Technology has reinvented most industries

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2 Technology has reinvented most industries and digital media has become a key advantage for companies to reach, engage and convert today s tech-savvy consumer. By now, most companies have embraced the change or die edict. And while the home finance industry has been slower to reap the full benefits of social and digital technology, it is quickly catching on. Social media, in particular, has emerged as a key way for mortgage lenders and loan officers to share information and exchange ideas with real estate agents, builders and homebuyers. In recent years, social media has evolved significantly and its use has grown exponentially. Facebook, the world s largest social networking site, reported that it had 1.65 billion monthly active users as of the first quarter of And that number is expected to grow to 2.5 billion by 2018 roughly one-third of the world s population. Through social media and other digital channels, mortgage lenders and loan officers can reach and interact with influencers in ways previously unattainable.

3 Being findable in a modern world The first step in adapting to this new digital-first paradigm is being findable online. There is an unstated expectation from homebuyers that they should be able to find you on Google and social media, yet many loan officers haven t even taken this step. Amy Malloy, social media marketing specialist at RPM Mortgage Inc., Alamo, California, likens social media to communication of the past. To ignore social media today is like ignoring 20 years ago, she says. Nearly 70 percent of mortgage shoppers start online, according to a study from Deloitte Development LLC, Oakland, California. On the home-buying side, more than 50 percent of buyers start their search online, according to a joint study by the Chicagobased National Association of Realtors (NAR) and Google. Creating a profile on LinkedIn or Facebook business page is only part of the equation. With a highly considered investment like a home loan that requires working closely with a loan consultant, both agents and consumers want to know that person is credible. Building out a network of connections, sharing content and participating in groups are a great way for loan officers to establish credibility. Des Moines, Iowa based Wells Fargo Home Lending understands the importance of enabling its home mortgage consultants with the social media tools needed to engage with consumers in the digital age. We provide a platform for home mortgage consultants to develop individual Facebook Business Pages and LinkedIn profiles, and we supply a wide range of content they can choose from to help them build relationships with consumers and with real estate agents, builders and other home-buying resources, says Greg Gwizdz, executive vice president and national sales manager for Wells Fargo Home Lending. Beyond a channel for loan officers to connect with consumers, social media is also a powerful channel to build relationships and stay top of mind with centers of influence across industries. Real estate agents are highly effective social networkers, and connecting with them online helps loan officers build community awareness and generate referral business. The empowered homebuyer With the world s information at their fingertips, today s homebuyer has all the power. Phonebook listings and classified ads are a thing of the past, and online sites such as Zillow and Redfin offer consumers the convenience to research home listings and mortgage pricing whenever, wherever they are. And they have more information about the offerings in the market than ever before. According to Erin Lantz, vice president of mortgages for Zillow Group, Seattle, consumers increasingly make mortgage decisions based on customer reviews, competitive pricing and product details, all curated for them in one place, so it s important that loan officers assess their social media pages and Not surprisingly, 80 percent of today s U.S. consumers would consider a mortgage from a non-bank, one in three would consider Walmart and 48 percent would consider PayPal. online profiles to make sure they convey trust and expertise. In fact, Zillow has received more than 2 million consumer reviews of local real estate agents and lenders, including reviews for more than 250,000 mortgage professionals and usage of that platform is increasing. Given that more than 40 percent of consumers start their home-buying search online and more than half from their mobile devices, according to the National Association of Realtors 2015 Profile of Home Buyers and Sellers, marketing to millennials is especially important. Increasingly, we see more consumers starting their homebuying process by figuring out what they can afford online, [and] talking to a lender to get pre-approved before they start working seriously with a real estate agent, says Lantz. RPM Mortgage is another company that is ahead of the curve in adapting to this new consumer paradigm. Its loan officers have been using Facebook and LinkedIn to connect with customers since We understand that in order for our loan advisers to build a successful business, they need to be present and available wherever their clients are and that includes social media, says Julian Hebron, executive vice president of sales and marketing at RPM Mortgage. Intensifying competition Digital technology and rapid changes in customer expectations are threatening traditional business models, which are far too often inefficient, costly and unresponsive to the needs of modern consumers. Alternative lenders, online mortgage originators and mortgage industry digital disruptors such as LendingHome, San Francisco; Groundfloor, Atlanta; RealtyMogul.com, Los Angeles; and Social Finance Inc. (SoFi), San Francisco, are finding new ways to serve high-tech consumers while increasing profitability at all stages of the mortgage and home-buying process. Not surprisingly, 80 percent of today s U.S. consumers would consider a mortgage from a non-bank, one in three would consider Walmart and 48 percent would consider PayPal, according to D+H USA Corporation s 2016 State of the Mortgage Industry report. Regulatory guidance managing risk on social media Despite the opportunity to leverage social networks to attract and retain customers, the real estate finance industry faces unique regulatory hurdles. A 2014 study by Sonoma, California based Brandle Inc., The State of Social Media in the Mortgage Industry, reveals that only 20 percent of social media sites are compliant, and lenders still have a ways to go in figuring out how to market effectively to homebuyers and influencers. Guidance from the Federal Financial Institutions Examination Council (FFIEC), which became effective in 2013, outlines how financial institutions (including banks, credit unions, mortgage lenders and other non-bank entities supervised by the

4 Consumer Financial Protection Bureau [CFPB] and other state regulators) can compliantly use social media and website communications. The FFIEC places having a strong risk management program in place as a top priority. According to the FFIEC, this program must include: n Clear roles and responsibilities for supervision and process workflow for approval, monitoring and enforcement of content shared on social media; n Policies and procedures regarding the use and monitoring of social media and compliance with all applicable consumerprotection laws and regulations, and incorporation of guidance as appropriate. Policies and procedures should incorporate methodologies to address risks, including fraudulent use of a company s brand; n A risk management process for selecting and managing third-party relationships; n An employee training program that incorporates the policies and procedures regarding work-related use of social media and, potentially, for other uses of social media as well; n Audit and compliance functions to ensure ongoing compliance with internal policies and all applicable laws and regulations, and incorporation of guidance as appropriate; and n Guidelines for evaluating the achievement of the objectives set out by a company s board of directors and senior management. How RPM Mortgage, Guild Mortgage and Wells Fargo leverage the power of social networks With the rise of social media, many mortgage companies realize the value of extending their brand presence on social media to connect with potential buyers and influencers in their local markets. In the aforementioned Brandle study, top-performing companies were found to be more socially engaged, and revenue performance and social presence correlated. (The study found that Facebook is the most dominant and efficient in terms of audience, and Twitter is more efficient in gaining followers.) The following are three leading mortgage companies that understand the power of social media. RPM Mortgage equipping loan advisers to succeed on social media No stranger to leveraging social media, RPM Mortgage, a mortgage lender and broker with more than 800 loan advisers and employees, understands the value of social media for its representatives to reach and connect with people in new ways, and stay connected with the communities they serve. RPM s marketing team leads a robust social media sales program, including the use of a client engagement platform that allows loan advisers to distribute compliance-approved content that they can easily publish across social media sites, to build credibility and stay top of mind. While RPM analyzes the value of social media in a variety of ways, including online conversions, traffic to loan adviser websites, application downloads and more, says Malloy, the real value comes from the loan advisers themselves, such as when they express the difference social media is having on their business. Guild Mortgage deepening relationships using social media Guild Mortgage, a privately held mortgage company based in San Diego, makes regulatory compliance a high priority with respect to social media activity. The company communicates regularly with its licensed staff to ensure they are using social media related to their loan origination activities appropriately and compliantly. According to Bella Titiyevskaya, Guild s vice president of compliance and legal affairs, the company leverages social media as a means for loan officers to build meaningful relationships with their customers, and also use social media as a listening post for customer input and feedback. Guild s marketing team requires employees who are active on social media as it relates to their loan origination activities to register through a central technology platform, which enables its compliance department to educate loan officers on best practices. We regard social media as another means of communication to let customers know who we are, says Titiyevskaya. It s a wonderful way to avail customers of educational content, and get smarter about the home-buying process. Wells Fargo Home Lending Combining the best of both worlds When it comes to leveraging technology, Wells Fargo has learned that customers want to connect digitally and personally to address their home financing needs. Consumers want the best of both worlds so they can take care of their home financing needs when, where and how they want to, while still receiving the personal service they expect from a lender, says Wells Fargo s Gwizdz. For instance, in our 2016 How America Views Homeownership survey, 88 percent of people said they want to be able to see each step in the mortgage process so they can understand what s happening, Gwizdz says. At the same time, 81 percent said they want to have a personal connection with their lender knowing that someone is there to answer questions and walk them through things, says Gwizdz. Despite a perception that millennials are more interested in all-digital experiences, we found that when going through the home-buying process, they value personal guidance from a mortgage consultant. Wells Fargo offers that combination of online convenience and personal guidance by pairing digital capabilities with its nationwide network of nearly 8,000 home mortgage consultants. For example, according to Gwizdz, the company utilizes an online application to enable eligible customers to track the status of their home loan application and exchange information electronically, all while working closely with a home mortgage consultant. We always give our customers a choice they don t have to go electronic. Whatever they choose, the customer still works hand-in-hand with our home mortgage consultants and processors, Gwizdz says. Four steps for building trust and remaining relevant in the Digital Age Leading research with Fortune 500 financial services companies point to four best practices that mortgage professionals could adopt to help loan officers and lenders succeed in a high-tech world: 1. Ensure a consistent customer experience across all touch points The best companies recognize the importance of having unified customer touchpoints those critical moments when customers interact with an organization and its offerings, from active consideration to moment of purchase. Because

5 consumers now have more choices than ever when it comes to mortgage decisions, creating a consistent customer experience across social media, mobile, web and in person is one of the best ways for companies to gain trust and loyalty, and ultimately grow and retain their customer base. 2. Reach customers at the right time, in their preferred channels With new technologies and diverse consumer groups, lenders and loan officers will have to ensure they meet the needs of customers at the right time and in their preferred ways. They must be able to track each channel closely for opportunities to engage with the right person at the right time. For example, upon seeing that a local real estate agent posted about new listings on Twitter, the loan officer can request a meeting with the agent to discuss the properties. This tactic keeps loan officers plugged in and on top of potential referrals. 3. It s still a human capital business, so offer what the machines cannot There s a reason why people often press 0 or say speak to an agent shortly after they encounter an automated voice system. There are even websites like DialAHuman.com to assist those wishing to talk to a live person rather than a robot. Study after study, including Milwaukee-based Northwestern Mutual s Planning and Progress Study 2016, reveals that at the end of the day, people still crave the human touch. The Northwestern study found that more than 50 percent of the 2,464 people surveyed say the ideal solution combines a human relationship with technology. For lenders and loan officers, getting to know your clients taking into account a potential borrower s family history, spending habits, and existing relationships with a bank, if there is one goes a long way in fostering trust. 4. Recruit next-generation team members to serve the next-generation consumer The next-generation customer i.e., the millennial is already here. To keep pace with the online preferences of these digital natives, the next-generation loan officer must join the ranks to replace older-generation loan officers as they start to retire. (The average age of a loan officer is 54, according to the Mortgage Bankers Association [MBA].) Employing the tools of digital natives is imperative to attract the young workforce who will succeed incumbents. A smooth transition will help loan officers maintain their current clients while addressing the demands of new homebuyers. Looking ahead As technology and consumer behavior changes continue to affect the mortgage industry, companies must rethink sales and the customer relationship. While many strides have been made to leverage new technology, the home financing industry as a whole must continue to evolve to meet the rapidly changing needs of its customer. MB Meagan Hency is vice president of marketing for Hearsay Social Inc., San Francisco. She can be reached at mhency@hearsaycorp.com on Twitter. REPRINT WITH PERMISSION FROM THE MORTGAGE BANKERS ASSOCIATION (MBA)