1 The Reverse Review The Call Center Model By: Jessica Guerin Published: July 2013 Issue As originators seek more avenues to connect with borrowers across the country, the centralized call center is helping some seniors complete the loan process over the phone. When the Home Equity Conversion Mortgage was first introduced, it was originated in a face-to-face interaction at the so-called kitchen table. There, the loan officer would explain the details of the loan to a potential borrower, learn about their specific circumstances and discuss whether or not a HECM loan would be a sound solution for this particular client. But just as technology has invaded nearly all aspects of our lives, so too has it altered the way reverse mortgages are originated. Now, many leading lenders are operating call centers from which they engage potential borrowers in discussions about the benefits and requirements of a HECM. In many cases, the entire loan process from start to finish is conducted over the phone. While the traditional, feet-on-thestreet approach is still the foundation of many successful reverse mortgage operations, some are watching the notable rise of the centralized call center model with interest. The Rise of the Call Center Reverse mortgage call centers began to appear about a decade ago. Aided by an increase in TV advertising and Internet marketing, loan officers (LOs) working from one central location began reaching out to targeted leads and fielding inbound calls from interested parties around the country looking for more information about the loan. But it wasn t until 2007 that a borrower could complete the entire loan process over the phone. In April of that year, HUD issued a mortgagee letter allowing HECM borrowers to engage with a reverse mortgage originator and a HECM-approved counselor over the phone. Previously, borrowers were required to make every effort to meet with either an originator or a counselor in person. But acknowledging that a face-to-face meeting could be problematic to arrange for some seniors, HUD essentially ruled that the entire process could be conducted over the phone. Now, no matter where they are located, seniors can pick up the phone and call an 800 number to talk directly to a reverse mortgage specialist, and that specialist can see them through the entire loan process, distributing information about over-the-phone counseling, arranging for a property appraisal and overseeing the loan through closing. The reverse mortgage call center where loan officers, processors, underwriters and management operate together under one roof began to thrive. Effectively adding one more channel by which lenders can connect with senior borrowers, this centralized model has altered the origination landscape for HECM lenders.
2 Today, leading lenders like One Reverse Mortgage and AAG rely mostly on their call centers for retail origination. Others, like RMS, supplement their branch businesses with call centers in order to accommodate all types of borrowers. Volume Proponents of the reverse mortgage call center point to the fact that this centralized model lends itself to greater loan volume. Inarguably, an LO operating from a call center can potentially connect with a dozen senior clients in a day, whereas an originator pounding the pavement is limited by geographic location as he or she travels from appointment to appointment. But just because LOs can connect with more borrowers over the phone doesn t necessarily mean that loans are closed in speed-of-light fashion. According to Paul Fiore, senior vice president of AAG s retail lending operations, originating loans over the phone still takes time. What we stress is not to be too fast with the client. Some people may think a call center is just about getting out as many applications as you can and high volume but we don t teach a one-call sale. We really want more of a consultative sales approach, Fiore says. The goal of the call center is to be able to efficiently take care of as many people as you can, while still providing great customer service. Efficiency A key element to achieving that efficiency is the centralized structure of a call center operation. With all staff members under one roof, companies are able to create a cohesive approach to selling and processing loans. At One Reverse Mortgage, this setup has given rise to a company culture that revolves around teamwork. We all work together from our mortgage bankers to our client-care specialists to our insuring team. We are all committed to the same thing. That is probably the No. 1 reason for our success, says One Reverse President Gregg Smith. We don t have employees; we have team members, and that s how we approach it daily. With technology in place to track sales calls made over the phone, management can also monitor staff daily to measure efficiency, tracking lead volume and call time to determine the cost per lead. For AAG, the ability to track an LO s efficiency can help management uncover what aspects of the process need to be refined. I can pull any report to show me how efficient someone is being with leads if they re taking too many, if they re not taking enough, if they re making the right amount of phone calls on a daily basis, and if they re following the sales process, Fiore says. We re actually able to look at how they perform throughout every stage of the sale to see if they re converting things the way they should be to achieve the right conversion numbers. Because the sale is not a one-call close, there are many parts to it, and we have to make sure that people are doing every part properly. For Fiore, having his team nearby is essential to successfully managing his operations. I give credit to the people who run a large feet-on-the-street business effectively, he says. I couldn t imagine running an outside model effectively, because I wouldn t have my team near me. What I like about having a call center is that I have team leaders or sales managers who report directly to me, and everything is centralized. It makes it much easier for me to have a handle on what s going on in the business. Training
3 With all LOs operating from one central location, management can easily oversee the training and continued education of its staff. According to Smith, this centralized model lends itself to a hands-on teaching approach. We are in a constant state of training, coaching and revisiting the things that we have already trained on, Smith says, adding that the company s mortgage bankers, as One Reverse calls its LOs, are divided into teams that meet daily. We ll discuss anything from what just happened in the marketplace today to an example of a great call with a client. Sometimes we meet to simply revisit our rules. Smith says this constant contact is essential to ensure that One Reverse continues to thrive in an everevolving industry. What you know today may not be the solution for tomorrow, so we re constantly sharing and interacting with each other to discuss our experiences and what we ve learned. Fiore says AAG also puts a considerable amount of time into training its staff, a process aided by the fact that management can audit sales calls to determine what parts need refinement. We spend a great deal of time coaching and training loan officers, not only before they get on the phones, but after, he says. We continue to work with them, making sure they are doing the right thing by the client, making sure they are saying the right things on the phone, coaching them up. Because if you just put them on the phones and you don t listen to their phone calls and work with them then you can never guarantee that they re doing it the right way. Quality Control In this hyper-regulated world, doing it the right way is essential to staying in business. For those operating under the call center model, compliance requirements are easily trackable as management can, for the most part, control the script and monitor adherence. According to Fiore, AAG s LOs are instructed to present the information the same way every time. Everything, from the explanation of the loan to the details about available counseling agencies, is presented in a uniform manner to ensure compliance with federal requirements. Quality control is huge; compliance is huge, Fiore says. Because we are very systematized, it gives us great control over our loan application process. Whether it s better than what people do on the street, I can t say, I just know that for us it gives us really nice visibility into what our LOs do on a daily basis. Smith agrees that compliance is major and the call center model does help monitor quality control. Anyone who has been in this space for 10 minutes or four years knows that the licensing, the compliance and the oversight are increasing, not decreasing, so you d best be prepared for that, he says. I think that with the centralized model, [compliance] is easier to assess daily than with the other models that are out there. Licensing In order to comply with FHA licensing requirements, lenders must ensure that a borrower is working with an LO who is licensed in their state. For a call center operation, this means that LOs must be licensed in several states and that routing systems must be adopted to direct inbound calls to the appropriate originator based on the incoming call s area code. Fiore says AAG s LOs are typically licensed in four to six states. We try to license accordingly so we re not overlicensed in one state and we re not underlicensed in another, he said.
4 In any call center operation, technology is key. According to Fiore, AAG s complex routing system keeps operations running smoothly. When a call gets routed into the phone system, it will only go to the loan officers who are logged into the system and licensed in that state. And if there s nobody licensed in that state, then we ll set up a call back for the borrower, so we can always assign the lead to a licensed loan officer in that state. Building Trust But connecting a potential borrower to an appropriately licensed, well-trained LO is only half the battle. Now, the LO must develop a relationship with the senior, building trust so that they can effectively discuss whether or not the senior would benefit from the loan. Some argue that senior borrowers are more at ease over the phone and are therefore better able to ask questions and offer details about their personal situations. A phone call might also be more convenient than arranging an in-person meeting or inviting someone to your home. But according to Fiore, despite the presumed convenience, selling a loan over the phone has its challenges. There s a disadvantage in that you have to overcome the hesitancy of a borrower who never gets to meet with you face to face, he says. What we really try to do is build a relationship with the client. Before we go into any kind of sale, we need to understand why they re interested in the product, we need to build a rapport and an understanding so we can, as best as possible, try to mimic what someone experiences when they meet someone face to face. Fiore said hiring LOs who are personable over the phone is essential. I really try to hire and recruit people who connect with the client. We teach that above everything else. Forget about selling for a moment and try to build a relationship, he says. But it doesn t work for everybody. I ve met with great salespeople who are tremendous in a face-toface sale, but they couldn t sell over the phone. And I ve met great phone salespeople who can t sell face to face. It s two different sales, trying to accomplish the same thing. The Appeal of Meeting in Person While the success of reverse mortgage call centers proves that there are seniors out there who are comfortable completing a loan transaction over the phone, there will likely always be those who prefer to meet with a HECM specialist face to face. Smith acknowledged that not all borrowers are going to be comfortable obtaining a loan over the phone. There is definitely a group of clients that would feel more comfortable doing it face to face, he said, adding that his staff is sometimes able to overcome any initial hesitancy a senior might have about talking over the phone. Is there a segment of the clients out there who are focused on doing it face to face? For sure. And is there a certain percentage of that population that ends up doing business with us? Yes, definitely. Still, Smith concedes that not every potential borrower is going to adapt, and those clients will likely seek out a lender who can send an LO to meet them in person. If you want to see someone face to face, you re going to seek that outlet, and we know that. It s not a unique situation to the reverse space; this is a common situation with all financial services products.
5 The Case for Multiple Channels Because some seniors will never be comfortable with over-the-phone origination, lenders like RMS maintain multiple retail channels to accommodate all types of borrowers a branch model that allows borrowers to meet in-office with local reverse specialists, a call center that connects with borrowers nationwide via the telephone, and an independent, feet-on-the-street model that enables an originator to travel door to door to meet borrowers in their homes. According to Mike Kent, RMS president of mortgage lending, maintaining all three channels is key to the company s success. I think to have a good, solid, balanced retail presence, you need to offer the borrower what they need, what puts them most at ease. That might mean someone coming to the house and sitting at the kitchen table, or them going into an office and meeting with a loan officer, or transacting the loan process over the phone, Kent says. Our goal is to provide them with the avenue that puts them most at ease, so when they walk away from that transaction they feel that they ve gotten the highest level of education possible in order to make a decision on whether or not they should move forward with the loan. Kent says the three channels co-exist neatly and operate with a single mission in mind. We have a pretty good balance between our three retail channels, he says. We don t have a lot of competition. We re all trying to get to the same place and do the same thing, and that s giving the borrower the best experience we can possibly give them. RMS channels also coordinate to meet the needs of a borrower. For example, if a borrower reaches out to a call center for information about the loan, but isn t comfortable completing the transaction over the phone, the call center LO can connect the borrower to a local RMS LO. I think that we might, as an industry, sometimes pigeonhole ourselves into what a call center means, Kent says. For me, a call center is just an avenue to make a connection to somebody who wants to learn about reverse mortgages. You may originate that loan through that connection, or you may have to push it through another connection channel for the borrower to really get the customer experience that they re looking for. According to Kent, there is no right or wrong model and it mostly comes down to what suits an individual borrower best. I don t think there s a silver bullet of origination in any single design or structure, he says. I think that to have a viable retail presence, you have to be accessible based on what the borrower s preferences are. But pending program changes from HUD may impact how the industry does business, Kent says, and this could mean we need to reassess our various approaches to origination. I think going forward with the change in product and some new rules that HUD will be publishing later this year, we re all going to have to go back and take a look at how we originate loans and what models we use. We re going to have to be open to adjusting and changing those models as the market dictates, he says. But I think all in all, we re a pretty nimble industry, pretty entrepreneurial, so I m quite confident we ll all work it out.
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