How to Tap the Biggest Lending Opportunities Post-Refi Boom

January 04, 2022

Recent reports note that American homeowners currently have $9.1T in tappable equity, having added $1T (or an average of $20,000 per homeowner) in Q2 alone. This comes to an average of roughly $173,000 in tappable equity per home, an amount that represents a huge opportunity for lenders and servicers looking for revenue streams now that the refi boom has cooled.

Offering eligible borrowers home equity loans, HELOCs, and cash-out refinances should be a top priority for lenders and servicers right now – but identifying which borrowers are eligible and systematizing outreach to maximize the odds of conversion is a huge undertaking.

Here’s a look at the systems lenders and servicers need in place to ensure they retain and reconvert as many eligible borrowers as possible – while also adding real value to their lives.

A Way to Identify Eligible Borrowers (Golden Record)

The opportunity to leverage tappable equity is big right now – but not for every homeowner. The numbers reported above give a sense of the scale of opportunity available to lenders and servicers, but a mass email encouraging borrowers to explore their options isn’t likely to help your bottom line much.

Why? For three reasons:

  1. Lack of personalization: Increasingly, customers expect personalized experiences. This is especially true of the financial institutions they work with. Think about it: borrowers are required to divulge a lot of information to take out a loan. They know that highly personalized communications are possible (think what Netflix and Amazon offer). So when they get a mass email from a lender, they’re likely to delete it – if an organization that knows so much about them can’t bother to personalize its messaging, why should they engage?
  2. Effort required: Nobody has time to click through to figure out what a cash-out refi is, never mind determine whether they’re eligible. Generic mass emails require too much work from borrowers.
  3. Potential to harm: Think of the people whose income fell during the pandemic and are just exiting forbearance. Maybe they’re unsure whether they’ll be able to continue paying their mortgage. An offer to tap equity can feel like a slap in the face.

So what’s the solution? A back-end system that combines your CRM, LOS, marketing, and servicing data repositories into a single view to ensure your team has the full story about the borrower and can identify the best product and plan for engagement (see Figure 1).

Figure 1: Visualization of a golden record pulling data from multiple sources

We call this the “golden record.” Another common term is “single source of truth.” However you refer to it, it’s a database solution that ensures that…

  • Data is shared among the various platforms you use.
  • Each of your customers has one and only one record across all of your systems.
  • All customer information is accurate and up to date.

With a golden record solution in place, a lender or servicer can search within all their data repositories for borrowers with a certain amount of equity and a solid payments history to see who might be eligible for a home equity loan or HELOC, then target messaging about those opportunities only to eligible borrowers.

A Way of Automating Borrower Outreach (CRM)

Of course, reaching out to all eligible borrowers individually – and keeping track of their responses – is more than any lender or servicer could do manually.

To scale targeted messaging about equity-related opportunities, lenders also need a customer relationship management (CRM) system. CRMs make it possible to manage multiple outreach campaigns simultaneously, as well as automatically trigger certain campaigns when a borrower or the market meets certain criteria.

To build on the example above, a lender might set up logic that identifies all borrowers who are eligible for a home equity loan in states currently offering tax credits for adding solar panels to a home.

The lender might then create an email or dial campaign that contacts anyone in this group with messaging informing them that they may be eligible for a home equity loan and that they could use the money from the loan to install solar panels for additional tax benefits.

The lender might run a simultaneous campaign letting borrowers know that their state currently offers tax credits for adding electric vehicle charging infrastructure.

The conversion rates of campaigns like this are likely to be much higher than those of mass emails because the personalized messaging highlights opportunities that offer real value to the customers.

Applying the golden record solution to your outbound marketing campaign guarantees the right messages to go to the right target audience with minimal duplicate records or unwanted compliance headaches.

Back-end Tech to Streamline Customer Experience

Key to making outreach campaigns like these work is ensuring that they truly make life easier and better for customers.

That means…

  • If a customer clicks to “learn more” in the email you send, they’re sent to a page on your site with information relevant to their specific case.
  • If they hit “reply,” the person who gets the email is familiar with the campaign and knows next steps. 
  • If they call, the person who answers the phone can quickly pull up the borrower’s account (after security verification) and start discussing their options.

To ensure this smooth customer experience, your back-end tech has to be connected and unified – and your entire team has to be informed about and prepared for the campaigns you’re running. If your current tech stack exists in silos that don’t speak to each other, you won’t be able to pull this off.

Update Your Tech Stack to Take Advantage of Today’s (and Tomorrow’s) Revenue Opportunities

The 2020 refi boom led to so many inbound leads that most lenders didn’t have to focus on reconverting existing customers. Now that the boom is mostly over, proactive and strategic outreach to existing contacts will be essential to managing costs and ensuring strong revenue.

If your organization doesn’t currently have the systems described in this article, which are essential to acting on the market’s current opportunities, get in touch.

Our senior mortgage experts and solution engineers have created custom CRM solutions specifically for the lending industry. We can help you build or customize a platform that helps you identify the right borrowers to reach out to, automate personalized outreach, and ensure that everyone you contact has the kind of experience that makes them eager to convert.

Author: Mark Hansen
About: Mark Hansen is chief product officer at NTERSOL. For more than two decades, he’s been developing digital solutions for mortgage and real estate. In his current role, Mark combines his deep industry and technical knowledge with his communication prowess to solve clients’ thorniest problems and make sure everyone involved is on the same page throughout the process.