We often hear, “look for the pain point” in learning to sell. Is that always the magic to getting the sale? Skip Anderson, of Selling to Consumers is not so sure.

Looking for More Than Pain in Mortgage

What About Debt Settlement?

Sure, that is fine for mortgage, but all debt customers are coming with pain right? Maybe not. In fact, I would venture to guess many of your debt settlement prospects don’t even know they have pain yet. That is why aged refinance and loan modification leads are so profitable for debt settlement companies.

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Whether you are in the mortgage or the debt settlement business–loan modification leads are a good bet for prospects. If you think about it loan modification implies a crushing debt problem. Assuming that a homeowner is holding one of the largest debt burdens an average customer will encounter, a loan modification lead is someone in real debt relief need.

Why Loan Modification Leads?

If you are in the debt settlement business you may be wondering why I would recommend loan modification leads. The answer has a lot to do with detecting the intent of the person inquiring and how close they may be to taking action.

As you know most debt leads are people very early in knowing (or admitting) they have a debt problem. That means you are spending much of your time convincing them that they need to take care of their debt problems now.

To the contrary, someone who has inquired about a loan modification knows they have a crisis on their hands. They also are probably a bit more sophisticated, in that (believe it or not) most consumers still don’t know what about loan modifications.

Opportunity to Set-up Mortgage Referrals

It is also a fair bet that if someone is having problems paying their mortgage they are there because of credit problems, credit card debt, installment loans and the like. Sounds like the perfect person for you, in the debt settlement business, to help.

Ultimately, getting them into a stronger financial situation to support that mortgage payment.

However, you might not have the expertise or licensing in your debt settlement practice to solve the mortgage issue. Never fear, this is a perfect opportunity to set up a referral relationship with a mortgage broker or loan modification specialist.

Ideally, these loan modification leads will not only get you some more debt settlement deals, but they may also get you some referrals flowing from mortgage partners.
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I am curious what the general sentiment is on this topic. I hear a lot of my customers having to make adjustments because of all of the regulatory changes. There’s HVCC, loan modification rule changes, increased mortgage licensing requirements, robocall bans, and a host of other changes that target the financial services industry.

How are you dealing with these and other market changes?

Here are some of the trends I am seeing with my clients and in the market:

1. Small and independent brokers are having to find bigger shops to join or operate under in order to stay compliant
2. Everyone is monitoring regulatory issues and legislation much more closely
3. Costs are going up and most increases are attributable to compliance
4. There are fewer sources of funding for lenders
5. The government is forcing more inefficiency, while cutting profit opportunity

This certainly is making it tougher to run a debt or mortgage business. However, I think there are some great opportunities to excel in this environment too.

• If you look for the right savings, like buying aged leads versus real-time leads, you can stretch your advertising budget a lot farther.
• The regulatory environment also weeds out the bad apples-improving the image and the trust of those remaining in the business.
• Finally, I think whenever market sand is shifting creativity always wins-learn to do something faster, more efficient, or more appealing.

Then, while your competitor are moping with their heads down you will be passing them by.

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Loan modifications are all the rage in government and the media, but where the rubber meets the road they may not be getting it done. It seems that very few of these troubled loans are actually getting modified and when they do they simple seem to be delaying an inevitable foreclosure.

Loan Modification Doesn’t Mean Debt Forgiveness

Although there are many statistics showing the powerful effect of debt forgiveness in recovering troubled borrowers few loan modification programs are using this tool. Holden Lewis’ article on FrontDoor.com confirms this fact:

“Less than one in 50 mortgage modifications includes debt forgiveness, which is considered the surest way to prevent foreclosure.”

“For every troubled homeowner whose mortgage principal is reduced in a modification, 39 others end up with more housing debt as lenders tack on missed payments, late charges and even attorney fees to the loan balance.”

But would that strategy help?

“A number of researchers found that the most successful mortgage modifications involve debt forgiveness. Yet, according to the Comptroller of the Currency and the Office of Thrift Supervision, just 1.8 percent of modifications in the first quarter of 2009 forgave debt. That’s about one in 50 modifications.”

“The other 49 modifications consisted of rate reductions or rate freezes, term extensions and “capitalization,” which means that the missed payments and fees were added to the homeowner’s debt burden. Some 70.2 percent of modifications included capitalization: That means that for every troubled borrower who got debt forgiveness, 39 ended up owing more.”

Looks like a big disconnect to me and why there are so many consumers willing to take a chance on using the services of a loan modification firm. These consumers have usually tried repeatedly on their own to see what relief their bank or government programs could offer them and have been left out in the cold.  As usual since America’s founding, if you want results look to the private sector.

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Are you following me on Twitter? You should be. I am constantly Twittering out ideas, tips, and news I pick up from my stream of daily feeds on debt, mortgage, and loan modification.

Here are some recent items you may have missed if you weren’t following me:

• Reverse Mortgage – Bank of America executive says it is part of retirement now
• Naked Capitalism – Debtors Revolt?
• Loan Modification – California Attorney General targeting loan modifiers

Twitter is a great way to tune into late breaking news on most any topic, but especially financial industry news.

So, if you don’t have a Twitter account sign-up for one today at http://twitter.com. In all cases start following me at http://twitter.com/troywilson

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Well it is a funny world isn’t it? Federal law enforcement and regulators are going after loan modification companies with a vengeance, yet the US Treasury is handing out BIG incentives to get them done.

Tim Manni, a writer for HSH Associates Financial covers another attempt to increase loan modifications:

“With this program, the Treasury is now paying financial incentives to all parties involved in the modification process (borrowers, servicers, and now lenders). If you recall, the notion that Washington was going to pay borrowers to remain current and services for their “success” was extremely controversial.”

So, the incentives for loan modifications continue to escalate, but the business seems to still be too complex to really efficiently execute, or make business sense.

One of the problems may be the focus on trying to cover losses instead of finding a way to make the process commercially sustainable. The objective is clear-cover the potential risk:

“The purpose of the program is to encourage additional lender participation and HAMP modifications in areas with recent price declines by helping to offset any incremental collateral loss on modifications that do not succeed.”

Are you in the loan modification business? Can you add some color to this? Please comment below.

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In the Internet leads business we see so much straight selling of products-rates, payments, and terms. In many cases that approach might work. Some borrowers are coming in with knowledge, well researched, and ready to get their deal done. However, most are just trying to get a clue on how to improve their lives or financial outcome.

This is your opportunity. Stop confusing your prospects by rushing in with rates and payments. Start by listening for the financial outcomes they are seeking.

1. Lower debt payments – Everyone wants to have less debt, but most are probably just looking for some relief. That means reducing the amount they have to pay each month to satisfy creditors, and maybe get a little ahead.

2. Increase monthly cash - This is often the outcome your customers are looking for and there are lots of ways to get there. But, don’t start in with loan modifications and debt settlements-start by figuring out where they want their monthly cash flow to be and work backwards.

3. Pay off home early - Increasingly homeowners are getting more conservative. Although they may not be focused on this as housing values continue to decrease eventually I think you will begin hearing it more. People are certain to be living in their homes longer and looking to pay them off sooner.

4. Reduce mortgage payment and sell - A lot of homeowners are starting to think renting is a better idea. This is going to have customers looking for smart ways to sell their homes and minimize payments until that happens. Likewise, many people have to relocate to find jobs. That means they need to minimize their payments as they maintain two households.

5. Increase retirement cash - Many seniors had their retirement nest eggs ravaged by the stock market. Now they need to turn to their homes to increase their retirement income. Talk about what they need to maintain their lifestyle before you rush in and scare them with the reverse mortgage pitch.

Listen first, learn what your prospective customers are looking for in outcomes and then sell those outcomes-using products as tools and examples of achieving their ideal outcome(s).

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Have you ever lost a customer? Maybe you didn’t even have them yet. You just got the big, “no!” Mortgage Cicerone and Better Closer have some ideas that might surprise you.

Mortgage Cicerone

We get to peak in on a devastating moment in any sales person’s day-losing a customer to the competition. But, the Mortgage Cicerone is not discouraged because he has a strategy for getting these losses back:

1. Call them seven to ten days after it happens.
2. Don’t call and ask if they have changed their mind.
3. Remind them when they initially decided to use another lender, you offered to do whatever you could to help them…even if you are not doing their loan.
4. Professionally ask them how their loan is going and offer your help again.
5. If their loan process is going badly (this will be the case one in three times), you have a perfect opportunity to recapture the prospect.

Better Closer

Similarly, Bill Rice of BetterCloser.com thinks that this is not a lost opportunity. Quite to the contrary he thinks it is one to attack because the competitor has a high probability of disappointing the client:

You don’t even have to ask for the sale. You will be amazed how many of these deals you will win. They will come to you because:

• If you are this attentive and responsive, what would it be like to be your customer
• The competitor will most probably frustrate the customer when they get into processing
• If you don’t get them this time they will call you next time because of your commitment

So, don’t ignore the customers you lose to the competitor they may be your highest converting lead.

In all cases, don’t get to discouraged after all sales people often suffer from Post Traumatic Sales Disorder (PTSD).

“Sorry, I am already working with someone.”

The dreaded brush-off. You lost another one to the competition…or, did you? How can you turn this into opportunity? Treat them like a customer.

Don’t Lose Hope When You Lose

Treating prospects that you lose to the competitor like customers can be a very valuable sales strategy. Chances are these prospects made decisions based on factors other than service or knowledge. By putting a small amount of effort into these two areas, even though you lost the deal, you can probably squeeze out a deal or two.

Follow-up on Losses Like Customers

In a world full of self-service and do it yourself many are forgetting the profitability of service. It creates trust, reciprocity, and loyalty in a relationship-powerful allies in sales.

Service should be the first thing you offer to a prospect that turns you down.

“Yes, Ma’am I understand and I hope that Joe’s Mortgage Shack takes care of all your mortgage financing needs.” Leave it at that, but…

Go immediately to your calendar and set-up an appointment to call that customer back in 3-5 days. This is about the time a loan will enter into processing. Often mortgage brokers and lenders run into challenges with underwriting, getting stips satisfied, or hounding for docs. This friction often creates opportunity.

Call back with something like this: “Ms. Jones, this is Troy from Superduper Mortgage…We talked a couple of days ago. I just wanted to check in and make sure that Joe was taking good care of you. Do you have any questions? Is everything approved and good to go?”

Every so often that simple opening will have a frustrated customer tossing themselves into your capable hands.

Create a Loss Pipeline that Converts

In addition to that simple callback I also suggest getting them into your marketing database. Chances are they will be more than happy to get good value-based mortgage and homeowner tips/news. It will also keep you top of mind as things move forward with this mortgage, future financing, or referral opportunities.

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Could you be missing a lot of great candidates for debt settlement? If you are only buying debt leads then the answer is, “yes.” You see, debt leads are people that self-indentify they need debt settlement services. Meanwhile, the facts are most people in debt trouble don’t have a clue what “debt settlement” is or how these programs help.

Look beyond the scope of debt leads and you could pick up your sales numbers this month.

Safeguard Consumer Intent

Before you branch out into these other great lead types make sure you are compliant with relevant disclosure, consumer intent, and DNC laws. Even better is to ensure that leads have opted-in to contact for other products and services, and for more good measure ask them for permission. One example would be to have an online request form for unsecured loan leads have an optin box right before the consumer hits the submit button or a popup box after hitting submit that allows him to click a box opting him into also being contacted by a debt counselor as long as he has at least $10,000 in unsecured debt.  By getting him to actually opt in to also be contacted about debt services the lead generator and you are not only better legally protected but the consumer is that much more likely to be interested in considering debt settlement as an alternative debt relief option. The consumer is a great prospect either way and in actuality much more likely to quality for debt settlement than for a loan anyway but you will see greater success if you can buy leads in which the consumer has taken the extra step of specifically opting in to be contacted about debt settlement.

You can approach these consumers with a very simple, trust building introduction.

“Hi, my name is Chase from Debt Settled America and although I know you applied online for an unsecured loan I think you may be able to simply settle your debt. Can I tell you more?”

Finding Debt Settlement Candidates

Where do you find these secret diamonds in the rough? Debt settlement firms seem to be finding success with online requests for any of the below:

• Unsecured loan
• Payday loan
• Bankruptcy
• Loan Modification
• Refinance (poor credit and high LTV)
• Credit Repair

Benefits of Buying Other Lead Types

1.     Troubled borrowers often look for help in strange (wrong) places. A lot of consumers who debt settlement could be the optimal solution for have never heard of debt settlement and you will never reach them if you wait for them to come to you. Start thinking about the profile of your ideal candidate and go find leads able to deliver you the best prospects.

2.     Consumer having shown interest in other lead types won’t be shopping other debt settlement firms. Be the first to offer them the option of settling their debts as an answer to their financial dilemma.

3.     Other lead types tend to allow you to filter for criteria not available in a usual debt lead such as credit, behind on payments, LTV, loan amount, income, employed, etc. and thus get to someone likely to be a very motivated prospect as well as often a very profitable one. At times they can even suggest consumers very likely to have above average debt amounts as in the case of bankruptcy leads.

4.     Lead vendors likely to give them to you cheaper since you will not be stepping on toes of their regular clients.

Give these other lead types a try and stop leaving as much money on the table. You will be surprised how well they perform. They really do represent a win win win for lead vendors, debt settlement firms, and consumers and I expect cross-selling to become much more commonplace in the lead industry.

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