Many of you remember watching the super bowl this last month and seeing the $5,000,000 commercial spot for Rocket Mortgage. Quicken Loans has always done things big … they have always gone “Direct” to the consumer by spending tons on marketing. So how do we compete? Not all of us have 100 mil to drop on a product awareness campaign … on top of 20+ million to develop the solution. More than 450 people worked to develop the automation of the loan process they coined “Rocket Mortgage”. And why would they do this?
Obvious reason #1: Great Marketing Opportunity – People are scared about the loan process. The idea that a computer can without “Judgment” determine your eligibility is appealing. No talking to sales people… check. Quicker response to my request… check.
Obvious reason #2: Reduce human error. Buybacks due to incorrect data is a huge cost center for banks today. Many of those buybacks are the result of incorrect data entry or mistakes on the loan files. Eliminating that margin of error goes straight to the bottom line.
Obvious Reason #3: Eliminate operating costs. If a loan is produced through consumer direct marketing, originated by a computer, closed by a Transaction coordinator (Processor) and touched very little by underwriters, the company eliminates many of the big costs associated with closing a loan. Including Loan Officer commission. What happens when you don’t need to pay out 100bps per deal and underwriters can get through 3x’s as many files??
A few things:
- They could reduce rates – they can take the savings right off the top and reduce rates to buy the market
- They would have increased revenue – More money means more power to invest in marketing, tech and infrastructure.
- Less fixed costs – payroll, rent, office supplies, insurance and more.
This is self perpetuating … the more they save the more they can invest, the more they invest the bigger they get, the bigger they get the more they can reinvest, etc…
Remember the T-800 in terminator? The machines will rise and replace the humans who before were the key to closing a loan .. leaving us to do what? Sell Insurance?
However there is one thing that can protect loan officers from an almost certain death … Create strong relationships with referral partners.
Realtors are not going to trust a computer to deal with the “emotional needs” they and their clients have. They want someone to talk to, someone to point a finger at, someone to be there with them, fighting for their buyers. Rocket Mortgage can not do this … and it actually serves as a great reminder to realtors who want the “Personal” touch to value their Loan Officer partnerships.
In my opinion, if you want to survive in the mortgage industry past 2020, you MUST build a solid base of realtor relationships … If you don’t, you’re at risk of being replaced by a computer.
Still, not all technology is evil. The real question is whether you will use it to your advantage or let it take advantage of you?
Hope you guys stay strong out there. Let us know how we can help you achieve your best year ever.