Lender Life

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Hubs of Opportunity

Robust online mortgage websites embrace today’s lending challenges as well as consumer needs

By Elizabeth Judd

When Community Bank of Bergen County unveiled its online mortgage hub this summer, the bank put “ease of use” at the top of its goals for the site, says President and CEO Peter Michelotti.

“I still do a lot of lending myself,” Michelotti says. “Every time I’d speak to a potential customer on the phone, he or she would say: ‘Can you email me the application?’ And I’d say that I have to mail a paper application.”

Although the latest online mortgage application platforms seemed cost-prohibitive, Michelotti realized that his $292 million-asset community bank in Jersey City, N.J., truly needed an online delivery channel so “customers could apply from home instead of using the old-fashioned paper application.”

Sam Vallandingham, president and CEO of The First State Bank in Barboursville, W.Va., had a similar rationale for adding an online mortgage center to the bank’s website in early 2014. “As community banks, we’re very service-oriented,” he says. “This lets consumers fill out a mortgage application at 12 o’clock at night, sitting in their pajamas.”

In the seven months since the system went live, Vallandingham’s enthusiasm has steadily grown: “We’ve become more convenient to our consumer because we’ve added functionality. It’s been a very positive experience, and we’re going to look to broaden that offering.”

Making the case

The online mortgage hub at D.L. Evans Bank in Burley, Idaho, is just over 3 years old. The impetus for starting a robust mortgage website “was convenience for our customers,” explains Zehireta Avdic, marketing officer for the $1 billion-asset community bank. Applications are processed through A la Mode Inc., a third party in Oklahoma City that accepted 425 mortgage applications for D.L. Evans between July 2013 and July 2014.

“This lets consumers fill out a mortgage application at 12 o’clock at night, sitting in their pajamas.”
—Sam Vallandingham, The First State Bank in Barboursville

Similarly, The First State Bank, which has $270 million in assets, decided to convert its mortgage platform “in the most recent onslaught of regulations,” Vallandingham says. The bank went from having a static mortgage website that described various mortgage products to one designed by D+H based in Toronto that provides a completely Web-based mortgage application process.

“The mortgage market used to be face-to-face,” says Vallandingham, but notes that nowadays nearly two-thirds of mortgage applications are originated online. As soon as The First State Bank’s new online mortgage hub was unveiled, he says, the bank began getting applications from borrowers who were neither existing customers nor referrals. When asked, these individuals said they had merely found the bank’s mortgage program through search engines.

Beyond generating new leads, Vallandingham is pleased by how much time and effort his community bank’s online mortgage center saves internally. Offline the bank would spend a minimum of one to two hours completing mortgage applications for customers, he says. Lots of time was involved handling disclosures. Now such mortgage lending preliminaries are handled online.

Although community banks generally have a token online mortgage presence, most have yet to offer truly interactive products. “We’re still at a point where it’s the minority of community banks that have a robust, online mortgage lending presence,” says Ron Haynie, ICBA’s senior vice president, mortgage finance policy.

Haynie characterizes a mortgage website as “robust” when it does more than display a bank’s current rates. He notes that community banks with dynamic online sites are doing everything from letting consumers start the application process online to pre-qualifying applications over the Web, and later allowing borrowers to check their loan status via the Internet.

Launching a robust online mortgage center opened up a host of new possibilities for Community Bank of Bergen County. Michelotti points out that until quite recently, the bank hesitated to advertise online because it was still mailing out paper mortgage applications. Now that so much of the mortgage process occurs on the Internet, the bank is actively exploring online advertising.

Vallandingham offers a similar take. He notes that while he started down the online mortgage road for his customers’ convenience, the experience of attracting new customers “changed my point of view.” In the not-too-distant future, The First State Bank plans to add more online capabilities, including the ability to log on for deposit accounts, consumer loans and credit cards.

A competitive necessity

Haynie views online mortgage centers as a way for community banks to cope better with the dramatic changes in consumer mortgage lending. He praises mortgage websites as “a cost-efficient way to generate additional business and allow your loan officers to focus their time on serving customers, as opposed to some of the basic stuff that you go through with mortgage lending.”

In the near future, Haynie adds, community banks will risk losing substantial business from younger homebuyers who are accustomed and expect to conduct most of their banking transactions online.

“If you have a technology tool that helps you provide good communication and a positive experience, that clearly gives you a competitive edge over the guy down the street.”
—Ron Haynie, ICBA’s mortgage lending expert

And while rates and fees typically drive mortgage lending, a bank that’s fairly competitive can distinguish itself by service, says Haynie. Part of the service equation is education. A top-notch online mortgage site can effectively showcase different loan products, such as FHA or VA loans, and not just 30-year, fixed-rate products.

Your Lending Resources

ICBA offers a wide range of educational resources for community bankers on lending. In addition to various classroom seminars and an in-depth certification program, the association offers online courses, audio conferences and webinars, guidebooks and multimedia instruction materials.

For more, visit www.icba.org/education.

Michelotti is impressed by how easily online mortgage websites draw out key information from potential borrowers and model different potential loan options. “The paper applications can be daunting to some people,” he says. “But [Community Bank of Bergen County’s new system] walks you through question by question. It’s customized to each person’s scenario. If a scenario doesn’t apply, it won’t ask you that question again.”

What’s more, the bells and whistles on the bank’s site are designed to attract new borrowers. Michelotti was pleasantly surprised by the site’s rate-watch feature, which updates potential borrowers when interest rates hit a level that they set themselves. He believes that this reminder “will definitely bring us new business.”

In the end, Haynie is convinced that offering a robust online mortgage site can help community banks in many ways, not the least of which is differentiating themselves from competitors. “If you have a technology tool that helps you provide good communication and a positive experience,” he concludes, “that clearly gives you a competitive edge over the guy down the street.”


Elizabeth Judd is a freelance writer in Maryland.