Even with a crystal ball, it would be difficult for anyone to tell exactly when the housing crisis will have hit the bottom. As consumers have lost confidence in the financial industry, it’s become more and more difficult to overcome their aversion and skepticism. In the past, consumers wanted lines of credit as if it were a birthright. They were willing to finance nearly anything from cars to clothing and jewelry. It was also easier for lenders to give loans and buying a home, taking out a line of home equity credit or refinancing were very common. As the media continues to talk about how strict the rules have become and the economic crisis that the nation is currently in, many consumers are feeling disheartened about the solvency of financial institutions.
With this being the mindset of potential buyers, it is important for financial institutions to communicate that they are financially sound. They also need to position themselves as a reliable source that keeps abreast of the current government programs that are available and how these programs can help their customers still realize the dream of home ownership.
Seeing that home ownership is the backbone of the nation, the Obama Administration has increased incentives and programs designed to assist first time homebuyers and those that are having trouble with their mortgage and declining home values. Lenders are now rushing to try and get the good word out, but find that they are being met with either disinterest or distrust. Breaking through to consumers and changing the way a financial institution approaches lending can mean the difference between thriving and surviving.
Hillary Legrain, Esq., a Mortgage Loan Officer with Bank of America knows this story all too well. She has worked in the lending industry before the current housing crisis. She believes that the market has indeed started to turn around as she’s seeing purchase sales and loan applications on the rise.
Down payments can be a huge hindrance to first time homebuyers, especially since September 2008 when the FHA loophole that allowed for seller-assisted down payments through companies, such as, AmeriDream, Inc. was eliminated in the Housing Relief Bill of 2008. This bill also established a pseudo-tax credit of $7,500 for first time buyer. This tax credit was really an interest-free loan from the government and with the stipulation that it had to be repaid, didn’t dramatically increase lending. In 2009, with the first time homebuyer’s tax credit increasing to $8,000, Hillary has seen many more new buyers that are wiling to make the jump from renter to owner. She anticipates that number to increase as the tax credit will now be able to be used as the down payment at closing.
But now that the lending is turning around, banks now have other issues to worry about, namely repayment of the loan due to the rise in unemployment. Bank of America solves this worry by offering their clients complimentary Borrower’s Protection Plan coverage for the first 12 months after the purchase of the borrower’s home. The plan acts as insurance against life-changing events like sickness, disability, or unemployment which can devastate a borrower’s ability to repay their loan. The plan helps by paying for the mortgage for up to 12 months. Hillary has found that, “in these times of economic uncertainty, it helps to ease the anxiety around buying a home.”
With all of these new and exciting changes and offers, it’s important to keep in contact with current customers and potential customers as well. Bank of America recently launched a nationwide marketing effort to let customers and potential customers know that they are open for business and have money to lend. This marketing campaign includes mail and email campaigns that keep their customers aware of the new products that are available to them.
Some loan officers find that calling their clients, especially those that are older and prefer the phone to email, is a great way to explain the changes and new rates that are available.
One of the best ways to spread the word and to increase sales is to utilize a customer referral program that offers current customers the chance to receive gifts or money when they refer their friends to the company. Referrals are an excellent way to gain new business for several reasons including the low cost of implementation, increased credibility, and awareness for current customers.
A successful marketing mix will combine all of the aforementioned approaches to contacting customers so that they may be aware the financial institution is alive and well, has money to lend and even can offer an incentive.
