The annals of mortgage financing are littered with the failed attempts of companies that believed they could bundle real estate services and provide "one-stop shopping" or "cradle to grave" financial services. Sears Mortgage and Merrill Lynch Mortgage, just to name a few, are some of the more memorable failed attempts to bundle services and cross sell multiple products and services. You will hear a variety of opinions as to why they failed at attempts to bundle services. Most likely, it is a result of a combination of mortgage industry myths that impacted the success of these ventures. Here are some of the myths that many of these bundled service arrangements have been built around:

1. Profitability can be remedied with more volume.
   This is simply not true. If you have an incremental loss per loan and you do more loans, you are simply increasing your losses. As brokers continue to increase their capture of retail market share, we need to learn from the mistakes of the past. In our attempt to be the best price on the street, we need to ensure we don't shoot ourselves in the foot. Our ability in the future to retain the dominance in consumer direct production depends on our ability to maintain long term profitability, and deliver high quality personal service. We need to invest in our businesses and technology when it improves service and profits and stop selling price. We will not hold on to our market share if we allow the competitive pursuit of the consumer (and ourselves) to put us out of business. You can't build a long-term business without investing in it and giving people the tools they need to succeed. You can't do either when you make loans only to subsidize commissions. This is a short-term approach and threatens the broker's long-term viability.
   
2. Cross selling is the key to profits.
   Again, cross selling is effective if it brings in additional new business, opens new channels, and improves profits. If you cross sell insurance services, for example; you can't take losses in insurance to subsidize loan volume - it just doesn't work. Each business needs to be evaluated based on its contribution to the bottom line.
   
3. Centralization is better than decentralization.
   You can't assume one size fits all. You've got to do what the consumer wants. Many of the failed attempts to bundle services have been built on a centralization model based on the motive of lowering costs and contingent on the necessity of cross selling multiple products to the consumer. Some consumers will accept it, but most will not. A telemarketer in a centralized unit typically does not have the experience, knowledge, or incentive to cross sell other services. Customers want highly personalized service at a competitive price. They want to feel that you are working just for them. This is hard to deliver in a large telemarketing unit where consumers are often lost in the shuffle.

In fairness to the large companies that have attempted to bundle services, it is far more difficult to achieve a successful cross-selling and bundling arrangement in a large organization than in a smaller organization. The challenges of the legal, operational and bureaucratic roadblocks are difficult to overcome. Probably the biggest challenge is getting "buy in" from all of the various parties involved from the sales person, to the other service providers. Everyone must be clear on the objective, the process and the flow. Achieving the "everyone on the same page" approach is easier in a smaller organization where the parties share common interests and benefit directly from the success of the venture.

The founders of Amerihome all have extensive experience with bundling of services during fifteen plus years with one of the nations largest mortgage companies. Credit cards, home equity lines, insurance services etc. were offered at point of sale. The lack of success in our previous experience of cross selling at the point of sale was the result of a combination of factors. 1.)The loan officers were not comfortable discussing these other services, since this was not their area of expertise and their focus was the mortgage. 2.)There were not adequate incentives. 3.)The hand-off was not smooth, and follow-up by the other service provider sometimes fell short of quality service. Therefore, the loan officer was reluctant to risk their primary relationship by cross selling these other services that were beyond their control.

When we formed Amerihome we decided to take a different approach to our bundled services. Our approach to bundling services is a simple philosophy. We don't try to be all things to all people. We follow the principles of a sales person growing their business. Successful loan origination comes from having a network of referral sources. Much like a loan officer growing their business, the more people they know in their sphere of influence, the more referrals they receive. It is the same for Insurance Agents, Real Estate Agents, CPA's, Financial Planners, Title Companies, etc. We are all chasing the same consumers but for different services we provide that make up the full array of financial services available to consumers.

What we have done is establish relationships with a title company, credit reporting, closing services, home inspector, real estate agents, certified financial planner, insurance agency etc. We now can offer these other services as "value added service" to our existing customer base, we can offer our services to their customer base and together we can approach new customers such as employee groups or affinity organizations with a team of services.

By working together, we can approach new markets of business with a team of services, we benefit from each other's networks or access points to the consumer, and we can share the expenses of co-marketing to consumers. By working together, we then each discount service costs incrementally, which adds up to considerable savings to the consumer. These savings are only one benefit to the consumer. They also receive professional and experienced specialists in each service they receive, as opposed to a telemarketer or loan officer who may have received limited training in a number of cross selling areas and does not have any control over the sales and service process to their client. In our approach the consumer receives highly specialized and personal service at a competitive cost. By using this approach, entrepreneurial smaller companies such as Amerihome Mortgage can offer the full array of products and services as any major bank or mortgage company's bundled services arrangements have attempted to offer, but with the advantage of local, personal, expert service. With this approach, you can now open new venues of business to major employer groups, affinity organizations, and past customers to add value and earn repeat business.

At Amerihome Mortgage, we are continuing to develop our bundled services program. The successes have been very encouraging and have definitely added to our book of business. We have adopted the following rules for success in our bundled service arrangement:

1. We must generate additional business and open new channels of business.
   If you are discounting services for business you would already capture, there is no value created.
   
2. Our partners must also be committed to the process.
   They must understand and share the belief that by working together we can capture more business and improve the service we are providing to the consumer. We need to actively cross-refer to each other and share our various access points to the customer.
   
3. We still must earn the business.
   We can't approach this additional business as "captive" just because it comes in as part of the network. If anything, we must deliver better service since we are now held to a higher standard by the affinity group, and our service partners. If we drop the ball, it reflects poorly on the entire team of service providers.
   
4. You can't be all things to all people.
   We do mortgages and we do them very well. Our business partners are experts in their respective fields. By making a quality referral to our bundled service partner, it reflects well on us and better serves the customer. The value of the increased business from working together out weighs what we would earn by trying to cross sell other services and trying to be all things to everyone.

Many major mortgage companies and banks have recognized that the mortgage broker is better suited to work directly with the consumer locally at the point of sale. Some have exited retail production completely and have stepped up their support of the broker with their wholesale and correspondent approach to the business. The same now holds true for bundling of services, cross selling, and technology. More progressive companies will realize that to truly streamline the mortgage process they need to get the technology to the point of sale. DU and LP need to get to the consumer by getting it into the hands of the broker. Some correspondents are starting to take steps to make it more available to the broker, but it still isn't coming fast enough. If the agencies would get the technology out to the broker, it would be a giant leap forward in streamlining the entire mortgage process for the consumer. Secondly, wholesalers are beginning to view the broker as their new "outsource" sales force. By bringing more products and cross sell opportunities to their brokers, they can market and cross sell their various bundled services directly to the consumer without the expense of building staff and training a telemarketing center. The broker can improve progress in this area by more fully developing the relationship of trust and quality with our correspondent "business partners".