The more complicated the financial product, the harder it is to implement new product twists, marketing programs, and process changes. But if it’s hard for you, it’s hard for your competitors, so you have a chance to beat them to the punch. The mortgage area appears wide open, so consider an online spin for your mortgage products.

1. HOME BUYERS EMPORIUM: Build a Web area that promotes home ownership. Pack it with educational information for first time buyers; forced-savings products to build down payments; details on programs to assist low-to-moderate income households purchase a home; and joint promotions with real estates agencies, builders, remodelers, architects, etc.

Many financial institutions offer these services, often as part of CRA outreach efforts. For example, see Fleet’s Home Fleet Home Club at <www.fleet.com/persbank/ mortgage/club.html>. But few have moved the programs to the Web where they have the potential to be more robust. Partly because the information can be easily changed as new programs come along, and partly because personalized assistance can be delivered in a cost-effective manner.

2. BUILD YOUR OWN HOME LOAN: Bank of America already offers Build Your Own Bank, but how about Build Your Own Home Loan. Differentiate yourself from the pack by letting users select the terms of their loan. This requires a flexible loan system and a willingness to lend for your own portfolio. But at the right price, why not put some loans on the books?

Let users select:

• Desired purchase price
• Maximum monthly payment (year 1, year 2, year 3, year 4, year 5, year 6, etc.)
• Desired loan term
• Maximum out-of-pocket initial expense (closing costs plus down payment)

The financial institution then suggests loan alternatives that best meet the user’s optimal conditions. The bank’s server could be programmed to calculate loan alternatives automatically, or a loan rep could call to discuss options, or some combination of the two.

3. LOAN APPLICATION STATUS REPORTING SERVICE: Send applicants an automated application status report at pre-set intervals. Let users select their preferred delivery method and report frequency:

• delivery via e-mail, fax, Web, and/or voice messages
• frequency: twice daily, daily, every two days, etc.

In the update include:

• agreed upon rate if locked; current rates if not locked
• detailed loan status (awaiting income verification, approved pending appraisal, etc.)
• estimated completion dates for each remaining step
• estimated loan closing date
• contact names, phone numbers and e-mail addresses

4. CLOSING DOCUMENTS ON THE WEB: Post final documents on the Web site for users to review and/or print out prior to coming in for final closing.

5. INDEFINITE DOCUMENT STORAGE: Maintain copies of loan documents on the Web so users can easily refer to them during the remaining life of the loan. Perhaps charging a nominal “safe deposit” fee for the service.

6. INDIVIDUAL AMORTIZATION TABLE ON THE WEB: Allow users to access a 30-year amortization table for their particular loan. Include a “what-if” function to calculate the impact of additional principal payments, straight refinancing, or cash-out refinancing.

7. AUTOMATIC PAYMENT SIGN-UP FORM: Include a simple form on the Web for enrolling in direct debit loan payment. The form should include a maintenance function so that existing direct-debit users can change payment dates (if allowed), change the debited account, add/delete additional principal payments, or make inquiries about the auto payment plan. See CountryWide <www.countrywide.com/cw_g/customers/autopay/autopay_form.html> for an example.

8. ONLINE ESCROW ACCOUNT ANALYSIS & MAINTENANCE: Let users gain more control over their mortgage escrow accounts via the Web. Include an “escrow window” that provides a view of current balance, a complete history of actual and estimated disbursements, and future disbursement projections. Allow users to make up any shortfalls, or tap any surplus, via an online funds transfer form.

9. BUNDLED ONLINE “HOME BILL PAYER”: Provide each mortgage customer with a Web-based bill payment program designed exclusively for paying home-related expenses. The primary benefit would be record-keeping for home improvement expenses. (In the United States certain expenses can be added to the home’s cost basis to reduce future tax liability.)

The special bill payment account could include paper-check and debit card access for added versatility. Another enhancement would be the ability to hand-post additional entries to track purchases made outside the account (cash purchases for example). The home bill payment account should also be “portable.” That is, when a user purchases a new home, or refinances, and keeps their loan with you, the transaction history moves over to the new loan. Since users can choose to defer capital gains taxes until age 55 or later, there is a real need for an archival service that helps track home improvement expenses over a 20- or 30-year period.

10. BUNDLED HOME EQUITY RESERVE: Allow users to easily tap home equity directly from their first mortgage account. Build a Web area that allows users to automatically tap the paid-down principal portion of their home loan, and/or apply for a loan/line secured by home equity. This home equity “reserve” line of credit could automatically be issued at loan closing. The line of credit could be tied to the “home bill payer” account for easy access.

11. PAYMENT REMINDERS AND PAYMENT CONFIRMATIONS: This optional service (perhaps with a fee) would send payment reminders at preset intervals and/or a confirmation when payment has been received. Users could specify and change the following parameters at your Web site:

• Delivery mechanism: Choose Web, e-mail, fax, or voice message delivery.
• Payment reminder frequency: Select how many days prior to the payment due-date the message should be sent.
• Payment confirmation: Choice of positive or negative response options. That is, a message sent each time payment is received, or alternatively, only if payment has not arrived by the a preset date.

12. ELECTRONIC BILL PRESENTMENT/PAYMENT OPTION: For users uncomfortable with automatic preauthorized debit, offer “semi-automatic” direct debit. Users can either respond back to a payment reminder e-mail saying “yes go ahead and take the mortgage payment out of my account” or go to your Web site and authorize payment there (bill presentment model). Negative response messaging could also be used. For example, unless the user responds negatively to the payment reminder by a certain date, the transaction will be debited as previously planned.

13. ONLINE SKIP PAYMENT PROGRAM: Why is it that my credit card issuer tries to get me to skip a payment just to grow outstandings by a measly $50, but my mortgage lender would be calling out the collectors if I wanted to skip a payment that would boost their outstandings by more than $1,000? Why not emulate the card companies here? Not only would this be a good selling point for your mortgages (“the only mortgage that allows you to take a month off”), but it could be a lucrative source of incremental outstandings.

The amount of the skipped mortgage payment could be added to the mortgage balance (the opposite of an additional principal payment) or it could (more profitably) be added to a separate and higher-rate credit line established just for this purpose. Credit line payments could be added to future mortgage payments, or handled separately.

However you set it up, skip payments could be delivered via the Web. The Web could contain a “skip payment application” for requesting the loan accommodation. E-mail could be used to notify users that they have been approved to skip a payment.

14. RATE UPDATE SERVICE: Consumers interested in tracking mortgage rates closely might pay a nominal fee for a service that sent periodic rate updates via e-mail or fax. Especially if the fees could be credited towards the cost of a future mortgage. Refer to HomeOwners Finance Center for an example <www.homeowners.com/ratewatch.html>.

If you want to grow the size of your Rate Update e-mail list (a.k.a. listserv), keep the messages informative, concise, entertaining, soft-sell, and above all else, free. Encourage recipients to pass them along to friends, co-workers and associates.

16. REFINANCE SERVICES: A key towards establishing a long-term consultative relationship with your mortgage base is to offer convenient and competitively priced loan refinance services. By maintaining an ongoing dialogue with your mortgage customers, you open the door to obtaining future mortgage and home equity loans. And don’t shy away from recommending to your own customers that they refinance their loan.

With the advent of wired connections, it is finally cost-effective to maintain extensive long-term relationship marketing programs.

• Monthly rate update service: E-mail or fax a monthly update to clients comparing their existing mortgage rate to current market rates. If there has been a drop, detail the cost/benefits of refinancing.
• Refi alert service: As opposed to sending out a monthly missive, send the message only when there is something to report. In this case, that rates have dropped to a level where refinancing could be attractive. Send an e-mail or fax to users alerting them to the opportunity. Then allow users to choose the frequency of subsequent communications (e.g. daily, weekly, monthly) based on their interest in a refi.
• Cash-out refi analysis: Incorporate cash-out scenarios in the refi notices so users can see how consolidating debt within a single mortgage payment might save money.

17. HOMEOWNERS CLUB: Develop an online homeowners association where home owners, or prospective owners, can get localized information pertinent to home ownership. If you can find someone already doing this in your market, such as HomeTime.com (screenshot left), it might be easier to team with that company rather than creating the content from scratch.

Some examples:

• remodeling ideas
• architect referrals
• tax issues
• home inspector referrals
• contractor referrals
• real estate agent referrals
• hazardous waste removal guidelines
• heating and air conditioning contractor referrals
• utility bill analyzer

The HomeOwners club could include a periodic e-mail newsletter to keep members up-to-date on new ideas and additions to the Web site.

18. ANNUAL INSURANCE CHECK-UP: Once a year entice your mortgage base to your Web for an insurance check-up. Users could review their current insurance situation versus recommended levels, and purchase additional coverage online. Draw prospects in with special offers, multiple policy discounts, extra coverage bonuses, etc.

19. HOME INVENTORY/RECORDS SAFEKEEPING: Provide a Web area for completing an inventory of household goods for use in case of fire or theft. For an annual “safe deposit box” fee, the records could be stored on the bank’s server for safekeeping.

20. MORTGAGE INSURANCE (PMI) CANCELLATION SERVICE: Help mortgage holders understand when they can get out from under their PMI payments (often when LTV goes below 80%). Besides Web-based educational information, provide an online form to request insurance cancellation. Also consider an e-mail service that periodically (quarterly or semi-annually) updates customers on their PMI status.

21. HOME TRADE-UP AREA: Web services specifically geared to those in the market to purchase a new home and sell their existing one. Allow users to “trade-in” their existing mortgage for a new one on the new home. Provide a trade-in “credit” as an incentive to stick with your mortgage services.

22. HOME EQUITY LENDING: No real estate finance Web should be without a rich, sales-oriented home equity lending area. Home equity loans and lines can be enormously profitable, with the NPV of a single incremental $50,000 line of credit as high as $5,000. Conceivably, home equity lending alone could pay for a modest Web site. Tracking is an issue however. Much of the incremental business you’ll attract due to your Web presence will apply for the loan through other traditional channels. Although imprecise, asking applicants where they first learned about the loan program may be about the best way to estimate the volume attributable to the Web.

Once you’ve established a good online interactive application, consider sprucing up your product line with some new twists on the standard installment loan. After all, you will eventually face stiff competition on- and off-line for every equity-secured deal.

• 100% LTV loans/lines at premium rates
• higher than 100% LTV loans at premium rates (just make sure you fully disclose the lack of tax deductibility above 100%)
• loans based on the new value of the improved home
• unsecured-to-secured debt conversions
• “autos on the house”: home equity-secured vehicle loans
• “checking on the house”: home equity-secured credit lines attached to checking account(s)
• “investing on the house”: investment margin accounts secured by home equity
• home office funding: computers, office equipment and fixtures secured by home equity

23. TAX-TIME SERVICES: There is nothing more disconcerting on April 14 than not being able to locate the 1098 itemizing deductible home-mortgage interest. It’s especially problematic when you’ve moved and the form went to your old address. Beef-up your mortgage services by archiving this information on your Web. After entering the proper loan number and name, users would be able to access principal and interest paid and escrow disbursements over the life of the loan. Other content for your online tax area:

• links to tax advice on the Web
• database of local tax advisors
• educational information on tax advantages of home-secured lending
• applet for storing a record of home improvement expenses

24. HOUSE-HUNTING SERVICES: Help home buyers manage the process. Potential Web-based content and services:

• credit lines for incidentals and repairs (to be rolled into mortgage amount at closing)
• real estate agent referrals
• homes-for-sale links/listings
• real estate attorney referrals
• referrals to cleaning and repair services for home sellers
• home inspection checklists and referrals
• insurance checklists and referrals