Navigating Compliance and Empathy: Writing Effective Compliance Communications in Mortgage Lending

The movement towards a more holistic approach to customer relationships has given rise to a desire for more empathy in all manner of communications for mortgage lenders. Having a compliance communication strategy that acknowledges the importance of empathy can provide a solid framework for messaging, making it easier to know how to write a past-due notice or how to write a privacy notice, among other relevant documents.

Partnering with PrintMail Solutions can simplify this transformation even further, ensuring mortgage communications that are both compliant and compassionate.  Read on to discover ways to increase the effectiveness of your mortgage compliance communication letters using an empathetic approach.

The Importance of Empathy in Mortgage Compliance Communications

Empathy as a virtue is clearly in the public eye these days. At the 2024 Academy Awards, the movie “Everything Everywhere All at Once” took home 7 Oscars, riding high on a message that empathy and kindness are admirable strengths.

“The only thing I do know is that we have to be kind. Please, be kind. Especially when we don’t know what’s going on.” – Waymond Wong

On television, the eternally optimistic football/soccer coach character of Ted Lasso (with a misattributed nod to Walt Whitman) taught us to “Be curious, not judgmental.” This lesson, deeply rooted in empathy, feels particularly relevant for the financial services industry and mortgage company strategic communication.

According to a study by Statista, after credit card bills, mortgages are the second most common source of debt among Americans. Collection letters, past-due notices, and other types of compliance communications can trigger immense anxiety in recipients. Treating customers with empathy when navigating these fragile discussions is a worthwhile and achievable endeavor.

Being kind can be good business, too. Having an empathetic approach can increase client trust and enhance brand loyalty.  It can also diffuse potentially difficult situations, supporting positive and productive customer interactions. Starting from a base of understanding and connection can make it easier to engage in and ultimately solve even the thorniest of customer service issues.

Tips for Writing 3 Types of Compliance Communications

    1. Adverse Action/Declination Letters: Humanizing the Approach

Traditional Approach: “Your loan application has been denied due to insufficient credit history.”

Empathetic Approach: “We appreciate the opportunity to review your application. After careful consideration, it seems we need a bit more credit history to move forward. We value your interest and are here to provide guidance on steps you might consider for the future.”

Layout and Structure

• Personalized Greeting: Instead of a generic “Dear Applicant,” use “Dear [Recipient’s Name].” Personalizing your statement via email marketing merge variables can decrease the initial sting of the message and show that the decision isn’t a mere automated response.
• Purpose Statement: Start with a clear yet compassionate sentence that indicates the purpose of the letter. For instance: “We’re writing to update you on the status of your recent application.”
• Decision and Reason: The reason for the decision should be expressed in simple, jargon-free language. Softening the language doesn’t mean clouding the truth. For instance, rather than stating “You do not meet our credit requirements,” you might say, “Your credit profile doesn’t align with our current criteria.”
• Next Steps or Recommendations: Always offer resources or recommendations for the recipient. This could be advice on improving their credit score, an invitation to reapply after a certain period, or contact details for credit counseling services.
• Contact Information: Clearly and prominently provide a contact person, phone number, and email address for recipients who have questions or need further clarification. This is a potential future customer, so treat them with the same care and attention that you would an existing customer.
• Closing: End the letter on a positive, forward-looking note. Phrases such as “We appreciate your interest and encourage you to reach out with any questions or concerns” or “We value your efforts and hope to assist you in any future endeavors” can make the recipient feel valued and understood, despite the unfavorable decision.”

     2. Collection Letters/Past Due Notices: Navigating Tactfully

Traditional Approach: “Your payment is late. Pay immediately to avoid further penalties.”

Empathetic Approach: “We noticed your recent payment has been delayed. If there are any challenges or questions, please let us know how we can assist.”

Layout and Structure

• Introduction: Begin the letter by gently but clearly establishing the purpose of the communication, ensuring it feels like a thoughtful outreach rather than a cold, impersonal notice.
• Specific Details: Clearly and prominently list the amount due, the original due date, and any late fees incurred, ensuring transparency. Add a brief context, such as connecting the amount to a specific service rendered on a particular date, for clarity.
• Grace Period Mention: If a grace period is offered, highlight the extended deadline, emphasizing this as a gesture of flexibility and understanding on the company’s part.
• Contact Information: Provide clear contact details, highlighting a direct line or specific person for related queries, and subtly mention the best times or expected response times for more efficient communication.
• Closing: Encourage communication, such as, “We’re here to help.”

     3. Privacy Notices: Transparency and Assurance

Traditional Approach: “We may share your data with third-party providers as outlined in our policy.”

Empathetic Approach: “Your trust means everything to us. While we sometimes collaborate with trusted partners, we always do so with the utmost respect for your privacy choices.”

Layout and Structure

• Introduction: Provide a brief and clear overview of the purpose of the privacy notice.
• Data Collection and Use: Clearly define what data is collected, how it’s used, and why.
• Choice and Control: Explain how users can control, access, or delete their data.
• Third-Party Sharing: Detail any third-party interactions, always focusing on user benefits and security.
• Updates and Changes: Clarify how users will be informed about changes to the privacy policy.
• Contact Information: Offer a direct point of contact for privacy-related queries.
• Closing: Reiterate commitment to user privacy, e.g., “Your privacy is our priority.”

We Can Be Empathetic and Meet Business Goals

Empathy is not a weakness, and in this discussion, it doesn’t mean we aren’t working toward our goals.  It also doesn’t mean we “give in” or release responsibility for a situation. In fact, the right balance between emotion and objectivity can make it easier to understand and move forward towards resolutions.

Best-selling author Brene Brown has written and spoken extensively on the topic noting, “Empathy is a way to connect to the emotion another person is experiencing,” and empathy is connecting to the feeling under an experience, not the experience itself. Just like a parent communicating with a child, we can be of service while being firm and committed to the underlying needs of the moment.

Begin Improving Your Mortgage Lending Communications Today

In an ever-evolving mortgage lending landscape, the ability to communicate with empathy while upholding compliance standards is a necessity. PrintMail Solutions’ financial communications services can help turn mandatory messages into moments of connection with your customers. With the right language, potentially uncomfortable exchanges in communication can become trust-building opportunities that redefine the customer experience. Speak with a member of our team today and subscribe to our blog for more great articles on improving customer communication for financial institutions.