The challenge of borrower retention continues in 2024.
Retention has become a mortgage buzzword. It’s turned into a mythical creature that we have all heard about in other business sectors but haven’t quite been able to place in the mortgage industry. I have read dozens of articles about how to increase your retention. They outline a strategy involving customer service, relationship development, and a “wow” experience. If you want to learn about scalable retention strategies, check out the Zappos case study. Zappos was one of the first companies to offer free shipping for returns. T-Mobile did extensive research to learn how to provide the best customer experience and became the “Un-carrier” allowing customers to use their service without an annual contract. These companies and many more show what it takes to achieve customer loyalty. It involves an audacious, unthinkable barrier removal that has traditionally created consumer challenges. Once the barrier is removed, customers come back in droves. Retention.
The Facts of Borrower Retention
If you follow any borrower retention technology company – you may be swayed to believe retention is becoming a standard. However, Black Knight’s Mortgage Monitor Data Report will abruptly bring anyone back to reality. In the biggest refi era the mortgage era has ever seen, retention continued to drop. I can confidently say there is no Santa Claus, Easter Bunny, or borrower retention in the mortgage industry. It’s a fairy tale. It doesn’t exist. I know mortgage loan officers believe they retain customers and have marvelous relationships. Marketing teams construct brilliant email campaigns and have invested in software that flags potential buyers. However, the evidence doesn’t support the delusion. Maybe it is time to accept that borrower retention doesn’t exist in the mortgage industry.
A Borrower Retention Strategy
I’m not saying there is no retention. Well, I guess I did, but according to Black Knight, mortgage companies keep about 18% of their portfolio. Being that this is an average means some are doing better, and others are doing worse. As I was thinking about this and investigating the borrower retention companies that serve the industry, it hit me like a ton of bricks. I took an educated guess as to the clients each major borrower retention company has, and if my guestimate is right, only about 10-15% of mortgage companies leverage borrower retention technology. It is possible that thousands of lenders and mortgage loan officers do not leverage this technology.
We know that demand for houses isn’t down, so there is a high probability that mortgage loan officers have the loans they need to maintain their business live within their database. So, if there is a year to figure retention out, it is 2024. Whether you are a national lender, regional mortgage company, or individual broker, you can find assistance with borrower retention on Mortgage Advisor Tools.
Find a Borrower Retention Technology Solution
Benjamin Franklin was the first to say, “You can do anything you set your mind to.” The mortgage industry at large has yet to take full advantage of these services. Every borrower retention technology company I have ever worked with can show how they can lower the cost per funded loan. These technology companies are getting bundled up as borrower retention, but in many cases, these companies are ways to aggregate the business you couldn’t get before. Getting a mortgage to buy a home is an uphill battle for some people and requires years of financial discipline to improve their circumstances to qualify. But people tend to work for things that are important to them. All lenders watch millions of dollars in originations slip through their fingertips by simply not implementing a strategy or leveraging technology.
Mortgage lenders must reach people where they are in the process and thoughtfully engage prospective homebuyers. Without a borrower retention strategy, lenders will continue to see potential deals originated by their competitors. It is a high probability that these competitors are utilizing a borrower retention technology as part of their strategy. Sending a birthday card, or only putting prospects in an email drip campaign are activities that don’t provide a value to the borrower. Relying on the idea that relationships and borrowers remembering their experience is not a strategy. If the industry rests on this laurel, borrower retention will remain impossible.