Editor’s note: The mortgage market is shrinking and more lenders and mortgage brokers are turning to online lead-generation services and automated systems to stay ahead of the curve. In this three-part series, Inman News explores what online channels and automated processes the mortgage industry is using to attract customers and streamline lending in a tightened market. (See Part 1 and Part 3.)
As growth in consumer lending slows, mortgage companies are becoming more creative in pursuing business, experts say, and one of the avenues they’re pursuing is online leads.
“As the market is shrinking, transaction volumes are going down, commissions are getting squeezed. It’s a tougher market if you are a mortgage broker,” said Kevin Akeroyd, vice president of mortgages at online lead-generation company HouseValues.
“That has made people get more creative and aggressive on how they are going to acquire new customers. We have seen this translate into a much larger adoption of the Internet lead category, both in the real estate side and the mortgage side,” Akeroyd said.
In 2005, executive consulting firm Borrell Associates predicted the mortgage industry will shift marketing budgets to predominantly online channels by 2009, eclipsing total dollars spent on television, print and direct mail advertising. According to Borrell, the mortgage industry currently spends more than $22 billion annually on consumer marketing.
Between December 2005 and April 2006, Akeroyd said, TheLoanPage has tripled the number of leads sold to lenders and mortgage brokers. The vice president wouldn’t give the number of leads sold in December or April.
In April, HouseValues raised its guidance as to the amount of money the company expects to make in the first quarter of 2006 based on better-than-expected progress in its mortgage business, as well as demand for its real estate marketing services.
A brand-new site, Bid4Mortgage, takes a slightly different approach from that of established lead aggregation sites. Consumers can visit the site and choose a lender without revealing their identities. Established less than two months ago, the company is getting more and more attention from lenders every day, according to CEO and founder David Prouty.
“I think lenders are looking for ways to be in contact with people,” Prouty said. “After all, as the National Association of Realtors said, more than 70 percent of people start their search for the Internet. It’s the first tool they go to.”
Amran Kahn, director of marketing for E-Loan, said he believes that mortgage industry professionals have been using technology to generate leads at low cost “for some time,” not just because of the shrinking market.
“When it comes to online marketing, it’s not direct lenders such as Countrywide who are leading the charge,” Kahn said. “We feel E-Loan is at the forefront of competition with search-engine marketing.”
Kahn said this type of marketing has been successful for his company in capturing leads. E-Loan has done so, he said, by leveraging technology to capture all the data and use it to its advantage. “It is easy to optimize and fine-tune,” Kahn said.
One way the company does so is by doing “AB” testing, the marketing director said. “With AB testing, you show an audience at random one type of ad — the “A” ad — and then you show them the other — the “B” ad — and you see how it works,” Kahn said.
“You can test your ad copy and then you go to the next stage where the consumer is clicking on your ad and arrives on your Web site. You can provide them a totally different experience base don where they are coming from,” he said.
Thomas Borcich, owner of Bixby Knolls Mortgage in Long Beach, Calif., and state director for the California Association of Mortgage Brokers, is a big fan of customer relationship management software to keep brokers in touch with their customers.
“It allows you to track all your customers you have put in loans over the last five years so you can contact them regularly,” said Borcich. “The average customer refinances every three to five years, and if you have 1,000 clients in your database, 20 percent of them will refinance each year.”
Borcich uses B.E.A.T. software, made by CD Consulting Group. “It notifies you when six months have gone by without contacting a client and prompts, do you want to send thus and such message, or it can prompt you to call the client or send an e-mail or a letter.
“If you’ve done a good job for clients in the past, they are much more likely to come back to you,” Borcich said.
Another lead generation trick: “Number one: become a trusted advisor versus a loan hack,” Borcich said. The broker said he uses MortgageCoach, financial planning software that helps mortgage brokers work in concert with financial planners to help clients get a mortgage.
“Let’s say you take an interest-only loan. The software will show you the benefits you’ll get because you get a tax deduction,” Borcich said.
“They are there in your office and they trust you, they will use you to refinance or fund the mortgage for a second home,” Borcich said. “Also, quite often I get referrals from clients because they trust me – their children, family and friends.”
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