3 things Finance of America should have done

You sign much paperwork before you get scanned. You must be careful what you say in public about your former employer.  So, my words will be well crafted and above reproach. More or less.  Following the closing of Finance of America Mortgage’s retail doors, I thought it might be insightful to share some things that may have caused this outcome. 

To be clear, I loved working at Finance of America.  It was awesome.  People, the culture, and the proprietary product lines were a marketer’s dream (more about this in a bit).  The opportunity to take something raw and see if we could blow it out of the water was super appealing.  That experience at FoA is why I get to do what I do today at Art Vs. Math: we look for companies that want to do something special in the market.  Scale, disrupt, create impact, and make a difference in people’s lives.  

Most of these items I identify will be highly general, and I hope that it helps other lender executives ask questions about their current state of existence in the market and how they can avoid the worst possible outcome.  I am also writing this as a marketing and strategy executive consultant. I have no insights into the complexities of all the inside baseball and financials that likely contributed to FoA’s exit from forward mortgages.

Here are three things I would have done if I were in there shoes:

Understand Market Position – This work was done while I was there, and I am sure it was done long after I left. Price’s Law states that 50% of the work is done by the square root of the total people participating. The simple version we all know is that 20% of people do 80% of the work. This law can be experienced in many things, but it always displays itself in business. The bottom line: if your origination volume isn’t diversified geographically, you’re more vulnerable to market conditions, regulation changes, turnover, litigation, and competition. National lenders should also apply Price’s Law to micro revenues or state performance. This would break down performance in cities, counties, and even neighborhoods to understand revenue diversification and avoid vulnerabilities. This analysis would help an enterprise understand where to invest or de-vest to maintain consistent revenues and never be over-leveraged.

Change the name – Finance of America owns Lending.com.  I’m very familiar with the website — my team and I built it. I’m glad to see it is still running and serving the business.  One-word domains and business names are easier to remember.  Owning a term like LENDING leads consumers to believe you are an authority on…lending. Better and Lower rose to prominence rather quickly, and I bet you remember their names. Because it’s easy. While the mortgage industry knows who Finance of America is, nobody else does.  You work for the most significant mortgage bank no one has ever heard of.  This is a bigger problem if you don’t do the following.

Focus on enterprise level branding and advertising – Finance of America, at one point, was the 5th largest non-deposit bank in the country.  However, no one had ever heard of them.  You’ll rarely hear me rant about branding. Still, in this case, a serious investment needed to be made in driving brand awareness nationwide to help facilitate loan officers’ efforts.  Branding and Marketing appear to be non-producing activities, so they are often dismissed as not valuable.  Fifteen thousand studies show otherwise, and there is a utility to working for a known company.  This not only increases conversion but increases the morale of staff.  Even though millions were spent on arbitrary marketing efforts, there was never a focus on mass marketing to improve overall brand awareness.  On the bright side, the public also doesn’t know that the doors are closing either because … they’ve never heard of Finance of America. 

Let’s review our lessons or what I believe could improve the chances of success, especially in this obnoxious new mortgage market environment  You must know where you stand in the market and where your revenue comes from.  If possible, diversify to protect the enterprise from vulnerability.  If you own a dope-ass, one-word domain, you must use that. Be organically memorable.  Make it easy on the consumer and the staff.  Lastly, now is not the time to cut marketing and advertising.  The creatives that fill those departments are the ones that will provide the best outside-the-box ideas when it all falls apart.  I hate that Finance of America’s forward-mortgage business is closing.  I hate it for all the fantastic, talented people that worked there.  But stay encouraged. You never know what’s next.