Stripped Bare - Beneath the Feel Good Veneer of Subprime Lending

Chapter 5 - The Pitch

The emotionally charged bombardment of easy dollars advertising campaigns utilized by the subprime lending industry did bring potential borrowers in the doors, or more accurately, caused subprime lenders’ phones to ring.  But, the emotions which ignited the ringing of the phones alone was not sufficient to seal a deal.  Subprime lenders needed an easy to hit, homerun pitch to win subprime borrowers’ confidence, and secure their signatures.

The subprime lending industry was exceptionally adept at making the refinance pitch to borrowers with credit problems.  Whether the borrower was hearing the pitch for the first time, the third time, or the fifth time, subprime lenders knew exactly what borrower buttons to push to induce borrowers to refinance, even if the benefits to the borrower of refinancing were few and lackluster.

All individuals, whether purchasing a car, a refrigerator, or, in our case, a mortgage, are susceptible to emotional cues, and the emotional cues, or buttons, for borrowers who only qualify for subprime financing are many.  Subprime lenders knew this, and they regularly plied these emotional buttons with virtuosity.

The majority of subprime lenders provided a sales script, what many of us would think of as a playbook, to their account executives.  These sales scripts, which have been psychologically refined for optimization of profitability, provided the subprime lender’s account executives with the exact sequencing of emotional buttons to push at specific points in their conversations with potential subprime borrowers.  In fact, the sales script were so well fine tuned that a subprime lender could take a reasonably intelligent and personable individual, with no mortgage experience what-so-ever, off of the street and have them signing up borrowers for subprime loans in five (5) weeks or less.  Which was quite important as the turnover rate of account executives within the subprime loan industry was quite high.

Posted by on 03/31 at 05:48 AM

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