LOST OPPORTUNITIES

Consumer loan closings are regarded as the "wastebasket of mortgage lending." In New York City, at least, they are usually entrusted to the lowest-bidding law firm (so as to gain or keep a perceived competitive edge, closing costs are either borne entirely by the lender or kept to a minimum). The lowest bidder employs the high-volume, low-profit template, using casual per-diem closers or cheapest available employees.

This, of course, is the optimal template for the so-called "mortgage banker" or similar wholesaler who immediately disposes of 100% of its mortgage product to investors. That person will never see the customer again, does not rely upon word-of-mouth to attract customers, and has but one product to sell. They sell upon price alone. Service is a foreign concept; the basic premise is "a consumer mortgage customer is like a bus; if I don't get this one, there'll be another coming along in a few minutes."

A bank, even a bank that sells off every single consumer mortgage loan within 24 hours of making it, even a bank without branches that exists solely in cyberspace, has something besides that mortgage to sell to that customer. It has certificates of deposit, checking and savings accounts, credit cards, other forms of consumer debt, insurance and even investment advice. However, these products are not unique, and there is competition even in this age of mega-merger. Therefore advertising is necessary, not merely to get the mortgage customer, but to get the buyer of other products as well. The person who buys a mortgage and the one who buys a bank are often one and the same.

If for any reason they are not the same, any banker will make every effort to make them customers for more than one product. Marketing wags call this "cross-selling" and "point-of-sale advertising". Every teller, every signature behind a desk on the platform, every customer servicer with a headset and screen, every employee on and off the floor, every banking day, is given the message "sell the bank, not your own department."

The bank's advertising budget reflects this. In your own case, do the math--what does each new customer cost you in advertising? But you probably already have. And you are probably not happy with the number--it's too high. The same marketing wags will tell you that point-of-sale advertising is the most effective, the cheapest and the least-used kind of advertising.

Well and good, you say, but what does that mean for consumer mortgage closings? The closing is the point of sale. That is the moment when the bank can make its best impression. That is also the moment when the customers, who are making the biggest single commitment of their lives, are the most in need of intelligent and courteous treatment, not only from their own lawyer but also from the "ogre across the table", the bank.

If the customer is met by a gum-chewing, bluejeans-clad "para", who can neither explain anything nor appears to care for anything but how quickly they can "get outta here 'cause I have anotha closing", then the advertising money spent upon attracting the customer, the time and efforts of the loan officers spent in "cross-selling" the customer, have all just gone down the drain. What is more, you have just lost good affirmative word-of-mouth, which our advertising wags will reluctantly admit is better than any advertising campaign. The cost of overcoming bad word-of-mouth is prohibitive when it is not impossible.

The cure is simple and not expensive. Make sure that skilled lawyers, not "paras", close your consumer mortgage loans. Make sure you use one team for the bank, so that they know which bank they represent. Make sure you know them and they know you, so that rapid, personal communication is possible, so that customer concerns get addressed, not left to voicemails. Then you are already "cross-selling" at the point-of-sale.