Giving Back This Holiday Season
It’s that time of year when we’d usually be walking around our local malls and humming along to “It’s the Most Wonderful Time of the Year.” Of course, that song typically refers to the holiday season itself. For many this year, however, the “most wonderful” part is that the year is finally drawing to a close. Between the ongoing health crisis, the business closures and job losses, the civil unrest and the recent election turmoil, there are a lot of people worse for the wear at the end of 2020. At the same time, the mortgage industry was gifted historic low rates and has been able to pull off an incredibly successful and profitable year. Can you feel the tension? Our question this month: How can mortgage lenders and loan officers use their 2020 windfall to spread some good cheer this holiday season?
HOW CAN MORTGAGE LENDERS AND LOAN OFFICERS USE THEIR 2020 WINDFALL TO SPREAD SOME GOOD CHEER?
By all accounts, 2020 has been a banner year for the mortgage lending industry. With rising loan amounts and absurdly low interest rates, many lenders’ total loan volume will end up two or even three times what it was in 2019. And the prospects for 2021, initially forecasted to suffer a 50 percent year-over-year drop in refinance volume, are improving. A recent Black Knight report shows that the number of high-quality refinance candidates was its highest ever in September — 19.4 million — and continues to climb. This suggests that that the refinance boom may be far from over and that forecasts for 2021 may be significantly underestimated. Let the good times roll!
While mortgage lenders are basking in their 2020 success with an eye toward future profits, they would be wise to remember that this has been a tough year for many of their clients, particularly those who needed a lower payment or a cash-out infusion just to stay afloat. Small business owners, restaurants and retailers in particular, have been the hardest hit, with more than 160,000 closing their doors for good. And according to the Mortgage Bankers Association (MBA), the number of homeowners currently still in forbearance plans remains remarkably high at 2.9 million — nearly six percent of all mortgage loans. Additionally, 2.3 million borrowers are currently 90 or more days past due — that’s five times the amount entering 2020. These are good reminders that even if you’re not feeling the financial pinch of the pandemic, there are plenty of people who are. The end of the year is a great opportunity to show your customers that you care about them and that you are thinking of them.
A healthy and appropriate response to a generous windfall is, quite simply, generosity. And what better time than when our bank accounts are flush with commissions and bonuses?
Here are a few ideas for practicing generosity this holiday season:
Gifts to Customers
If you’re not already in the practice of thanking your borrowers in a tangible way, then buying gifts for everyone might feel daunting, especially if you did a lot of loans this year. I could tell you that the referrals you’ll end up receiving will cover the costs many times over, but any way you skin it, there will be a substantial “felt” cost on your pocketbook. Granted, you don’t need to buy everyone a gift, especially if you did hundreds of loans this year. If your list is long, or if you’re on a limited budget, I’d recommend working your way down your borrower list like this, as resources permit:
- Anyone you know of that contracted COVID-19 (or a loved one)
- Essential workers (medical, postal, etc.)
- Restaurant workers
- Small business owners
- Hospitality workers
- Retail workers
- Remaining purchase customers
- Remaining refinance customers
Also, don’t feel like you need to buy every customer a $200 steak dinner. Something inexpensive, yet indulgent like a $15-20 box of chocolates (or even a gift card for the same) can go a long way toward generating good cheer — and customer loyalty. If you’re crafty, create your own holiday gift box with a candle, some artisan snacks and maybe a nice bottle of seasonal hand soap for $20-30. The holiday season is the perfect time to surprise and delight your customers in this way precisely because it’s unexpected. That’s what creates the delight and that’s why it will not be soon forgotten. I still remember and recommend a loan officer who sent me wreath one year for my front door — and that’s the first thing I think about whenever I think of him.
Thanks to RESPA regulations, giving gifts to referral partners is off the table. But what about donating to charities “in their name” or “in their honor?” According to my compliance sources, this is well into the gray area and would be tempting fate.
The safest, RESPA-compliant way to donate is to do so without ties to referral partners. Simply pick one or more charities yourself, then commit to donating a certain percentage of your commissions — or a fixed amount per loan — in the month of December.
A few things to keep in mind:
- If you go with a fixed amount, the minimum starting point is $50, lest you look cheap. $100 is ideal because it’s perceived as a solid amount of money to anyone. $200 makes a statement, but not much more than $100. Any more than $200 and they may start wondering a) how much money you actually make and b) if the donation is more of a tax write-off plan than a way to give back.
- Always make sure your donations are in your name, not a referral partner’s name. Since a tax write-off is a financial benefit, the latter could be a violation of RESPA.
- If you plan to advertise about the donations — this includes even a Facebook post — then be sure to follow through, lest you run afoul of some Reg Z and MAP rule issues.
*STRATMOR recommends discussing any of these recommendations with legal counsel.
Personal Notes (on Personal Stationary)
2020 is a year when the typical, mass-produced holiday card (or e-card) just won’t cut it. We’ve been through too much together this year for platitudes and generic sentiments. By acknowledging our shared time in the trenches in a personal note, you have a real chance to connect on a personal level and make a lasting impact with your customers.
So do away with the boring budget cards, invest in some nice stationary and sit down and write down a personal note of thanks. Maybe even do the whole melted wax stamp thing for the “wow” factor. Again, if you did hundreds of loans this year and just the thought of penning personal notes makes your hand hurt, start with the borrowers who will appreciate it the most: “essential workers,” small businesses owners, and those in hospitality, restaurant or other harder-hit sectors.
Here are three strategies you can implement today to create connections with your customers:
- Plan Ahead: Make a commitment now that for every loan you do in 2021, you’ll write a Christmas card when it closes (even if it’s in July) including something personal about the transaction. This should be easy because it will be fresh in your mind. Then save the cards to mail in December along with a gift card. The customer will be delighted, and you will have smartly spread your work out across the year and achieved maximum impact.
- Ask for Corporate Involvement: When it comes to donations, many lenders have a matching policy for approved charities. That’s a great way to double the impact of your giving and create more goodwill in the customer’s eyes for your organization as a whole.
- Make Donations Personal: Consider donating to national causes supported by your clients. Put on your investigative cap and check out their LinkedIn or Facebook page for causes they support. Does your referral partner have an adopted child (AdoptTogether)or a rescue dog (ASPCA) or perhaps a loved one suffering from an illness that needs a cure? Show that you’re not only thinking of them, but that you’re willing to take real action.
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