Someone gets a new job, relocates, and needs a house in his new home town, ASAP. Another person wants to buy a house but is too busy to drive to the bank and fill out loan forms at lunchtime. A third mortgage seeker is available only on weekends. No problem in First of America Mortgage Company, Kalamazoo, MI, territory. If the consumer can't go to the bank, the bank, in the form of a loan officer loaded with a laptop, goes to the consumer.
With consumers' disposable time in such short supply (not to mention thin margins), speed is essential in mortgage lending. As Rick Smalldon, First of America senior vice president, puts it, "You can't expect homebuyers to settle for the old 30 to 45 day approval wait for mortgage loans." So with the help of MorVision Mobile Loan Officer (MLO) from Dinatek, based in Livonia, MI, the bank, which originated $1.8 billion in first mortgages in 1996, went mobile. Now customers get approval on the spot.
With a complete customer database, the ability to handle all loan products, and a direct interface with underwriting, MLO makes loan officers self sufficient. "When the customer is approved, he goes shopping for new curtains or furniture instead of shopping someone else's rates," says Smalldon.
MLO accepts any fixed-rate loan, which covers 60-70 percent of Midwestern borrowers. The bank uses its interface with Fannie Mae's Desktop Underwriter; Freddie Mac is another option. As Fannie Mae and Freddie Mac expand automatic underwriting, it will grow to government lending, jumbo loans, sub prime and all ARM products. Fannie Mae has a pilot for FHA/VA; by year end it will process some jumbos. FHA/VA and fixed-rate mortgages make up a significant part of First of America's business.
Besides saving borrowers time, MLO saves the bank the real estate expense of expanding and contracting facilities as interest rates and loan volumes fluctuate. Instead, the bank can have fewer, larger regional centers. Loan officers cover a wider geographical area, and work out of their homes or executive bank suites.
Revving up personal marketing
Using added MLO sales components, loan officers step up personal marketing, reports sales manager Michael Townsend. From the existing database of loan buyers or prospects, officers can customize mailings to follow up and stay in touch. As a case in point, they can advise current customers to refinance when rates drop. Loan officers also meet future prospects at open houses, preapprove them, and follow up regularly. The point is to make sure that customers remember the loan officers in talking to friends or families who want referrals.
MLO also helps loan officers keep track of references as well. By knowing how many deals one realtor brings, for instance, the loan officer can spend time and marketing dollars with people who send business, whether it be realtors, builders, CPAs, or attorneys. The realtor, in turn, knows that a pre-approved loan is a significant marketing tool. "It's more than just an efficiency gain for First of America," says Townsend. "We provide the tool to make loan officers more successful salespeople."
The process is simple. The loan officer completes the application, interfaces with credit bureaus and underwriting system, and then the bank's processing system. MLO talks to the bank's internal processing systems, networked into servicing and secondary marketing. The bank had to develop an interface for its mainframe system. "It was a challenge to bring data from the loan officers' PC-based system. We built a interface from the laptop through Flashpoint software to our mainframe," says Smalldon.
First of America budgeted more than $1 million for the total program, including $3,000 to $5,000 per laptop user for hardware. Smalldon contends that improved efficiencies more than make up for the cost.
Lower processing costs are the whole point of increasing efficiency. Today's loan officer submits the file to the automated system, which identifies the processing pieces and indicates what other information the loan officer needs from the customer before him. This replaces the old method: send a file to a processor who figures out what is needed; ask the customer for the information down the road; submit the file to the underwriter; get the underwriter responding that it needs more data. Fewer clerical workers are needed now; the aim is to do more with the same number of personnel, according to Smalldon.
keeping up to date on the road
A crucial element of the system was finding a way to keep loan officers abreast of new products, forms, changes in forms, and differences in interest rates from day to day, according to Smalldon. "With 200 loan officers spread all over the place, we must be able to provide information very rapidly. We can't send out PC disks," he says. A new bank system allows loan officers to dial a phone number and get computerized updates of relevant changes, including daily or even hourly interest rate alterations. In addition, loan officers are equipped with pagers. When rates change, the officers dial in for updates.
The transition to laptops brought surprises. During training sessions, it became clear that while some loan officers were proficient in PC use and Windows, others were afraid of the technology. Training people with such a wide spectrum of experience was difficult. In the future, training will begin with preliminary instruction on the PC for those who need it. Follow- up training includes weekly conference calls with newcomers and experienced officers to discuss difficulties. E-mail also helps, particularly in explaining how to enter information into the computer and the need to be specific in doing so. Some officers also go on the road to help their colleagues.
On a larger scale, First of America must help loan officers understand the philosophical changes of doing business while using PCs, reports Smalldon. Typically more sales than detailed oriented, loan officers get the minimum amount of information necessary to move the customer along. This approach does not work with computers; if the application is not accurately and completely filled out, the computer will not come up with the expected results. "They just can't write information on a napkin, bring it back to a clerical person and expect them to move forward," he says.
In turn, some loan officers feel that the bank is trying to turn them into data entry clerks, according to Smalldon. The bank must convince them that on the contrary, it is providing loan officers the tools to give customers absolute answers on the spot. This accelerated process allows the loan officers to move on to the next deal. Loan officers have been making deals in Michigan since July. The roll-out should expand to Illinois, Indiana and Arizona by year-end.