion that comes from not knowing where the lender is in the origination process.
One of the complaints heard from almost every lender is that their partners are suffering from a lack of communication during the refi boom. Today there is no reason for this.
When loan rates are low and over-the-top in most lending shops, this is the perfect time to create some new habits. Whether it’s real estate agents, lawyers or financial advisors, leaders train everyone to know what’s going on in every partner transaction.
Modern loan origination technology has made it very easy to provide status updates to any stakeholder at any point in the process. Advance communication to referral partners is now a fundamental part of what all leaders will offer in 2023.
A referral partner is always right.
Over the past few years, the mortgage industry has stepped up 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 is always important that we provide the best possible experience for our borrowers. This is how we win future business from the borrower through a new loan or referral to someone they know. But these wins are dwarfed by the referral partner’s business building power.
Our borrowers, about 70% of the time, represent one transaction for most loan officers. A good referral partner can bring in many transactions every month. To overcome them, we need to look beyond the transaction to the lifetime value of the relationship.
Since few LO’s have been doing this, there is no denying that startups who consider business referral partners to be valuable assets are setting themselves apart.
Adjust your tech stack
Legacy mortgage software isn’t great at meeting the needs of business referral partners, especially when it comes to effective communication. Lenders who take the time to adjust their technology stack now will be more effective in meeting the needs of their partners next year.
Of course, this assumes that lenders can make changes to their tech stack. Lenders with legacy platforms are finding that developing new workflows can be time-consuming and expensive, often driving them to LOS developer preferred partners.
Modern LOS software offers a robust set of APIs that enable lenders to create what they need to process loans efficiently, communicate effectively and close quickly. In addition, these next-generation devices have moved beyond the desktop and are now available on mobile devices, allowing Los to connect with their partners from anywhere.
Real estate agents and other partners are experiencing this API-driven efficiency in other parts of their business and thus it is becoming a requirement for all lenders. Using an outdated technology stack will be wrong in 2023, just because Loos knows it.
Expand your credit list
Previously, shutter speed would probably appear in this list. At the peak of the housing market, being able to close quickly on a loan was often the difference between getting the winning bid or losing. But today, in a cold market with fewer buyers competing for similar homes, it’s actually qualifying more borrowers.
For most lenders, this means offering a wide range of loan products that meet the needs of most potential home buyers. You can’t build a strong relationship by telling your referral partners that you can’t fund their buyers. At the very least, setting good expectations for the agent’s clients will improve the experience for both the agent and their buyer.
When a lender is pre-qualifying a new home buyer, the agent wants to see not just a pre-qualification, but a pre-approval. Telling your partner that the deal is both the seller’s responsibility as far as title and appraisal work is concerned will give the lender confidence.
In the past, lenders were unable to match the demand for loan products, so it was difficult to provide the kind of experience that is possible today. There is no reason for creditors not to fulfill these promises.
It requires lenders to consider ways to provide a better experience for their business partners and the homebuyers they serve. It should all be part of a sound business development strategy that drives LO actions in the coming year.
Lenders who will emerge as industry leaders in the coming year will be bolder in their approach to arming their LOAs with better technologies that make it easier to wow their business referral partners.
Joe Cameriri is Executive Vice President of Sales and Strategy at Mortgage Cadence.
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