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Expert Insights: Uncovering Database Goldmines

This piece originally appeared in the April 2022 edition of MReport magazine, online now.

Refinance to purchase, or purchase to refinance … markets are always shifting one way or another. Mortgage loan officers must adapt quickly, or their business can suffer. But with so much focus on new clients who are either buying or refinancing, previous clients are often overlooked.

To get a better gauge on mining databases, MReport spoke with Louis Zitting, Founder and CEO of MonitorBase, a fintech company that monitors prescreened credit information and other real-time behavioral data to alert salespeople when someone is in the market to purchase or refinance a home.

Zitting began his career developing websites for mortgage companies before becoming a Loan Originator and Branch Manager for a large nationwide lender. His passion is helping clients find new ways to grow their business in a data-driven world while removing complexity from the process.

How can loan officers identify underserved borrowers, and what are the best ways to reach them?
Zitting: There are many underserved borrowers at the moment. Much of this has to do with lenders struggling with capacity over the past couple of years, but that is going to change as rates increase and refi business slows down. In fact, there are still underserved borrowers for refis, as many homeowners were unable to get one due to financial issues or employment issues. So, identifying borrowers who still have a high mortgage rate and whose credit is migrating higher is key.

Another underserved market that exists is those who have been renting and are in the process of improving their credit. Loan officers should be focusing on areas where average incomes are still somewhere in line with the median value of the home. Most underserved borrowers are outside the big metropolitan areas.

To identify these borrowers, most loan officers will need to look at data they have not looked at before. But they also need to broaden their perception of what their client database is. It is not limited to just past transactions or your Realtor relationships … it is everyone you know!

What do some loan officers get wrong when it comes to marketing to existing clients?
Zitting: Where most loan officers fall short is doing generic marketing that does not speak to individual clients. Usually, it is just automated newsletters with the interest rate updates and loan product changes, and that is it. A consumer usually sees something like this and thinks it is great for the loan officer, but they do not understand what it means for them. By blasting out generic newsletters every month, you risk wearing out the attention of your audience, and they will train themselves to ignore your updates.

Deep down, consumers are not really trying to get a mortgage. They are trying to change their lifestyle. A mortgage product is part of that step, but the loan officer’s messaging needs to be more toward the life events of the people they are trying to reach—reaching out at a time that makes sense. So rather than a biweekly newsletter that’s a product update, loan officers should provide some sort of valuable information that will be relevant to their clients at a time when they are entering the market, not just marketing to people because they are in their database. In this sense, less is more.

What strategies for retaining clients for life are often overlooked?
Zitting: One great way to build clients for life is to help them get their first home. For example, FHA borrowers on lower credit tiers—620 to 700—are a great place to start.

There are so many first-time buyers who are having a hard time getting their offers accepted because there are so many cash offers happening. However, most still intend to buy a home and are not going to give up—it will just take them longer.

The relationships you are able to develop with this group are important because when inventory starts opening up, they will be ready to go. This also gives you the opportunity to introduce first-time buyers to the agents you work with, so you are able to build your referral network as well.

How fast do loan officers need to be when it comes to sales, and how can they get faster?
Zitting: When the data suggests a contact may soon be in the market for a home, the faster you can engage, the better. That does not necessarily mean they are going to buy right away—the sales cycle for home purchases is growing longer because there’s so little inventory. However, once a buyer is ready to move, they will usually take the most recent advice they received. That could be the teller at their community bank, or an agent that they had a conversation with who tells them which lender to use. You want to make sure it is you.

The lifecycle of the homebuyer is long, but you should engage early and be there to answer questions throughout the process so that when the time comes, you become their best option.

What is credit migration, and why is it important for mortgage sales?
Zitting: Credit migration is moving from one level of credit quality to another. We look at it in terms of a borrower’s credit and finances improving over a period of time, to where it meets the minimum credit requirements established by the lender. It is important to realize that today’s credit denial can be tomorrow’s closing. In fact, credit scores soared during the pandemic because many people were able to pay down their debt.

With the improved economy, credit migration opens up a world of opportunities for loan officers, starting with their existing contacts. One thing MonitorBase does is monitor a loan officer’s databases for credit migrations and send alerts when a contact’s credit improves. I can tell you, there is a lot of untapped business in databases with loan applicants who did not qualify six months to a year ago.

And it is possible that some do not even realize they now qualify for a mortgage, so loan officers need to monitor credit changes and act quickly. Once the borrower is ready, they may move on to a different lender.

What can machine learning tools help tell us about borrower behaviors?
Zitting: There are so many data points that even if we were to look at it manually, you would not be able to keep track of it all.

Machine learning tools help us identify whether there is a trend happening in credit or geography, based on patterns in consumer behavior and what consumers have done in the past, to indicate if a mortgage transaction is likely to happen. This information is taken into account to predict who will probably be in the market in the near future, which helps lenders and loan officers channel their marketing efforts toward the right contacts.

The bottom line is most loan officers are sitting on a ton of untapped business in their databases. But they also need the right technologies to identify early intent-to-buy signals, so they know when and how to reach out to someone who is ready to buy. Because if they cannot do it, someone else will.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.

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