When most consumers walk into a retail bank location, they don’t expect to see a mortgage loan officer (LO) standing right there, ready, willing and able to provide a wealth of expertise and information about today’s increasingly complex mortgage process.
In fact, it used to be normal to never see an LO in a bank branch until one was called upon, and even then, he or she usually wasn’t hanging out at the branch – usually an appointment had to be made over the phone. Even then, there’s no real assurance that the LO you called will have time to answer all your questions (that is, if they even call you back).
Today, however, any bank with retail locations that’s looking to ramp up its mortgage business would be best advised to get the best LOs it can hire into its branches as frequently as possible. After all, research shows that despite the fact that the mortgage shopping process is increasingly moving online, a high percentage of home shoppers start the process with their local bank branches.
These same consumers, however, want answers to their questions fast – just as if they were online (and why should it be any different?). The problem is, the mortgage process has become increasingly complex, giving rise to even more complex questions. For that reason, lenders with brick-and-mortar facilities need their LOs to have a strong presence in those facilities so that they can deliver “on the spot” information and guidance.
But there’s so much more to it than that. As Kevin Gillen, senior vice president of mortgage at TD Bank, tells MortgageOrb, many lenders are now figuring out that having a strong LO presence in their bank branches – and in the larger community – is a better strategy for building referrals, leads and future business.
“Yes, technology and automation is absolutely changing the mortgage business,” Gillen says. “If you’re a traditional mortgage banker, you probably wrestle with that every day – because you could interpret that as being a threat to your livelihood. But for the industry in general – and considering what customer preferences are now and how technology has delivered self-service, speed, transparency and simplicity – as a mortgage banker, if you’re not thinking along those lines, the world is going to pass you by pretty quick.
“We absolutely subscribe to the fact that the buying and servicing behaviors of customers, due to the generational gaps, is changing,” Gillen adds. “However, we also feel that your traditional LO plays an absolutely mission-critical role as a trusted advisor.”
But Gillen doesn’t mean the LO is just a trusted advisor to the borrower. The LO should also be a trusted advisor to virtually all of the other parties involved in the home buying process.
“The ecosystem today still heavily relies on your Realtors, your developers, your builders, your CPAs, your real estate attorneys and your FAs,” Gillen says. “Although there are different platforms and portals and systems that might try to penetrate all that – at the end of the day, these transactions are all built on person-to-person relationships, where you have this mutual understanding and trust.
“As a builder, as a Realtor, it is somewhat of a challenge if you’re going to send your client through a digital portal to have them talk with someone who they’ve never met before and they don’t know where they are,” he adds. “Not that I’m dismissing that – it is the new reality – it’s just very, very different [from the traditional mortgage experience].”
Gillen says TD Bank is ramping up its mortgage business this year with the addition of up to 79 new LOs (for a total of 180 by the end of October), each of whom is “married” to four to five branches in his or her area and then given the tools and support he or she needs to reach success. These LOs, he says, will have a strong presence in the bank branches, which is beneficial not only for customers, but also for other bank staff members who could get posed with some tough questions about today’s mortgage process. He says the bank plans to hire up to another 75 LOs by the end of 2017.
By increasing the LOs’ presence in the branches and having them work more closely with local Realtors and other key “partners” in the mortgage process, he says, TD Bank has discovered that its LOs are getting more leads and closing more deals. Basically, it is a pragmatic way of boosting the LOs’ networking capabilities and opportunities, resulting in more referrals.
“We launched this new LO referral program in May, after 10 months of development,” Gillen explains. “What we did was take a step back to look at this from the customer’s perspective. Who does the customer really rely on when they go through a real estate transaction? Their attorney? Their financial advisor? The Realtor? On the mortgage side, it’s the mortgage loan officer. They’re the pivot person.
“The other thing we looked at is we developed a very customer-centric approach,” he adds. “If you take what is considered to be a relatively long sales cycle – it is longer, and it is complex – why would you not want to have your best and most trained professionals and marry them up with your distribution channel? That’s exactly what we are doing.”
Part of the goal, he says, is to make the LO “an extension of the store manager.”
“Our LOs participate in calls with local Realtors, accountants … they also go on calls to small business customers because a lot of small business owners are great candidates for future real estate needs, including second homes,” he says.
Call it improvement through total immersion. Not only do TD Bank’s LOs have increased store presence, where they “spend time with the tellers and with our customer service representatives,” but they are also frequently brought into the regional offices, “where they spend time with the president and the regional managers,” Gillen explains.
It is through this relationship building that the bank’s LOs “take a more active role in driving the pipeline,” he says.
“So, it’s really an extension of our store distribution channel, bringing it to a new level of expertise,” he adds.
Another interesting benefit, he says, is that other bank staff becomes more relaxed, more confident, with an LO physically in the premises.
“In our stores, we offer maybe 50 different products – in that respect, we’re not too different than many of our peers – and within each of those, you have myriad policies and underwriting parameters, and then you have things like loan level pricing adjustments,” he says. “And if I’m a typical CSR, and mortgage is one of the many products I have to sell – it’s almost overwhelming.”
Gillen says it has been “interesting to see how new dynamics have developed between our team members in the store and the MLOs” as a result of having LOs in the facilities.
“There’s this sense of calm, a sense of relief,” he says. “But there’s also this amazing amount of confidence in that they now feel more comfortable with the level of expertise and what that brings to the customer experience.”
Gillen says this approach helps solve one of the major impediments preventing LOs from building business, which is the “lack of strong relationships and partnerships between the front lines and the processing and underwriting and closing partners.”
He says by joining the LOs to these other partners “at the hip,” TD has succeeded in developing “a culture of incredible inclusiveness.”
“Some of the LOs we’ve hired in recent months have told that at the previous companies where they worked, they were never in any meetings with their business partners – they never heard from them, never had access to them – plus there was no escalation process.”
He says having “clearly defined SLAs [service-level agreements] and clearly defined escalation processes, which does require a little bit of trust and patience,” is one of the ways to get a greater degree of “buy in” from the LOs.
But in addition to setting the expectations, the bank has found that by teaming its LOs up with all of the other parties involved in the home buying process, the customer experience is greatly improved. That’s because, as Gillen puts it, every LO’s success is based on the strength of the staff supporting that LO – from the agents, to the underwriters, to the branch managers, “they all play a role in the LO’s success.”
Gillen says TD Bank will continue to develop and expand its new LO referral model through 2017.