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Residential originators are facing not only helping each client navigate the current lending environment, but also the organizational challenge of transitioning all or part of their daily business life to a work-from-home Loan Officer (LO). For many, these are uncharted waters. It is this time, given the turbulence of the industry and the financial markets, that borrowers rely on their experienced LO more than ever.
First, who are we talking about? According to the Bureau of Labor Statistics, there are approximately 308,000 loan officers nationwide, and HMDA data indicates there are more than 5,500 lenders. According to STRATMOR Originator Census® Study data, about 60 percent of originators are men, while according to the National Association of Realtors, about 63 percent of Realtors are women. The median age of Realtors in 2018 was 54. The average age for an LO, according to STRATMOR data in 2019, was 47 and the average age of the borrower was 46.6.
STRATMOR Group’s 2020 Originator Census (2019 data) numbers show that the average annual production per LO was $11,584,013, or 44 units. STRATMOR estimates that in 2019, as many as 30 percent of applications in Retail were completed online by the borrower with no assistance from the LO. This means seventy percent of borrowers are still going to a loan officer to help them start their mortgage loan.
Will COVID-19 change this number? While we’re all being advised to do more online, from working remote to making the largest purchase of our lives, we are social animals and crave the contact of our kind, particularly as we make major decisions, like buying a home. We’ve built into the loan process the human touch, knowing as we do the importance of creating a relationship with the borrower. Data from STRATMOR’s MortgageSAT Borrower Satisfaction Program shows that 36 percent of borrowers are going through the home buying process for the first time, about one-third of the market, and that 87 percent of first time buyers choose their lender because of personal referral from a family member or friend or an existing relationship with — a real estate agent. Relationships generate leads and LOs turn those leads into loans.
When the LO becomes involved to do the program scenarios, talk rates and be the “Sherpa” doing the loan process, the information flow from the LO to borrower can add comfort and confidence during this time of uncertainty. From process and policy, to data, technology and advice on and/or validation of lender decisions, LOs, once again, have the unique opportunity to help ease financial concerns for millions of Americans and the need to discuss turning to the equity in their homes to help their financial future as the need arises. .
A well-trained and educated LO takes the time to explain everything from “what is a 1003?” to the role of the Federal Reserve and how MBS pricing works. LOs know that the marketing this is done now will generate leads two to six weeks from now, which will take another four to six weeks to close. So, what they’re doing today affects business six to twelve weeks from now. LOs can explain how rates will vary and are taking a backseat to service and programs. After all, what difference does a great rate make if a lender can’t close the loan?
STRATMOR data shows that borrowers like their LO very much regardless of channel. During this time of crisis, LOs are more important than ever because more and better communication is required in times of crisis. Experienced LO understand this. STRATMOR’s data on phone call updates vs. customer-initiated updates show that borrowers are more satisfied with originators that initiate the contact, rather than wait for the borrower to do so.
At these times borrowers need an expert, not a website. Real estate agents will refer their client to a person, not a site, to procure financing. The entire process can be handled over the internet, but most consumers still prefer a well-informed human to help guide them through a costly and complex transaction. Talking with a loan officers can help borrowers understand the recent wild swings in interest rates, what new technologies are available and how to use them. It’s the loan officer who plays the big role with the borrower in making sure loans close, especially when there are uncertainties with appraisals, recordings and the general process Bank and non-bank lenders continue to have multiple branch offices or a scattered workforce because they need to bring loan officers face to face with potential borrowers.
It is not a cakewalk. Companies need LOs to continue to represent the lender’s brand, despite being at home. Owners and CEOs need to promote corporate culture, despite not being in the same place at the same time. The loan process and workflow must remain connected, and managers must be able to “micro-coach” through real-time data. And the technology and data must be able to measure an LO’s effort as well as the effort of the supervisor. Working from home during this pandemic has created problems, as well as opportunities. Having a video call with a client has replaced meeting them at the coffee shop or at the office. LOs have become very good at lighting and camera placement.
Mortgage Loan Officers need to remind themselves that, if they were the borrower, would you rather receive advice from someone who knows the business, or the internet?
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Let us light up your strategy discussions.