Editor's note: This story was originally featured in the February issue of MReport, out now.
If you ask top-performing salespeople whether they’d rather do paperwork or sell loans, there’s no question how most would answer. Great salespeople don’t wait around for borrowers—they go out and find them by constantly marketing, calling leads, and touching base with referral sources. The truth, however, is that paperwork is just as important as selling. While you can’t have a business if you don’t sell, you won’t have a business if you don’t manage expenses, as well as license requirements, business disclosures, insurance, and the necessary check boxes to remain compliant and keep you out of trouble.
Of course, salespeople don’t like to pull their eyes off the sale. So, they put it off these necessary tasks until later or until they get a warning or even a fine. But what if they don’t have to think about it as much?
The fact is today’s evolving customer relationship management (CRM) technology enables mortgage salespeople to feed the sales pipeline and stay compliant with the requirements of doing business. The only trouble is many lenders aren’t leveraging the right technologies, nor do they understand how important it is to use them to create a compliant contact strategy, as well as lower costs and sell more loans.
From 0 to 60: How to Integrate Compliance and Sales
To stay compliant, a lender’s sales and marketing processes must operate in a structured environment that assures them of meeting Consumer Financial Protection Bureau (CFPB) and other lending regulations.
Their processes should also meet all American Institute of Certified Public Accountants (AICPA) Service Organization Control (SOC) standards for security, confidentiality, and protection of data. At any time, a lender could be facing an audit, which is why clear internal procedures must be in place to prepare for that possibility.
How do sales fit into all this? For one, lenders are responsible for ensuring individual loan officers are operating within regulatory lending compliance standards. Thankfully, today’s CRM technology can help ensure compliance with regulations governing the sales and marketing of mortgages, as well as maintain compliance during the loan process itself.
For example, the average mortgage transaction requires at least four different disclosures that require 34 separate signatures and where the borrower must provide 29 pages of documentation. Surprisingly, this is still a manual task for many lenders, although automation can streamline the process. Today, lenders can access an online push-button system that sends out correct disclosures to the customer in real-time, allowing the loan officer to complete the application and get the loan into processing faster. This also expedites the appraisal process, as you can’t order an appraisal until the borrower has acknowledged their intent to proceed via these disclosures.
Today’s CRM software can also help loan officers find appropriate loan products for individual customers, which is also required by mortgage regulations. To comply, lenders must provide consumers with all the information necessary for them to make an educated decision regarding whether a financial product or service is right for their needs. For example, if a lender offers a lower rate on a certain type of loan and markets to a general audience, the lender must inform borrowers of the requirements to get approved for that loan—and not in small font on the back of a letter, but clearly, up front, where the borrower can’t miss it. CRM technologies can automate all these processes.
Staying in the Driver’s Seat: Maintaining Control in All Stages of the Loan Process
CRM software can update the correct pricing and fee information during underwriting and adjust the Closing Statement when it’s integrated with a lender’s loan origination software (LOS) system and leveraged throughout the loan process. While automating the disclosure process is a huge time saver, it’s important that the loan officer can walk the customer through the disclosure process online if necessary. That brings us to another key factor for successfully instilling compliance in the sales process—control.
Despite increasing automation in the mortgage process—or perhaps because of it—control is more important to lenders than ever. For example, mortgage borrowers today can sign in to a lender’s website, fill out a few simple questions and provide the lender with instant access to all the borrower’s financial information. However, communication is extremely important for this process to work effectively. The good news is CRM technology empowers lenders to define and create unified messaging throughout the loan process, either through email or text. All communications can be reviewed and approved by the lender’s compliance department and saved for future audits. This reduces the costs associated with compliance, which can then be passed on to the borrower.
The best CRM systems go further by providing lenders even greater control. For lenders that conduct business in more than one state, for example, CRM tools can automatically include the correct business disclosures at the bottom of every email or letter, depending on the borrower’s location. They can also adjust the messages depending on when and how many times a borrower has been contacted, or suggest products unique to that borrower. When lenders can define their messaging and workflow and have access to a full audit trail, they will be at an advantage not only when it comes to generating new business, but also in ensuring compliance.
Petal to the Metal: Increasing Sales Speeds
Speed is the cornerstone of any effective sales strategy. In today’s highly competitive mortgage market, the first lender to contact, develop, and nurture relationships with a borrower has the best chance to turn that lead into a closed loan, and the lenders who do this consistently are the ones leading the market in volume. That means the CRM system a lender uses must be fast. For example, in today’s competitive market, sales leads must be quickly distributed to the right person based on their skills and availability, and every customer should be contacted immediately. The CRM software a lender uses must at least do these things.
So how fast is fast? InSellerate has conducted research studies to identify the speed to contact mortgage lending companies. Among other things, the study found that over 75 percent of consumers expect a call within one hour of an inquiry, yet around 65 percent of online mortgage inquiries never receive a response. This research also showed that calling a customer in the first hour after initial contact versus after two hours increased the chances of a successful contact by 700 percent. Sound crazy? Keep in mind that today’s connected consumers are far less patient than they used to be. They don’t have to wait around for a lender to call them back when they can find another lender anytime, anywhere—even on Twitter or Facebook.
If you can’t respond to borrowers quickly, it’s game over. That means your system must be fast in multiple ways—that is, it should provide timely and automated communication through phone, email, or text. It should also help loan officers follow up with borrowers immediately after a contact is made, either by an automated trigger, event-based email, or text messages, or initiating a follow-up call. Staying in front of the customer is that critical.
The right technology can help loan officers manage leads so that sales teams call back borrowers within minutes or even seconds. It can take the guesswork out of pipeline management, with defined workflows and lead prioritization from sales to processing. It can also manage all communications for a lender’s business, from initial contact and engagement with a borrower, to taking the application, processing the loan, post-closing, and customer retention. If the lender is relying on a third party for CRM technology, that vendor will be committed to improving their technology and internal systems.
Until recently, most lenders looked at sales and compliance as two separate issues, but technology has flipped such thinking on its head. The latest CRM systems help integrate compliance into the sales process, so lenders can quit worrying and loan officers can sell. CRM can help lenders stay in control of all communications and save all records in case of an audit. It can also help speed up the sales process so lenders can sell more loans quickly. All of this lowers a lender’s costs, which can be reinvested back into sales and marketing.
Fortunately, more lenders are starting to understand this and are leveraging technology to bring compliance and sales under the same umbrella. That’s good news for the lender and the loan officer, who can focus on doing what they do best—selling loans. It’s also good news for the consumer, who benefits from a simpler, faster mortgage process. And satisfied borrowers tend to be repeat customers and recommend their lender to friends and family. What more could you ask for?