Your Voice Column: Automated Borrower Intelligence Enables Mortgage Lenders To Work Smarter, Not Harder

The summer of 2019 closed with a bang for mortgage lenders thanks to a sharp spike in refinance volume. In fact, the Mortgage Bankers Association’s Senior Vice President and Chief Economist Mike Fratantoni reported, “The 30-year fixed rate mortgage fell to its lowest level since November 2016, and the drop resulted in an almost 12 percent increase in refinance application volume, bringing the index to a reading over 2,000 – its highest over the same time period.” Fratantoni cited the Federal Reserve cutting rates and trade tensions with China as contributing factors.

Talk about incredible news for the mortgage industry. However, for loan officers, manually sorting through thousands of borrower records to see who qualified for these lower rates likely proves to be a daunting task. It is also safe to assume that some qualified leads fell through the cracks and weren’t contacted due to the time constraints of sifting through customer information.

Utilizing an automated borrower intelligence system during the boom led to a far greater opportunity for mortgage lenders. Thanks to technology that performs on-going monitoring of leads, customers, and past customers, and provides real-time notifications, loan officers using automated borrower intelligence didn’t need to waste time checking in on leads who aren’t ready or are still unqualified.

Automated Borrower Intelligence Defined and Applied

Strategies surrounding the use of customer intelligence data have been in practice for well over a decade in other industries. However, as with most things technology-related, the mortgage industry is behind the adoption curve.

Automated borrower intelligence keeps loan officers informed when a pertinent event occurs, such as a change in credit score, qualification for a lower rate, or loan-impacting life events—with no manual labor required. Notifications are delivered directly to the loan officer and tasks are created to initiate appropriate follow-up actions based on the status of the lead, ensuring loan officers stay front and center with their customers through all stages of the customer life cycle.

For example, a borrower that lists his or her home for sale, improves their FICO score, or undergoes a divorce, becomes eligible for a specific loan product. The loan officer is notified by the system of that change and can then reach-out to the borrower with timely, relevant information. Essentially, the use of automated borrower intelligence technology plugs potential gaps in the customer journey, helps loan officers communicate with their customers at appropriate touchpoints, and ensures that no opportunities are missed.

Are You in the Top 40 Percent?

According to STRATMOR Group’s Originator Census Study, “The top 40 percent of originators account for more than 80 percent of total volume, a measure which has not changed by more than one percent in any given year. That means that 60 percent of an average lender’s sales force produces only 17 percent of total volume. The bottom 60 percent close less than one-half of one loan monthly.”

This statistic is a perfect example of why utilizing an automated borrower intelligence system is not only a competitive necessity, but an absolute business imperative for mortgage lenders to increase volume. And clearly, based on the information from STRATMOR Group, a large percentage of the lenders need to help with loan volume.

As we roll into the last quarter of 2019 and look to the start of 2020, it’s essential for mortgage originators to think about how they plan to keep loan volumes up. Does it make sense to triple marketing budgets? Rely more heavily on realtor referrals? No, it absolutely does not.

You’re Living on a Farm: The Smart Lender Approach

Let’s take a moment to think about your database as a farm and your loan officers as farmers. If as a farmer you work your land, harvest your crops, and retain seeds for the following year, you have become self-sustaining. Further, if you utilize machinery to harvest, you become more efficient and are thus able to yield more crops in less time.

Smart lenders are becoming experts at “farming” their database to make sure that when business slows down and the cost of producing one new good opportunity triples or quadruples, they have a steady stream of business coming from their own database. Smart lenders know that their database produces the most profitable deals, happier customers, and ultimately referrals. Incidentally, referrals are the least expensive source of new business. 

Fortunately, automated borrower intelligence systems are now available to help mortgage lenders properly farm their databases. Using automated borrower intelligence technology, mortgage lenders are notified the moment an unqualified lead becomes eligible, or when existing borrowers qualify for better interest rates or new loans. Essentially, turning databases into an evergreen resource of leads.

Similar to farmers cultivating their land to support future crop cycles, mortgage lenders need to realize that their database is one of their greatest assets. However, for that resource to provide ongoing leads, technology needs to be utilized to address several gaping holes in the lending system:

>>Awareness of when an unqualified lead becomes qualified.  

>>Eliminating the need for previously ineligible borrowers to repeatedly undergo the loan application process.

>>A means to notify existing borrowers when they qualify for a better interest rate.

Borrower Intelligence is a Must for Smart Lenders

Artificial intelligence may sound like the last thing you want in a business that is so dependent on trusted, authentic relationships, but systems that utilize AI can manage the behind-the-scenes work, freeing up time for mortgage lenders to build rapport with leads and customers. As noted in a survey conducted by Fannie Mae’s Economic and Strategic Research Group, “AI appears to be gaining traction in the mortgage industry, as well, as our study shows that about one-quarter of lenders surveyed say they have started using it for their mortgage businesses.”

Spurred by low mortgage rates, the current competitive landscape for mortgage lenders is intense. To remain viable in a saturated market, lenders must leverage automation to not only attract top talent, but to also improve borrower loyalty and retention.

Previously, monitoring the client database has been a manual and labor-intensive process that yielded mediocre results at best. With automated borrower intelligence, loan officers are often the first to know when it’s an ideal time for the consumer to enter the market, and because there is a previous relationship, connecting with the consumer is much easier than a typical lead.

In closing, automated borrower intelligence provides lenders with an avenue to build relationships, increase revenue and keep customers coming back long after their first transaction. By replacing “guess work” with data driven actions based on meaningful data, mortgage lenders can work smarter and more efficiently to increase loan volumes and keep the sales pipeline plentiful.