Mortgage Companies Boost Growth through Social Impact

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By Kristin Messerli

Some of the largest companies in America are building their businesses through sustainable and social investments, and it appears to be the way of the future for the mortgage industry. Companies that want to generate growth and maintain their market share long-term must understand how to incorporate social impact strategies into their business model, including community outreach, customer experience, and inclusive hiring practices.

Billionaire investor Mark Cuban states frequently on the popular TV show, Shark Tank, “Social enterprise is the future of business.” CEO of Whole Foods (recently purchased by Amazon for $13.7B), John Mackey, says, “I believe our philosophy of conscious capitalism will eventually be widely adopted primarily because it is a better way to do business, and it creates more total value in the world for all of its stakeholders.”

This shift in demand is led largely by Millennials, who now make up one in three American workers (Pew), and multicultural consumers, who account for 90% of U.S. population growth. A Nielsen study shows that over half of Millennials will pay more for a product or service if they know it has a social impact, and Millennials are more willing to work for companies who demonstrate a commitment to serving their community.

In addition to meeting consumer and employee preferences, a focus on social impact also mitigates the distrust that exists widely among today’s apprehensive consumers. Millennials entered adulthood during or soon after the Great Recession, and minorities were hit the hardest in the financial crisis of 2008. Both segments often hold a great deal of distrust for financial institutions.

To evolve with today’s market demands, businesses are moving away from focusing strictly on short-term profits in favor of assessing their performance over a longer time horizon. Mortgage companies must learn how to shift toward long-term strategies that consider the positive impact they can have on their employees, consumers, and community. After assessing some of the industry’s fastest-growing companies and thought leaders in this space, we have outlined a few key components to maximizing profit share through social impact.

  1. Community Outreach. Evaluate opportunities for impact that your company can have on your local community, your environment, and your employees. Consider organizations you may partner with and ways you can give to your local community that align with your values and mission. Companies may be surprised to find that focusing on what’s best for the community is often what’s best for their bottom line.

For example, Vitek Mortgage has recently made a shift in the company’s focus from number of loans to community support in an effort to build a competitive advantage. Vice President of Production Denise Konigsfeld says, “In an industry overcrowded with sales pitches and confusing lingo, we’ve seen the growing need to shift who we are as a mortgage lender and what we’re about. For us, that means focusing less on the number of loans and focusing more on being a company committed to education, inclusion, and community support. Through this mind shift, our focus becomes less about the sale and more about the person. And, success becomes measured not in dollar amounts, but in the number of lives we have positively impacted.”

Vitek has implemented an employee health and wellness program, a “think Green” philosophy that encourages environmental sustainability, and community outreach initiatives. “Together, teaming up with organizations like HomeAid and Neighborworks, who are focused on giving back to the community, we are working hard to help provide people the lift they need to start on a path of recovery and financial independence. Through our Financial Fitness classes with Neighborworks, we are helping people learn how to make smart financial decisions and create a plan to become homeowners. Each family that we help achieve the dream of owning a home is the fuel that drives us forward.” Vitek Mortgage has found new channels for sales growth through partnerships focused on underserved markets.

  1. Consumer Education and Language. Today’s consumers value information and transparency, and many communities need greater education to gain access to financial independence. Additionally, many Hispanic, Latino, and Asian American consumers speak English as a second language. Family members, who can be deeply involved in the decision-making process, might not speak English at all. Companies should consider ways to improve consumer education through language services and a transparent education experience for the consumer.

Alterra Home Loans is one of the leading mortgage companies in reaching the Hispanic and Latino market. They attribute a great deal of success to their ability to offer a diverse set of products, hiring loan officers who represent this demographic, and understanding the high-touch needs of overlooked communities. Julia Adame, a branch manager, explains, “Starting early in my career with mortgages, I became aware that predatory lending had been occurring in my community. Since then, I’ve made it a point to educate the non-English-speaking community. Last year I had a monthly home buyer’s class, only in Spanish, and I also write weekly articles for this cause.” This value for education is evident throughout the Alterra culture.

In addition to education outreach, companies must have a robust education experience in place to successfully onboard new customers. Ed Diaz, a loan officer for Banc Home Loans, who is focused on growing his business in Hispanic and Latino markets, explains how he uses a Spanish-language education tool called Mortgage Coach, to improve his customers’ education experience. “Mortgage Coach has been a huge way for me to break the chains of no education. It gives me the ability to really explain to a client in any culture how the numbers are calculated and what it means for them.” Mortgage Coach is one of the leading technologies in the mortgage industry because they are helping lenders increase sales through meaningful solutions.

  1. Product Offering & Credit Resources. In NAHREP’s State of Hispanic Homeownership Report, limited credit history is listed as one of the top three barriers to Hispanic homeownership. Companies who decide to invest in these markets must be prepared in terms of product offerings and processes to properly qualify individuals who may have limited credit histories.

Barrett Burns, President and CEO of VantageScore, explains that their alternative credit scoring model has been critical to today’s business development efforts in the mortgage industry. VantageScore’s credit scoring model was developed to provide an accurate credit score to the 30-35 million individuals in the U.S. who would otherwise be “credit invisible.” Burns says, “One of a number of challenges that lie ahead is a change in credit behavior. For example, many families are using credit sparingly while others, having emigrated from countries where the banking systems are problematic, are slow to use traditional banking services.  Other studies have shown that millennials have been slower to take out credit cards and auto loans than consumers in the past, leaving them with limited credit histories.

“As a result of those and other credit trends, there are now tens of millions of so-called ‘credit invisibles.’ Simply by using more modernized and inclusive credit scoring models, like our most recent model VantageScore 3.0, mortgage lending to Hispanics and African-Americans could increase by 16%, as compared with 2013 levels, without lowering prudent credit standards.”

(See pg. 8, for more on alternative credit data by FICO representative, Joann Gaskin).

  1. Hiring Diverse Talent. McKinsey & Co. reported that companies in the top quartile for diversity are 35% more likely to have higher financial returns than their national industry medians. Companies must reflect the audience they hope to reach in order to both access and properly understand the needs of their customers.

Cheryl Travis-Johnson, Co-Founder of the Council for Inclusion in Financial Services (CIFS), explains that hiring for diversity is not enough. Companies must hire with inclusion at the forefront of their business practices, meaning everyone has an equal voice at the table. Cheryl explains, “Multiculturalism influences business results in multiple ways and can have an adverse economic impact on business results if leaders do not manage it effectively. This is because employees will turnover if they do not feel they have a voice at the decision table that can represent their specific needs. Additionally, customers will no longer use products and services if they do not believe they were developed with them in mind.

“Therefore, it is imperative that leadership teams include members of the communities they serve. It is also important that all employees understand that an inclusive environment is not a by-product of corporate social responsibility (CSR), but an economic and competitive advantage.”

  1. Mission-Driven Culture. Companies that invest in their employees and build a strong team culture are more likely to retain top talent and increase productivity from their employees.

Inc. Magazine has named Movement Mortgage as the fastest-growing mortgage bank in the country. This is because Movement Mortgage has gained significant market share through their focus on a mission-driven culture and community reinvestment. Market Leader at the company, Heather Cox, attributes this success to the culture. “Working at a company that truly loves and values its customers and its employees has made all of the difference for me. Movement Mortgage puts actions behind its mission statement in so many ways, including how it treats its borrowers and the communities we share through the Movement Foundation.”

The foundation has invested over $27 million in community centers and charter schools, but the giving starts by taking care of their workplace family. In addition to many other benefits, they have a fund designed to give special assistance to employees in difficult circumstances (i.e. death in the family, health incident, etc.).

Businesses that want to maintain a competitive edge and sustain long term growth must first think about how to achieve positive outcomes among all their stakeholders – consumers, employees, and the greater community. Today’s consumers believe social impact is the way of the future, so companies should not move slowly to adopt this new mentality.

 

Note: We know the examples shared in this article are only a drop in the bucket of activity in which mortgage companies and individuals are engaged in social impact, and we’d love to hear about what you’re doing to have a positive impact on your community. Leave your comments here, or share them on our Facebook page at www.facebook.com/mortgagewomen.

 

Kristin Messerli

Kristin Messerli is the Managing Editor for Mortgage Women Magazine. She can be contacted at kristin@mortgagewomenmagazine.com.

 

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