This article will describe the primary challenges and solutions when applying a customer-centric focus to residential mortgages. In today’s marketing environment, it is important for companies to have a customer-centric mindset: customers at the center of the sales process. With public companies like New Residential Investment Corp. (NYSE: NRZ), there are multiple customer categories to incorporate into customer-centric strategies — borrowers, investors and other stakeholders using the NRZ example.
Customer-Centric Requirements — Overcoming the Challenges with Mortgages
To be clear, many businesses and industries are still struggling with the idea of placing the customer in charge of any sales process. Control-oriented marketers are often acting like they are still operating in an earlier era when the sales team determined how and when prospective buyers received any key information about the product or service being purchased. Ignoring the practical customer-driven need for contemporary customer-centric marketing is equivalent to ignoring the recurring difficulties experienced by an individual still trying to watch movies with a Betamax format (originated in 1975) when the prevailing technology and strategy for today’s consumers involves high-definition streaming.
Unfortunately, the mortgage industry is a prime example of multiple business and marketing models, and only a few companies appear to be consistently innovating and improving enough to meet today’s high customer expectations. For mortgage-related businesses, here are five examples of potential marketing challenges (and innovative techniques that can overcome the difficulties) associated with implementing a customer-centric business model:
- Reaching New Customers — Traditional (and substantially obsolete) marketer-centric strategies (diametrically opposed to the customer-centric approach) employed techniques like cold calling and advertising to reach prospects. Three of the favorite advertising mediums were newspapers, magazines and live television broadcasts. The modern consumer environment includes an aversion to both advertising and cold calls. Even if mortgage companies want to advertise, the potential problem areas include ad-blockers and modified reading habits for busy individuals. To overcome this immense challenge, New Residential uses multi-faceted communication that includes an emphasis on niche audiences and educational content (both online and offline). NRZ has also invested substantial capital resources in specialized assets such as mortgage servicing rights (MSRs), non-Agency residential mortgage-backed securities (RMBS) and mortgage-related businesses that have created multiple new customer sources.
- Quality Improvement — For both mortgage borrowers and investors, high quality is a mandatory element. But a cost-cutting atmosphere after mortgage businesses are acquired often results in layoffs and reduced quality. On the other hand, when New Residential acquired NewRez (non-traditional mortgage originator doing business in 49 states and the District of Columbia), NRZ increased the size of the team by 300 percent.
- Saving Money and Time — While saving time and money would refer to common customer benefits in a customer-centric environment, during the recent financial crisis many bank-owned mortgage servicing companies were seeking to save money and time for the company by emphasizing foreclosures and short sales when mortgage delinquencies occurred. New Residential and its subsidiary Shellpoint Mortgage Servicing have instead focused on customer-centric strategies that include collections and loan workouts.
- More Choices and Flexibility — Some mortgage businesses (including those owned by banking institutions) have opted to offer fewer choices and less flexibility to mortgage customers. For example, most banks offer a limited mortgage menu that is typically restricted to qualified mortgages (QM) that require underwriting guidelines imposed by federal housing agencies. NewRez offers both QM and non-QM choices that also allow customers to select more flexible terms such as interest-only and longer loan amortizations (up to 40 years).
- Digital Infrastructure and New Technology — Bank-owned mortgage businesses are essentially locked-in to a physical infrastructure model and have not readily adapted to digital operations and changing technologies that are required for the multiple phases involved in the mortgage industry. In addition to emphasizing digital operational techniques since NRZ was established six years ago, New Residential recently made a strategic investment in Covius Holdings (leading provider of technology-related services) as another way to improve future mortgage technology solutions for all NRZ stakeholders.
New Residential Investment Corp. — NRZ
As referenced in a recent overview of business achievements, “New Residential has been a leader in transforming the ways that residential mortgages are originated, serviced and owned.” Here is additional information about NRZ:
NYSE Trading Range — During a 52-week period ending May 28, the company’s stock traded between $13.86 and $18.75 on the New York Stock Exchange (ticker symbol “NRZ”).
Leadership Continuity — Mike Nierenberg has been an innovator in the residential mortgage market for more than two decades. He has been President/CEO of NRZ since inception (2013) and Board Chairman since May 2016.