Track 2 – How Lenders Can Double or Triple Purchase Closing Rates

TRACK SPONSORED BY:  Clever

Every year, more lenders get to customers before realtors, so how do lenders retain pre-approved borrowers and increase closing rates on purchases? How do the playbooks differ between retail and direct channels? How do you solve RESPA challenges inherent in realtor referral networks? And how much of this problem can fintech solve? It's more than you think in 2024. Come find out how.

Transcription:

Tony Chahal (00:06):

Good afternoon everybody. My name is Tony Chahal. I'm an SVP at Clever, and we are proud to be sponsoring the Growth and Recruiting Strategies track. In this session, you're going to learn how lenders can double, triple their purchase close rates, and we have an entire panel of experts that are going to be discussing just that. And with that, it's my pleasure to introduce the panel. So starting with Luke Babich, who is the co-founder and CEO of Clever Real Estate, followed by Grant Moon, CEO of BlueForceX. We've got Craig Martin, Executive Managing Director at JD Power, Kevin Peranio, Chief Lending Officer at Paramount Residential Mortgage Group. And last but not least, Patrick Roberts, Director of Purchase Strategy and Execution. And Mr. Cooper. So please provide a very warm welcome to our esteemed speakers.

Grant Moon (01:01):

Great. Well thanks everyone for joining us here today. I realize that people are still trickling in. I know that sessions go late sometimes. Super excited. If you don't know, we have some celebrities here within the lending space, of course, Kevin being number one.

Tony Chahal (01:22):

De-list LinkedIn celebrity, I'll take it.

Grant Moon (01:25):

Yep. But we also have Patrick from Mr. Cooper as well. So let's go. Yeah, I think that's amazing, especially within the show. Obviously we know that there's been a lot happening in the lending space and let's give a hand, at least for the lenders in the room and also that those joined us today on the panel. Alright, so format, we're going to go through some data, some of it we think that you probably haven't seen before and we hope will be insightful. We're also going to offer some various different strategies, some tactics and techniques, especially for those lenders in the room. Which before I get started, can I just get a show of hands of lenders in the room? Great. So thank you guys so much for coming and we're going to go through some practical use cases, examples of how we've seen optimized purchase strategy in action, how that's turned into more closed loans. We're going to try to leave enough time for Q and A. I know we're going to run into a break after this too, so feel free to stop on by. Great panelists. I've worked and known a lot of these folks for years and we're excited to have you. So let's get started here. We already introduced ourself. We know a forecast, quite frankly, over the past year is the only time I've really started seeing forecasts be right over the past 10 years.

(03:02)

Dominantly a purchase market, as you probably know if you're originating, and then also home equity as well. So hitting on some of these data points, 31% of buyers or 31% of the market right now, according to the NAR first time home buyers. And these buyers, a significant portion of them are starting 41% to be exact, starting their search online, right? Might not be too riveting. However, a lot of these behavior changer are impacting the way that they engage with you as the lender. And adding in some of the other components that we're talking about today, the impact of the realtor, 67% of buyers, a lot of people don't know this, only are going to interview one real estate agent. That might be a surprise to a lot of folks. Those that are deeply embedded in the overall real estate process probably know that that's commonplace and common standard. And you'll also know too how much of a sway that these realtors have in the overall process. So that also compared with 42% first find the mortgage lender online and 44% more closed their home with the lender, their realtor recommended. And I know that's the age old question, especially in solving any type of purchase journey, is how do you go ahead and account for that fact? I've heard terminology be used that it's called poaching. Others have others have called it steering, but regardless, they're in influence now, especially in this market that you can't overlook. Right? And would love to just get some of the panelists thoughts on that and why that phenomenon exists. And that'll of course lead us into other conversation points on some of the things that you could do to increase the loyalty of your business. So Luke, why don't you kick us off?

Luke Babich (05:18):

Yeah. So this is obviously a challenge that Clever has spent a lot of time thinking about because so much of our business is about shaping realtor behavior and clever real estate. What we've built with Clever Pro is basically a way for lenders who are within that 42% number. So 42% more consumers are finding their lender online. And the comparison there is, that's 42% more starting online with a lender than get a referral from a realtor. So buyer behavior has kind of flipped on its head over the last 20 years where more buyers are starting by finding a lender than are starting by going to a realtor and getting referred to their lenders. Really big behavior change. In the last couple decades and that creates an opportunity. For lenders because they are increasingly now the top of the funnel, the beginning of the consumer journey in a way that you weren't before. And I'm excited for folks to hear kind of how Cooper is thinking about capitalizing on that, but it also creates new challenges In controlling the consumer journey and shaping it. And one way or another, you need a way to have the realtor be enlisted in an ally. As an ally in promoting and reinforcing your brand, Or you fall into that 44% number, which is while more Consumers start with a lender By finding a lender themselves than start By going out to a realtor recommended Lender while 44% more are actually closing with the lender that their realtor recommended. And so that just shows you the Power of Realtors throughout the home search to shape that buyer decision about which lender they close with is immense and you need a strategy to kind of Enlist the realtors in supporting DND reinforcing your brand.

Grant Moon (07:11):

Great. Yeah, thanks Luke KP. Obviously you have a good footprint and handle, especially from the retail side, but we'd love to understand where have you started seeing some of the changes in the overall market, if any, and would love to hear some of your thoughts at PRMG and how you guys account for some of this phenomenon.

Kevin Peranio (07:35):

Sure. So at Paramount Residential Mortgage Group, we have three channels. So we see originators in correspondent wholesale and our retail channel. And what I've noticed is this trend end has taken a little bit different form in light of lower volume right now. So I don't think more than ever before, at least since maybe oh eight, for those of us that were around back then, there's a real lock of arms between realtor and originator. And so the strength in numbers approach, and like you said, the stats don't lie. You've got realtors referring to a lender, and so these relationships matter more than anything. So you see, I saw a stat this past week, there was 170,000 loan officers just a couple years ago that did one loan every 90 days. Now it's under 80,000. So these originators that don't do a lot of volume, they're getting washed out.

(08:34)

The ones that have the relationships with the realtors, they're 10 Xing down on that even though it's harder for everybody. So I don't think that's anything new other than where we've decided to spend our dollars and we're still investing in tech are things that help the originator. So social selling, any kind of stuff out there where online, if our fishing hole is kind of running dry because loan amounts are high and rates are high, we're encouraging our originators to go into other markets, which is where you guys come into play, help us create relationships with realtors and other fishing ponds that we're encouraging. So that's one thing. And then of course, not just being on social media and expanding your reach, but actually spending a little bit of money on it. So whether it's like a social coach or a denim social or some kind of tech that's out there, social media had this whole buzz like, well, it's free. All I got to do is take the time to make a video, but you get what you pay for. So if your people aren't spending a dime on their Instagram storyboard, they're probably not getting much ROI either. So we're encouraging people to spend a little bit of money doing better quality videos, doing better stuff on the storyboards when they expand that reach into other markets and make relationships with other realtors and then hopefully other borrowers.

Grant Moon (09:51):

Yeah, that's great insight. And just out of curiosity, I know you mentioned a few different players within the social presence, but are you finding in this market that people are shopping more and they want to know the online reputation, the service, and some of this is going to be a tee up, we have JP Morgan or JD Power, sorry, we're just talking about JP Morgan, JD power in the house and some interesting data, but is that something that you're seeing now too outside of rate?

Kevin Peranio (10:25):

Yeah, Totally. So when you're way up funnel, right, you're social selling, like you said, like a social coach. And then we just did, and again, I'm not plugging anyone. We all have a ton of software out there. We know them all. There's no secrets. They're all around here. And we just did a 60 day trial pushing mortgage coach within our ranks of retail. Dave Savage is a great friend of the industry in trying to use the total cost analysis to explain the fees and the value and the payment and the rate and all that kind of stuff. There's a whole presentation to do that once you get a borrower in there. And so not going to steal his thunder, but I will wrap back around after he talks. But yeah, absolutely reputation management matters, managing that online bars are looking online where they're looking you up and they're getting younger and younger, although with rates going up the first time home buyer went from 33 to 36, when rates go back down, it will go back down again. And then we'll start to pull through some more Gen Zs as opposed to just millennials being the first time home buyer bulk. And they're all online. I mean, they're looking at reputation, they're reading all the reviews, they're literally looking you up, which you got to manage it. There's your corporate reputation, then there's your branch reputation, then there's your individual reputation. It's a lot of work to make sure you do it right.

Grant Moon (11:39):

Yeah, no, that's great insights. Well, Craig would love to hear, what are your thoughts on this slide? What are some of the key takeaways as it relates to the service?

Craig Martin (11:53):

So we measure mortgage origination satisfaction annually. Have done that for about two decades, thereabouts. What I think tends to be really interesting to people is when we look at the model, so basically we take and we talk to thousands of consumers, ask them about their experiences, getting a loan, closing a loan, and then we take that and try to calculate what's most important in terms of satisfaction. So we don't ask them, Hey, give me the percentages, but actually we regress back and determine that. And one of the most important things, what you'll see here is communication and trust and people start off and thinking about that fundamentally, I get it, but oftentimes people get into this rate and all these other elements. I had this conversation with lender a while back, we were talking about rate, and they're going, Hey, I have the best rate out there. Why does the consumer believe you? Where do they get that information? Why do they trust you? And so fundamentally, this idea of communication and your reputation that's going to really drive it as we start looking at it, there's lots of different pieces and parts. It's complex, it's very difficult, but even more so with the purchase market, communication is critical and how do you communicate? And that doesn't mean just during the process, it's upper funnel, upper stage because more and more what we're seeing is you are becoming a financial advisor. In essence. You are the guide, you're the expert. And that early stage start of the relationship, if you're successful in that and demonstrating that's going to be insulator from losing business or being moved off of it.

Grant Moon (13:26):

And to that end, how we would even rate be applicable to the average home buyer, right? Because your rate's not even going to be locked until you find that home. And what's that purchase journey now? Like 60 plus days?

Craig Martin (13:41):

Yeah, exactly. And I think more and more what we find is that the customer, we've asked them about what's the most important, and there's this tendency always forever. I think it's going to be that way to say rate. Oh, why'd you pick them because of the rate? And then you go, okay, how do you know you got a good rate? And they kind of look you dead in the eye and go, because my lender told me I got a good rate. That's why I believe it. So, I think fundamentally that until you actually get the numbers, you aren't going to know. And we used to joke about the Excel spreadsheet person. They're like one in a hundred who actually goes and gets and shops five different rates, puts them in Excel and compares and contrasts and it's like, okay, this is the difference. It's got to be reasonable, acceptable. But most of them are focused first and foremost on the experience. What are they trying to do? I've heard this quote in different ways, but in essence, they don't care about your solution. They care about you solving their problem, which is you got to get me approved. I want to buy a house. No one's dreaming of a mortgage, they're dreaming of a home. So help them solve that problem.

Grant Moon (14:43):

And with some of the phenomenon that we've teed up that probably every lender has encountered at least once around the steering, if you're a lender in this market and you have a long tail purchase cycle and that loan officer or that lender has mechanisms that help in keeping that connectivity and not just, let's call it refi boom days of doing the pre-qual sending them on their way, and if it comes back, it comes back. And this is probably for everyone. Would you say that that builds trust? And I know Patrick, you run a very, very scaled operation, so let me get some of your thoughts on that.

Patrick Roberts (15:27):

Yeah, so that's a great question Mr. Cooper. We're at 4.2 million customers. Our strategy right now is to grow our purchase recapture and retention. So our refi business has done very, very well over the last few decades. We're obviously trying to grow this. We want to be that one-stop shop lender, which I think a lot of lenders do. And I think the number one focus for us right now, specifically within purchase is our agent assurance platform. And that's where Clever comes into play. This team is built to do everything they possibly can to deliver for the customer, and that's the customer that we do send over to our partner. And it really comes down to the team. So the team that's here with Clever, they operate in a very disciplined manner. I don't know if I've ever asked for a request and the response wasn't absolutely, we'll have that for you.

(16:23)

And it was probably quicker than what I was really thinking at the time. So the way that we operate within purchase, we're probably more down funnel than we want to be. We're sending over the majority pre-approved customers to our agent assurance partners, our clever partners, and then what they're doing is they're that customer and making sure that they're matching with a very specific agent in a very local MSA to our customer. So having that partnership with this team has been really a differentiator I would say within our business and trying to grow our recapture. Our recapture has doubled and we're looking to continue to double that as well.

Grant Moon (17:06):

Thank you, Patrick. And so would it be safe to say, when you say down funnel, you're talking about a consumer that already might be engaged in the shopping process and already notionally might have a realtor, right?

Patrick Roberts (17:19):

Yeah. So hearing Craig and KP speak, I would say that there's a lot of times there customers are coming in with contracts already and at that point they already have an agent. Well, in my mind, that's great, but what we want to do is what happened. We wanted to make sure that we captured that more top of the funnel. The slide is correct. I mean, our numbers are very similar to I would say the all in industry numbers, which is 67% of the time if we didn't partner with that real estate firm, they could go elsewhere. Our customers could go elsewhere. And I would say that we're very proud of our customer base being what we call very satisfied. We partner with Craig's team with JD Power. We survey them probably every point within the mortgage process. We do it in the servicing process. We're close to almost a trillion dollars within our servicing portfolio. So we are working to get that top of the funnel. When they're looking to list their home. We're seeing a lot of customers want to list their home first, well above the home buying stage. So yes.

Grant Moon (18:23):

Which is an interesting phenomenon because obviously everyone's heard of an 800 pound gorilla called Zillow. Has anyone ever poked around and looked at listings on there? If you want to view that home, that's in general lead that's going to be generated and it's auto-populated with the highest bidder from a real estate agent. So it makes a lot of sense from your perspective that that's a area to get instantaneous lift because Zillow has market power and therefore a good amount of consumers are going on Zillow, and therefore they probably believe that they're talking to the agent that represents that listing that they're interested in seeing when that's just a hook to be able to get a buy-side agent. And so I think that that's something too where if you have a real estate company such as clever calling on your behalf, real estate agent versus real estate agent, that's a great selling point to be able to get that customer as we saw from a data perspective, how much sway that realtor has. And it's probably not going to be in favor of everyone in this room. I mean, you might have some opportunity.

Luke Babich (19:41):

To build on some of the themes here, I mean I think something in what KP was saying is that this is a very multi-touch journey. The home buyer's buying decision has a lot of touch points along the way. They're going on Zillow and Zillow's trying to get a shot at positioning value in front of them. They're interacting with your brand if they've come in as a customer or even if they're just going around online and reference checking, well this lo sounds great, but who are they and how do I know that they're legit? They're interacting with that LO on social because Judy Power said so, And they're seeing all that due diligence on whatever there is out there, your digital paper trail. And if they've connected with the LO at the beginning of the journey, well they've got those 60 days to follow up and see that drip of content coming out and connect with the person from where we sit inside of this process. I think what's been great about the Cooper partnership is you guys have the opportunity to identify customers early and really capitalize on that consumer behavior shift from starting with searching for a home, towards starting with what you can afford to buy, starting with the financial advisor first. And then we can take on a lot of that legwork of having realtors who are trained, who know some of Cooper's value props, who adopt SOPs and protocols to be reinforcing Cooper's brand touchpoints. And then coming back to this communication piece to be providing updates in a systematic, standardized way back to the loan officers. So there isn't that ambiguity of who in my pipeline do I need to be following up with? But you've got the information needed to be proactive with the consumer communication. And I think what we'll see on a very macro level is that there's going to be an emergence in tools and clever is one of them, but there's a lot of others that try to make a refinance a purchase journey feel for a loan Officer.

(21:35)

A little bit more like a refinance, where the work comes up and you're able to crush the file, do what the realtor need, do what the consumer need. There's way more ambiguity. The purchase journeys feels like much more of a black box for most folks. And you need sources of intelligence and partners who are not just working hard but are working hard in a systematic way that aligns with your processes to break out that black box and be responding to what's happening in the consumer journey at the right times, at the right touch points so that you're not having them walk off to Zillow, right?

Grant Moon (22:08):

Yeah, Exactly. No, and That's actually a really good segue into when the lender gets engaged and JD Power has some great data on that. Craig, we'd love to get your take.

Craig Martin (22:22):

Yeah, I mean at a very high level, what we find is the earlier you are in the stage of engagement with the consumer, one, you have a better position with that customer as an expert. So your satisfaction's higher.

Grant Moon (22:34):

Because you said trust is one of the biggest deciding factors, right?

Craig Martin (22:37):

Absolutely. It's fundamental and really it kind of drives and influences all the pieces and parts, But I think what's interesting to me is you kind of overlay that with at what stage are they engaging you, but how much are they shopping around? So what we look at is also how many different lenders are they considering and shopping and applying to. The later you get into the process, the more you're getting shopped, the more it becomes a rate battle. So you're actually losing any value, you become a commodity. And so we start seeing that you want to be upper funnel, you want to be advisory because if you're late stage, you're absolutely fighting rate at that point. It's Just about the dollars.

Grant Moon (23:16):

So in essence, the earlier on the process and the more engagement that you have with the customer, the more likelihood that you can build trust, the more sticky that relationship becomes later stage funnel when consumers are actually shopping.

Craig Martin (23:30):

Absolutely.

Grant Moon (23:30):

Where would you say that the industry does a bad job?

Craig Martin (23:35):

I would say the industry has a bad job of being not early enough. So I mean what is being described now I think is the new battleground, which is how do I engage a customer before they even get into this process? Because fundamentally, to be successful as a home buyer, you have to be financially sound. So if you're waiting for them to come and go, Hey, I'm interested in shopping for a house, You've already missed the opportunity. That's really awesome.

Grant Moon (24:01):

So I want to pull the room real quick with what Craig said. Who here has had challenges motivating your originators in staying incubating the consumer and following up with the consumer and especially in purchase? Anyone here have that issue or problem right there? Yeah, so I think this ties a bit back to what you're saying, Luke, about next generation and modeling after a typical refi. And you know what? This is just human behavior. If you can get paid faster, I mean you're going to focus on that. So I think some of the overlays too that we'll talk about here is where you can automate within that process. I mean, it's really like it's eating the elephant one bite at a time, right? There's no silver bullet. And that's something that pretty much I've been hearing everyone saying right now. So this is a little bit more about it's really not just the rate trust is super important. Any key takeaways here, Craig, that you think of?

Craig Martin (25:09):

Yeah, so what we did here, so on the left side, what you're seeing is we just asked them, why did you not get mortgage with this lender? So we asked people who went with multiple lenders applied, and then they ended up with one and not another. What was the reason? Number one reason is rate. But then when we isolate down, they can say multiple reasons. When you isolate just for rate, it's only about 33%. And what you see is that a lot of the other reasons underneath rate actually a customer service related, and I use customer service as a broad term, you make mistakes, it takes too long, you're unresponsive, you're not communicative, and that triggers the discussion about this isn't a great experience, why am I paying these guys? Maybe there's someone better. And I had that personal experience myself.

(25:55)

I shopped and this was back in the refi boom, and I was like, these guys kind of suck. They're really doing a bad job. I know it because I know the industry all the time. So I went out and just started shopping somewhere else. It was easy, had all the paperwork done, just hand it to someone else and off I go. So I think that's a key trigger is a lot of times people go, the guy down the street beat me with rate. No, probably not. Probably you triggered someone to start shopping rate because the experience.

Grant Moon (26:23):

Because you just weren't responsive or something and you started getting to that mid funnel stage?

Craig Martin (26:28):

Or they to or they approached them in a way that was meaningful to them. Talking about budget and thinking about, Hey, are you really going to afford this? Are you really getting all the right information? We're seeing more and more of that upper funnel educational information starts to trigger. They don't know it, but they're starting to be triggered into, these guys are in my corner, they're thinking about my needs and not just the product and the sale,.

Grant Moon (26:52):

Which is so important. I encountered that too. I mean the first home I got, I used a VA loan after I got back from Iraq and I actually thought that the VA was going to give me a bag of money to buy a home. So it was really the lender that educated me on the process that I trusted and that education was power to me. KP, you are known as a relationship guy in the industry and we work together as a vendor and I'd say that resonates pretty heavily down in your organization. What do you think some of the pillars from a service side for PRMG has been the success and separating you from the group?

Kevin Peranio (27:34):

Well, there's a few things. I'll just drop a couple of nuggets. We use experience.com has been, our formerly social survey has been our, I guess, reputation management vendor for a while. And I read them all. So I personally read every single one of them. I get alerts, I even get alerts when our LO replies to the survey from the borrower. So I kind of look and it's, oh, I haven't talked to that person in a while. I'm reading it happened, give him an attaboy, had a girl. But if it's not five star, I look and see what goes on. And I can tell you that it is almost never because of rate, it's because of communication or lack of communication.

(28:13)

Somewhere in the process, the communication broke down and the borrower was unhappy, call me back, or poor communication or always sent me to text or always email or never picked up the phone. I mean over and over and over. And so that I think is where we try and enable our originators to be better, train them, talk to them, coach them. If we have a less than five star review, we absolutely attack what went wrong and try and coach that person for the next transaction. Now where you can create value, I mean look prices and everything, but there's always shoppers and it is what it's, you're going to find someone that's looking for rate and it's usually like their second or third loan in their life. So they don't really need the high touch, they don't need you to spend time with them teaching you what LTV is and what their FICO is and be your financial trusted advisor.

(29:05)

I mean, I'm in the closed door rooms with all these regulators and all these conferences and all these groups and all these boards and all this stuff. And I'm telling you, I say this over and over and over again to regulars, originators teach financial literacy at scale. They're the ones doing it. Who else is doing it? It's only an originator. I mean, look, my wife is a realtor. God bless her, they did a good job. They show the house, but they're not managing someone's debt and someone's credit and someone's everything that has to do with their finance. And so the days of demonizing originators are over, they are the ones on the front line teaching borrowers financial literacy and who needs the most obviously people in underserved markets, which is a huge mission that's very worthy of our time. And again, the originator is the one that has to teach that. That requires a lot of communication. So we do a lot of tech that makes it easier and faster to communicate and the speed to need speed to lead. I don't want to make it sound like it's a lead gen thing, but what we've noticed, and I saw this in some conference last year, the faster you do a transaction with a client, the more you communicate with them actually now is being perceived as that shows you care.

Grant Moon (30:15):

Sure.

Kevin Peranio (30:16):

So speed shows you care. So we all know in the first up funnel, if they pick up the phone, they call you. You don't pick up the phone within five minutes, 90% chance that deal's gone. So that's just do we enable people to get the phone picked up when the client wants to be spoken to at that moment so they can stop their search and branching off to other places and you pull them into your funnel and maybe there's a match. And most times there is, if you're the first person to get that's 67%, there's a quote that if you're the first or second originator or realtor to speak with a bar, you will win alone over 90% of the time.

Grant Moon (30:50):

It's funny, we were actually just having a conversation at dinner last night about that and how the importance of even when you're working with a client, you pick up the phone pick no matter what, pick pick up the phone

Kevin Peranio (31:03):

And the bar doesn't want to go through all that all over again with some new person, especially if you've gotten some of their information. And the other thing that just to kind of bring the realtor piece back into it, that relationship between the originator and the realtor, sometimes the realtor's a listing agent, so you're bringing a borrower to that listing agent where they can double side the deal. So borrowing whatever comes out, all these lawsuits against NA and all these real estate firms and it's going to blow up, buy-side commissions and all this stuff. I don't know what's going to happen, but bringing qualified borrowers like you guys are doing to the realtor is a very powerful thing. And if you go in with more than just a pre-qual letter, but a full underwriting approval, we do TBDs all the time, you help them win that contract, you help them get under contract, so your rate doesn't matter. You're like, Hey borrower, I have this relationship I built up locally with this realtor over years and we are going to help you get this house regardless,

(31:55)

Of what you think you can get on the street. We have a lock in this house, we have a system. Here's my rate.

Grant Moon (32:02):

Which KP that you bring up. A good point. The reason why a fully underwritten pre-approval might be of importance, we didn't give the stat on this, but you're looking at roughly a third of the market as going cash offers. And so if you're demonstrating to the listing agent that this fully underwritten pre-approval is basically the same as cash or there's going to be a little bit of closing, but at the end of the day you're going to get your money and it's not going to fall out of contract, I think especially in a low inventory market is a leg up again, just another notch on the belt and being able to give that consumer the armament that they have, especially in a tight inventory market.

Luke Babich (32:45):

Yeah, and to hit on a couple of things that came up. One is this theme of your digital presence driving trust. And what I take away from a lot of JD Power research is that you don't want to give them a reason to mistrust you,

(33:00)

Right? Folks start thinking about rate when they feel there's a reason that you might not be trustworthy and controlling that circle of trust to where you have all signals, your online presence, the presentation of the loan officer and the presentation of the realtor reinforcing that sense of trust. This is someone who has my back, is really, really important. And I think something I like in hearing about how PRMG manages that digital presence side. So I think it's easy for folks to look at the surface of how you show up online and see, wow, JD Power thinks you're great, Your customers think you're great, five star reviews, I think you're great, but not realize how much is happening behind the scenes to support that digital presence, how much operational work there is of senior leaders caring about it and putting the laser beams on those reviews.

Kevin Peranio (33:51):

So on that point, just to cut you off for two seconds, whenever we had someone leave as an originator, we would not let them take their experience.com surveys with them because it isn't just them. They're not the only reason's. Got a 5 star, there's a team, there's a whole team behind them. I mean, we do manual government straight to Ginnie Mae underwrites. I got the default ratios to prove it. My Jenny book, we do some tough loads. So we pulled that miracle off. We made a business decision, you're not the only reason. I mean we love our originators, but they're not the only reason a five star review exists. And so for many years we're like, sorry, this is a group reputation.

Luke Babich (34:28):

And it's that operationalization of taking the feedback and actually acting on it and having business processes to build that trust up over time. And I know something that we do with the Cooper team, you guys are great at using data and are soaking up as much data as we can send their way. But so clever surveys not only the consumer but the realtor to get a 360 view of how folks are working in the transactions that we've taken through to close together where we've brought a realtor relationship into the mix, Cooper brought the buyer, and we've now created that deal team to get the buyer through to closing. And we're then able to kind of quantify which loan officers are doing a good job, not just for the customer but also for the realtors. But I think what's hard to see from the outside looking in is how much work it takes to set up the NBRs to have people actually looking at and acting on the data to start to operationalize your consumer experience or the service you're delivering to your realtors.

Grant Moon (35:29):

So with that said, the KP mentioned the pre-approvals, the fully underwritten pre-approvals. What does JD Power think from a takeaway perspective of the rise?

Craig Martin (35:44):

Well, I think one we're seeing it's a tool that everyone's increasingly used. So it is going up and there's a pretty good reason for it, which is.

Patrick Roberts (35:53):

We're overstaffed.

Craig Martin (35:56):

I didn't say that. No, but what we're finding down, The pre-approval offer actually locks in early stage. So what we're finding is that there's a lot of people getting one from that person that triggers that engagement. And you've got that first, that offer actually starts to trigger that person to engage. What we saw in the data, we were trying to cross it to see are people getting lots of pre-approval offers and sorting through them and then picking one. And what we're seeing is that it's that first one that hits them that at least they remember is the one they're taking and going with it. So we're seeing both an uptick in the number of lenders who are sending them out, and also that's driving the business to the close. So that first hit is going to be critical.

Grant Moon (36:39):

You've got to trust someone to send your W two, right? Just call a spade a spade or your tax returns or anything else too.

Craig Martin (36:46):

Yeah. So it's definitely, I mean, I think it's going to be, again, it is that competitive. It's a tough market. There's a limited number of deals. So you were on to give yourself that biggest advantage possible.

Kevin Peranio (36:59):

Operationally, since our underwriters aren't as busy, we have them call out at approval, at suspense, at potential denial. And obviously they've always had to for denial and Suspense, But we're even doing that approval, okay, here are the couple of sticky things we need go work on this, this, and this. And so that at pre-approval, right at the underwrite, even if it's a TBD, we're trying to get out in front of any potential obstacles.

(37:23)

And again, that speeds up the communication loop and the chain and speed shows you care and we make the best use of the resources we have.

Patrick Roberts (37:31):

I think education is also a big piece of this. With our partnership with Clever, we will have webinars with I would say hundreds of real estate agents and our verified approval, which is what everybody's talking about here, where it goes in front of an underwriter that's making sure that the real estate team knows that we're doing that. So if we do pre-approve a customer, we make sure we let the real estate team know, Hey, we're already working on it and we're getting it as late as four hours. So just what KP was saying, I mean four hours is probably on a long time for us to make sure that we get a verified approval to the real estate agent, to the customer. So that's all about the relationship that we have to make sure that the real estate team knows what that is. Everybody knows what a pre-approval is, but knows the concrete of a verified approval.

Luke Babich (38:14):

Well, and you're getting at something great there, which is we talk a lot about building financial literacy among consumers, but as someone who manages a network of 19,000 realtors, it's also worth talking about building Financial literacy among realtors. Let me tell you, there's plenty of work to be done there depending on the caliber of realtor. Now in our case with Cooper, we Vetted these folks and we've found people who've been full-time for 14 years on average. There's a little less work to be done there, but even then we require them to call the loan officer talk through the pre-approval before they call the client so that they're showing up knowledgeable about the product because at the end of the day, the consumer fact checks everything they heard from the lender with their realtor. They want to know, I've been offered this product, is what I've been told about it, legit, is it the real deal? And they need to be able to represent that product properly.

Grant Moon (39:01):

Very cool. Great discussion. Want to get us moving a little bit more, going to skip through some items, but this deck will be available. We're running a little short on time here. I haven't had a time gauge or a card, so I've been trying to eyeball it more on the trust factor, how important that is. So engaging early up funnel positioning for the market I think is key. Always important is to draw out an optimized journey, what that looks like. We're talking about adding in your automation layers where your human touchpoints are going to be. And this is just an example of an optimized purchase journey if you haven't worked on one yet and now an interesting segue into Clever Pro and some of the conversion rate factors associated with it. You're looking at tremendous lifts, you're looking at a great amount of dollar savings as you can see as part of the overall business as a reduced commission and cash back. You're talking about concierge, you're talking about service levels all in one, and they are hands-on and integrated into the overall lending operation. Dedicated points of contact education aspect for the overall realtors, which is incredibly important as we found education builds trust, not just with the consumer but also for the realtor as well. But instead of actually having us talk about how the experience has been, Mr. Cooper, obviously everyone knows about them if they're in lending has been a partner at Clever. And we'd love to hear from you, Patrick, what that lift looked like on conversions, scores from a service perspective. So you can tell the group too.

Patrick Roberts (41:07):

Yeah, I mean I've touched on a couple of things here, but the main point I wanted to hit home with everyone is obviously with 4.2 million customers, we take our customer experience extremely, extremely serious. We have multiple ways where our customers are surveyed. It's all facets within servicing and obviously throughout the lending process and mortgage process. And then as Luke was saying, we take his data and make sure that if our communication wasn't clear and concise about what we want to offer all of our customers and that wasn't delivered appropriate to the real estate agent, we take it very, very serious. And then building that purchase recapture and retention is obviously the main focus for the business that we have right now within our purchase space. Our partnerships is really what we're holding near and dear to take us to the next level. We do have some value props that are on the next slide, but one of our biggest value prop is our agent assurance platform, which clever is very much a part of, and I would say an industry leader to speak specific to what the previous slides that Grant went through with Clever was their concierge team.

(42:19)

They're licensed professionals, right? A lot of the partners that I'm aware of, their concierge team is not the why behind that. Why that is so vital is that concierge team is speaking to the language of what they're about to either get on the line right then and there with the real estate partner and that concierge team knows the lender's value props and knows what they're trying to make sure that they get across to the consumer. It it's an invaluable piece of the puzzle that I think really allows clever to stand above their peers with all of these value props. I won't go through each of them because a lot of us are lenders, but Cooper wants to be the one-stop shop for our customers. But honestly a little bit more so for I would say our real estate partners so that we do have the stickiness between lender and real estate partner and Clever has been a vital part of that. I would say the feedback that we give each other. To better our business really over this past year or so, I think it's made the enterprise as a whole, both enterprises as a whole much, much better. Just in six months, again, we've doubled our purchase recapture and the amount of focus that we have with penetrating the real estate teams to knowing what we're offering and being on the same page. That's where we want to grow that mortgage conversion to what Tony and Luke were saying above 80%. And that's the why. There's no trying to trick anyone to using a lender. It's about understanding what the mortgage professional is trying to say and then they do go for 60, 90 days with a realtor. What is that conversation like? And the partnership that we've had with, I would say clever, we're speaking the same language.

(44:10)

Again, it's not always about price. And then one last thing. When those pricing conversations do come about, this partnership has been extremely nimble about literally just raising their hand and connecting with the mortgage professional about, Hey, just to give you a heads up, they're looking at a builder opportunity right now. Builder opportunity has grown immense because of the lack of inventory. So us as lenders, we have to be nimble to make sure that we're competing with that and we're doing everything we possibly can to keep all of our value props in front of our customer on why to continue to use Cooper. And obviously we talked about cash builder opportunity is even a higher percentage if you add both of those together. So that's where the partnership really comes into play. Speaking the same language, just reeducating and reeducating because we do this all on a daily basis. Then you got what Luke said, you got the real estate team that they have a crazy amount of training that they have to go through just to do their role, right? And if they have multiple partners, learning what value props the lender has is very tough. So we got to do our part as lenders to make sure that we're educating customers and our real estate partners to our due diligence to keep that stickiness.

Grant Moon (45:32):

That's a great point, Patrick. And that's a great way to end this.

(45:40)

If we can get a round of applause for the panel. And now at this point we're going to open up Q and A. I know that the other sessions just broke too. You have some time so you'll have your time to get your snacks and everything. So you have a great lineup right here. I don't think I've been party to such a great and good looking lineup, so please take advantage of that. And we have someone that's going to walk around with a mic for anyone that has no holds barred questions. Is that Jessica? It's Jessica. I thought it was you.

Grant Moon (46:24):

Good How are you?

Jessica (Audience Member) (46:25):

Good, Thanks.

(46:26)

So this is for Luke, and maybe this is a layup, I'm not sure, but there have been some competitors in your space before, home Captain, home Bird, Cardis back in the day a million years ago. How is clever different? What are you guys doing different?

Luke Babich (46:44):

Yeah, great question. I think that is a layup, so thank you. You're welcome. Zelm is actually a Mr. Cooper company and we're proud that we're the agent assurance partner in the picture. And I think what Clever has done differently, we actually started by building our own consumer business, which I think is unique out of all of the companies you mentioned. We run a set of educational content brands that reach 10 million consumers a year. And then behind that built a platform with industry leading conversion rates to match those consumers with real estate agents and negotiate better rates and service on behalf of the consumer. And what that looks like is home sellers get just a one and a half percent listing fee home can get up to 50 basis points, cash back. So there's a financial stickiness there. But then also we took the time to operationalize really exceptional service. So Clever's the number one rated real estate company on trustpilot.com with 2,505 star reviews. That comes down to the kind of operations KP was talking about, which I think is difficult to build and requires the DNA of a consumer marketing and technology company. But then over the last two and a half years we've been taking all of that educational content, the real estate network, the technology and the licensed concierge team and operationalizing it for a solution to help lenders future proof their home buyer journey. And the piece that we play that I know doesn't exist in the market is the level of training and kind of hand to hand combat around getting the realtors to show up as an ambassador for your brand. So before our realtors are receiving a consumer from Mr. Cooper, they've already gone through a competitive selection process. They've already had to earn a seat in our network through our algorithm, which prioritize agents with the best conversion and customer satisfaction metrics. So now they've risen to the cream of the cream and then they have to go through an hour long training to learn about the SOPs.

(48:49)

We require them to follow to set Mr. Cooper's loan officers up for success. Then there's ongoing training and scorecards to make sure they're executing against that and follow up touch points when they fall off track. And so I think my biggest takeaway, and obviously it's my job to sell the company, I wouldn't be very good at my job, but I also, I think there's some takeaways for folks who are also operating in more of a retail space, depending on realtors to bring them business that you can take from the kind of partnerships that we've built here. And a lot of it is systemizing the education, the expectation setting to create a really seamless journey where the realtor, in our case, the concierge who's kind of that matchmaker, the loan officer, are all on the same page receiving continuous education about the value props and the story they need to enforce. So we put a lot of tech, a lot of training, and a lot of really smart people on working on that problem for the last two and a half years. And it leads to these 80% pull through metrics or 80% of the buyers from Cooper who close a home do it with the original loan officer because of that training and effort that the realtor and concierge are bringing to the table.

Grant Moon (50:00):

Great to see you, Jessica. It's been a while. Yeah. Any other questions? Okay. Well want to thank everyone for joining. We're going to hang out here if you have a private question for the next five minutes or so. So thanks again and we really appreciate you joining us and hope everyone has a great conference.