Jack Huntress of HomeBinder on Improving Borrower Retention
Jack Huntress is founder and CEO of HomeBinder, Burlington, Mass., a centralized home management platform that keeps homeowners connected with mortgage lenders, realtors and other authorized professionals. Previously, he co-founded PARCEL, a real estate due diligence reporting firm, which was acquired by Environmental Data Resources in 2007.
MBA NEWSLINK: As refinance volume winds down, industry conversation has shifted to long-term customer retention. What opportunities do mortgage lenders have when it comes to improving borrower retention?
JACK HUNTRESS: Maintaining relationships with homebuyers is a challenge for the mortgage industry, which averages a paltry 18% retention rate across the board. While earning repeat business is no easy feat for businesses financing homes, by reimagining the role they play in borrowers’ lives, lenders could markedly improve borrower retention.
At present, lenders allocate the majority of their marketing budgets to wooing new customers only to make a single sale, even though we know that closing is just the beginning of the homeownership journey. In fact, according to U.S. Census data, Americans move an average of 9.1 times after the age of 18. And beyond home purchases, many homeowners rely on mortgage lenders to refinance and tap into home equity.
This isn’t to say that lenders ghost borrowers after close. Many have implemented CRMs that deliver delight with closing gifts, birthday cards and anniversary messages. But while maintaining brand visibility is essential, automated marketing campaigns alone are not enough to inspire customer loyalty. Lenders must go beyond staying in touch — they must continue to digitally support homeowners at scale in a meaningful way if they wish to earn repeat and referral business that is the lifeblood of a purchase market.
NEWSLINK: How can lenders continue to deliver value for homeowners beyond the closing table?
HUNTRESS: After looking at third-party research and conducting our own homeowner surveys, I learned that homeowners need two things that lenders are uniquely positioned to provide: ongoing home finance education and home management support.
First, let’s talk about education. Millennials are now the largest borrower segment and older Gen Z-ers are coming of homebuying age. Many in this collective generational cohort known as Next Gen are not proficient in what it takes to finance a home. This is in no way a jab at Millennials and Gen Z. In many ways they cannot be faulted for not knowing the steps they must take to become homeowners at the age of 18. For one, neither public nor provide schooling provides practical financial education. What’s more, financing a home today is far more rigorous than it was for previous generations at the same age.
The good news is that knowledge gap provides an opportunity for lenders to shine. Next Gen aspires to own homes and they crave knowledge that empowers them to make informed financial decisions. Lenders who go beyond helping this cohort purchase their first home by advising them of options as life circumstances change and equity grows will earn the loyalty.
Similar to financial education, homeowners need support staying on top of home maintenance. And what gets missed often is that Next Gen homeowners, which represent the largest demographic of homebuyers today, are overwhelmed with managing their largest asset. Homeowners frequently ask us basic questions like where is my HVAC filter located and how do I service it? And, how often do I need to sweep my chimney and do you recommend any service professionals?
Even for experienced homeowners, staying on top of every aspect of home management is difficult. By providing homeowners with a branded, digital home management platform, lenders can contribute value to their relationships with homeowners after close by helping them stay on top of managing their homes. Home management platforms simplify homeownership by centralizing important documents, maintenance reminders and appliance recalls. Some even go the extra mile by connecting homeowners with a marketplace of local authorized home service professionals.
NEWSLINK: Have you found that homeowners want to know how home improvement projects may help (or hurt) their home’s value?
HUNTRESS: Your home is usually the biggest investment of your life. Thus, homeowners want to protect it and improve its value over time, but many don’t know how or where to start. In an August survey of HomeBinder users, we found that nearly half of homeowners surveyed desire more insight into how certain projects will impact their home’s value.
While today’s automated valuation models are good for providing a ballpark figure of home value based on location and core property and structural attributes, they average an 8% margin of error. That said, there is ample opportunity for lenders to help borrowers be better stewards of their home by helping them understand how “in-home” data – things like appliance updates, renovations and interior improvements that aren’t considered in AVMs – improve a home’s value.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at firstname.lastname@example.org; or Michael Tucker, editorial manager, at email@example.com.)