Social Media & Residential Lending: Risks and Opportunities

If mortgage is a primary business line for your financial institution, your promotional efforts are probably gaining steam as we head further into spring. Whether you deploy full-fledged campaigns during the peak mortgage season, or utilize steady efforts throughout the year, social media can be a powerful tactic in your promotional toolbox.

Why Social?

By now, we know how prevalent the use of social media is. According to a 2018 Pew study, 68% of adults in the United States are using Facebook – three quarters of them daily. That same study shows 46% of Twitter’s American users are visiting the site at least once per day. And those are just two platforms!

Social media provides brands (and pretty much everyone!) a cost-effective means by which to communicate, as well as a platform that facilitates real-time word-of-mouth advertising.

In short: It’s a fantastic way to promote your services to a lot of people without busting your budget. When done right, it can be quite effective, too.

But Social and Mortgage… Does it Make Sense?

The stats on social media usage are impressive– but let’s take a look at social media in terms of a tool to promote mortgage. Does it make sense to incorporate social media into your FI’s marketing strategy to promote mortgage?

A recent survey by the National Association of Realtors® showed that 77% of Realtors reported using social media professionally (Facebook is their top choice – with 97% of active social media Realtors using the platform). Not only are Realtors using social media to share listings, but they have found the tool to be a beneficial way to build relationships with existing clients and contacts. In addition, nearly half of Realtors have cited social media as their source for the highest quality leads.


On the buyer side, statistics show that 95% of buyers will utilize online tools at some point in their home search. And the digital-loving Millennial audience is expected to purchase at least 10 million new homes in the next ten years, according to the US Census Bureau. As we bring it on home for your Mortgage department, 98% of those millennial buyers, and 88% of all buyers will be financing their home purchases – so they’re going to need to find a lender. If your audience is online, you should be, as well.

Identifying the Risks

While the benefits are plentiful, so are the potential risks. The benefits of utilizing social media marketing in your residential lending promotional strategy are many, and with planning and effort, many risks can be significantly reduced.

The conversation is a bit less complicated when you’re looking at one FI with one page per social media channel. Throw in several (or more!) mortgage loan officers and the conversation becomes more complex. It is up to each FI to take a look at their social media policies, procedures, and strategies to determine how best to support mortgage growth as well as the effort of their lenders while remaining true to the brand – and not stressing out your compliance department.

Why is my Compliance Department Nervous?

While utilizing social media can help your FI and your lending team increase their reach to promote mortgage services, there are definitely risks involved. It’s important to know what those risks are and plan accordingly to address any concerns right out of the gate.

Risk can be broken down into four categories: Regulatory, Financial, Operational, and Reputational. It’s important to know what each means – and how to reduce that risk.



Regulatory risk is probably the biggest area of concern for your compliance department – and it should be! There are more than 34 published regulations that guide communication and advertising, and all of them apply to social media, too.

While we won’t list them all, you’re looking at things like Real Estate Settlement Procedures Act (RESPA), Truth in Lending Act (Reg Z), Fair Housing Act, Unfair, Deceptive or Abusive Acts or Practices (UDAAP) – and more.

When your social media efforts are being led by your marketing department, it can be easier to manage these risks because your day-to-day efforts keep many of these guidelines front and center. But for loan officers who may not be as well-versed in understanding the restrictions that apply to advertising, it could be a whole new ballgame.

And unfortunately, social media makes it quite easy to violate these guidelines – particularly when it comes to advertising! In fact, in response to a complaint filed by HUD in 2018, Facebook removed over 5,000 criteria from its ad targeting options which were considered to be a violation of the Fair Housing Act.


Financial risk can go hand-in-hand with regulatory risk, as you might expect. Non-compliance with regulatory requirements could result in fines, sanctions, and the like. But financial risk can also come from lost opportunity or households. For many users, social media is a way to “kick the tires” before working with a service provider or buying a product. Potential homebuyers may determine from your social media feed that they want to work with you – or not.


Operational risks are often a result of the disruption of a process. For many companies with a social media presence, the biggest fear is the possibility of someone unintentionally posting something to a company channel that was not meant to go there. It’s happened to some pretty large brands, and while it may be amusing to those who aren’t involved, those big corporations aren’t laughing!

Another example is the disruption to continuity in the customer service process. For example, a customer reaches out via social media for service outside of business hours and the complaint is not properly documented in the system for follow up on the next business day.

Clearly defined policies and processes are essential for any organization using social media in its marketing efforts – and clarity around those policies will limit negative impact related to operational risks.

It’s important to keep in mind that processes must evolve as social media does. Recently Facebook announced its intent to encrypt all messaging through its platform. It will be essential for FIs to do the appropriate due diligence to review security and establish processes before integrating this functionality into regular business operations.


No FI joins social media hoping to hear negative things about their business. Unfortunately, it’s the nature of the social media beast. While social media can make it easy for customers and organizations to communicate – it also gives people an easy and immediate platform for airing their grievances, whether they are justified or not! It’s definitely no fun to be at the receiving end of a one-star review, but with proper management even negative reviews can have a positive outcome.

We advise first determining your tolerance level for what visitors are allowed to say and do on your social media page – and adjust your settings and monitoring strategies accordingly. We’re not a fan of deleting every negative comment, for example, however we feel that removing posts that are vulgar, contain sensitive or explicit language, or private information can and should be deleted.

Some FIs allow people to post on their pages, others only allow comments on posts, some choose to moderate everything. Whatever course you choose, be consistent – and don’t be so quick to remove the social from social media.

What should you do if you’re the recipient of ugly feedback via social media? First, evaluate the complaint – is there validity? Does it identify areas where you could improve or holes in your process? Don’t be quick to dismiss social media complaints – sometimes they present opportunities for improvement. Next, while you’ll want to avoid any disclosure of personally identifying customer information or details, a public response is an appropriate next step to address the complainant. Even if the response is merely an apology and a request to continue the conversation offline, your polite response gives customers and potential customers a glimpse at how your FI treats customers, handles complaints, and allows them to decide if they like what they see.


How to Reduce Risk?

Now that we’ve addressed the various types of risk, the good news is that there are steps you can take to reduce risk when using social media.

    A clearly defined process paves the way for a more successful presence on social media. Taking the time to define how your team will utilize social media in its efforts minimizes ambiguity, and thus, risk. Remember, as technology adapts, so must your policies.

    Identify the key players in your social media strategy and what their roles are. Be sure to incorporate tasks for review and documentation to ensure materials are compliant and available for review and/or audit.

    Hiring a third party to manage your social media presence is beneficial when your team doesn’t have the resources or knowledge to execute upon your social media strategy. Be sure your procedures incorporate how these vendors will adhere to your FI’s regulations and processes.

    Your presence isn’t required on every social media platform – and there are many! Take the time to review your options and review where your customers and target customers are and focus your efforts accordingly.

    Provide your team with the resources they need to be successful on social media. Social media changes rapidly – so be sure your team knows how to best represent your FI online.

    “Set and forget” is not a strategy that applies to social media. It’s imperative to pay attention to what’s going on.

    Work with your compliance division to establish audit and review tasks that provide peace of mind for the compliance department, and ensure you are ready when audit time rolls around.
    A benefit of digital marketing is the ability to easily adapt your methods on the fly. Review often, adjust if necessary. Your time and resources are limited – so develop the strategies that make the most of both!

Love it or hate it, social media is here to stay – at least for now. While it’s prudent to be aware of the potential for risk, with careful planning and thoughtful strategy, you can mitigate most of it and put its power to work for your business.