Milford National Bank and Trust Co. is among the institutions that have attempted to use “outside the box” strategies in order to strengthen their mortgage referral bases.

The concept was sound but the weather didn’t agree. That’s the way Don Bishop, vice president of retail lending for Milford National Bank and Trust Co., described the company’s latest effort to broaden its mortgage referral base.

The idea was to host a free car wash day for accountants at the local car wash, hopefully to generate future business referrals. But, as Bishop notes, there are no guarantees. Due to fickle New England weather, the event has been rescheduled twice so far.

However, when Milford National held a car wash day for Realtors last year it did prove beneficial. Bishop said the creative concept isn’t going away and he expects the bank to continue to roll out “outside the box” strategies in a tough marketplace.

“When they are in line for their wash, we say ‘hello.’ It’s a great way to talk to them. These people are extremely busy,” said Bishop. “It’s a new approach on getting them to come out. They are meeting with people who need mortgages. We are just looking for some more creative ways to make the advertising dollar go further.”

People in the financial services arena are often thought of as conservative. However, with a shrinking pool of loan applicants, attracting a strong referral network should in turn attract business, and some professionals in the mortgage industry are showing a willingness to get more creative in the downtime.

“It’s so competitive out there, we have to look for new ways to bring in business,” said Bishop.

Lender-sponsored seminars for homebuyers and Realtors are definitely on the rise, say several industry experts, but so are other ideas to broaden referral networks.

Jim Jones, founder and president of First Wellesley Consulting Group – a management consulting firm specializing in the financial services and real estate finance industries – said there is an industry-wide realization that mortgage sales forces need to take a more proactive approach to attract referrals. With the end of the refinancing boom, there is a shift in concentration back to the purchase market.

“If you want to do business as a mortgage lender in 2006, you need to increase your referrals,” he said.

According to Jones, financial institutions are also doing a better job of maintaining contact with existing customers. “Take a bank, for instance. A bank has thousands of households [it serves]. They know a certain percentage will refinance or obtain mortgages this year. They just don’t know which ones,” he noted.

Lenders need to stimulate referrals internally, as well. Jones said it has become a critical component of the financial business to keep the flow of information and communication running smoothly between departments.

“In the past, that information did not filter through to the mortgage department,” said Jones.

But also more important than it has been in the past is getting the word out there that a company is open for business and somehow different and better than the competition, he added.

‘A Significant Downturn’
There are so many lending options before borrowers that they often look for a referral from a friend or another professional to help make the decision. Lenders are looking to separate themselves from the pack and hopefully team up with new groups that can pass mortgage business in their direction, said Jones.

“It’s because we’ve had such a significant downturn. The challenge is: How do you differentiate yourself from everyone else? What they are doing is focusing on new groups of referrals,” he said.

Jones said a car wash day is an excellent example of trying to dip into new referral networks in a creative way. Since it had worked with Realtors, he said, why not give it a shot with accountants?

“I always thought that a lender should be the Jordan’s Furniture of lenders,” noted Mike Shain, a mortgage specialist with Milford National. He said that means going beyond the scope of what people in the business typically do. “I’ve always tried to do something different,” he added.

Shain came up with the idea of holding a car wash. He said, after holding enough publicity and events, he would like to see the bank listed in the top three lenders when customers of a business ask for a referral.

Jones said creative marketing to spark the interest of other financial service professionals is a critical component of maintaining healthy levels of business in a market slowdown. Strong referral networks will help a lender thrive in such times, he said.

Boston-based Summit Mortgage believes it has found ways to build relationships with others who will hopefully refer new clients to the company, according to one of its top officials.

“Our focus with all those groups is we approach them as business partners,” said Michael Istvanko, vice president of marketing for Summit.

Istvanko said the company has helped Realtors market their properties with PowerPoint presentations that include voiceovers. Slipped into the virtual property showing is information about Summit’s mortgage products and services.

Summit also has teamed up to send out joint mailings with other financial service providers that are not mortgage companies. But about a year ago, it secured a different way of getting added attention from homebuyers.

Summit began having its contact information printed on the back of Realtors’ business cards. In exchange, the mortgage company subsidizes a portion of the card printing fees.

Istvanko said it has built long-term relationships with others in fields that relate to the mortgage industry. He said as a result, Summit finds different groups of professionals who are willing to partner up with the mortgage company when it comes to some of its more creative marketing concepts.

“I think people are trying to build their businesses. You have to be creative,” he said.

John Carusone, president of the Hartford, Conn.-based Bank Analysis Center, said there is definitely more pressure for lenders to be creative. As interest rates began to rise, the environment of the lending scene grew more competitive and the customer pool started shrinking. Carusone said now is the time for lenders to promote their products and services, and work a little harder to get their name out there.

“There is a scramble to attract attention,” he said.