Depth PR 

Yesterday’s USA Today article “Predatory mortgages labeled ‘crisis’” is a reminder that unless the mortgage industry rigorously counters a rising tide of negative public dialog, ill-informed policy makers will run with the “predatory lending” political football. When the media cast non prime or sub-prime lending as synonymous with “predatory lending” and reports that minorities are disproportionately impacted, politicians and bureaucrats will win votes and bigger budgets to protect “hardworking Americans” from “unscrupulous lenders.” Mortgage professionals and their leadership must focus on changing the vocabulary of the debate. It is rarely a good idea to adopt or accept the negative labels of one’s adversaries since it implies that the label is correct. Mortgage lenders would be well served by educating the media on how mortgage lending works to create homeownership opportunities for all qualified Americans.
Lenders that elect to “steer clear” of the discussion altogether will have to accept the consequences.

Boston’s mayor has thrown down a “predatory lending” gauntlet for mortgage lenders doing business in his city, according to a December 22 article in the Boston Globe. Citing “lax oversight of mortgage companies,” Mayor Menino’s promise of imminent legislation tracks with an accelerating trend across the country. State, county and municipal governments are watching the media, fielding desperate constituent pleas, and receiving pressure from secular and faith-based non-profits to enforce greater lender accountability.

The onus is on the lender to provide the borrower a 360 degree perspective - without which even lending practices not predatory in intent will be deemed predatory in practice. Even the most responsible lenders are going to suffer a tarnished reputation when sweeping phrases like “… force these lenders to be more responsible in their marketing tactics …” are widely reported in mainstream media. “Predatory lending” is a damning label that has the potential to become a polarizing political catchphrase.

Exaggeration or emotionalism - a troubling vocabulary is evolving which will color borrower and lawmaker assumptions about your business. Whether mortgage lender or vendor, you should be concerned about your firm’s credibility in this environment.

The Joint Center for Housing Studies of Harvard University fingered housing affordability as a key issue for the mortgage industry in its 2006 State of the Nation’s Housing report. Sounding eerily like a lost broadcast from 1993, the report reminded me of a speech I developed for Georgia’s lieutenant governor that year. The following is an excerpt:
“. . . in a society where decent affordable housing becomes a privilege beyond the economic means of even our working poor – the fabric of our families will grow threadbare.

Is it any wonder? Without a place to call home, how can our families thrive?

Home is where our families establish the roots and routines that anchor them in troubled times. Home is where mothers and fathers provide the discipline and love that our children must have to succeed.

Without a place to call home, where can our people grow?

Home is where we go to plan our futures and celebrate our traditions. Home is where we are free to express our individuality and where we learn our value systems. Home is where our workforce returns to renew its strength and enjoy the fruits of its labor.”

Link to the full text of the speech

The November, 2006, cover article in Atlanta’s weekly entertainment tabloid, Creative Loafing, gave Georgia lenders a black eye for purported foreclosure-friendly lending practices (“Homewreckers: Georgia Tops the Nation in Foreclosure and There’s No Relief in Sight”). Although its target readership probably does not include industry regulators, the left-leaning audience that Creative Loafing reaches tends to be politically active, and might one day comprise a voting block on topics related to predatory lending. In this way, a free-to-the-public, grassroots publication poses a public relations threat that might result in mandated changes to the way mortgage lenders do business.

From mortgage lenders to community banks, credit unions to retailers, businesses that offer financial services to consumers are under unprecedented scrutiny. Not only are Congress and state legislatures playing Big Brother roles, but regulatory bodies interpreting and enforcing government mandates apply pressure based on their own perceptions of abuse.
Layered on top of the various levels of official intervention are increasing interest by non-profits such as The Center For Responsible Lending, heightened media attention, and intensive lobbying by competing financial services sectors (big bank associations vs retailer groups; credit unions vs community banks; appraisers vs AVM proponents).

Now, more than ever before, businesses that specialize in bringing financial services products to the general public, need public relations strategies that preempt and redirect the debate from irrational, knee-jerk emotionalism, to articulate, relevant and timely information-sharing. My personal surmise is that the primary drivers of these usually invasive, frequently ill-informed and oftimes punitive examinations are a) product innovation, b) technology advances, and c) process improvement (or the need for it). Regardless of the who, what and why, financial services providers are in a precarious public relation position.

Using the “Homewrecker” article as illustration, it is possible to understand how incendiary language can damage perceptions of an entire industry: “The mortgage industry [is] . . . offering creative financing plans that work for many people but can be disastrous for others . . . lenders have eased restrictions and now tease consumers with no money down agreements and dirt cheap initial payments . . . but many times such plans leave homeowners with no equity cushion. They often can never afford the house when interest rates go up, or end up paying more than their houses are worth . . . the [foreclosure] process makes it easy for lenders to repossess properties from homeowners who default on their mortgage payments . . . mortgage companies love Georgia because they can come here and do tons of lending and if there’s a default they know the house will get taken quickly . . ..”

Although the article feigns an objective voice, it is rife with emotionally and morally laden language, some of which I have placed in italics. Partly or poorly educated on the workings of the mortgage industry, readers of this article - and others like it in liberal-leaning media nationally - come away with the impression that the mortgage industry is in a stranglehold by predatory lenders making purposefully dubious loans bound for default because foreclosure is easy in Georgia. No mention whatsoever about the negative investor repercussions to repeated default patterns by lenders.
In this particular article, Fremont Investment and Loan is fingered most prodigiously - but it could have been any number of leading lenders. In fact, the article cites “a recent issue of Inside Banking and Lending [Inside B & C Lending, more correctly], an [Inside Mortgage Finance Publications] industry newsletter revealed that Fremont tops the charts in high-rate lending and subprime lending.”

Ironic, that in the hands of a thinly educated media with a political agenda, the very stats that evidence a lender’s aggressive and innovative practices, can be turned into the equivalent of a “bloody glove.”

In this environment where public tar and feathering has been replaced by the pillory of journalistic supposition, a strong public relations strategy is paramount. The ostrich strategy won’t fly. When looking for the best firm to represent your PR interests, look for a firm with great recent references in your industry.

If you’d be interested in how the “objective” media misrepresents the financial services industry - drop me a line at kerri@depthpr.com.

My greatest concern for agency-delivered public relations is its tendency toward shallowness. Inch-deep PR might work in some applications (I cannot imagine what that would be), but it absolutely will not deliver results for business-to-business requirements.

It is not uncommon for businesses that work with public relations agencies to begin to feel a vague (or perhaps pointed) dissatisfaction with their results somewhere in the third month of service. Often, an underlying factor is the agency’s failure to ascertain their clients’ expectations prior to signing on the dotted line - to listen for the clues as to what the client needs, and believes the outcomes will be. More often the contibuting cause of the let down is the sense that the “preeminently qualified” agency you’ve hired has lured you into a cookie cutter factory.

Some PR agencies are more interested in the number of clients they serve rather than creating a personalized program for each of them. It is a numbers game that is most profitably played by using cookie cutters.

How do you know when your PR agency is using a cookie cutter? What should you do about it?

In my 25 years’ experience, the clearest indicator that an agency relies heavily on cookie cutter processes is the median level of experience that they bring to the table after the sale has been made. Do the well-dressed, bright-eyed young folks around the table know anything at all about the world of business? Will the “grey-hair in the suit” that orchestrates the planning session ever look at your PR program again? Sometimes yes, many times no, but you’ll never know for sure unless you ask pointed questions, and ask them early. You’re smart, you’ll know if you are working with straight shooters.

As a public relations public service, I’ll focus on this topic for a handful of entries. I’m feeling a little feisty, so join in - even if you think cookie cutters are the best thing since sliced bread.

If you are interested in the specifics of how this works, and how Depth Public Relations differs, please write me an email at kerri@depthpr.com