Mortgage Marketing

The mortgage business had two record volume years in a row. Low rates fueled record housing sales and on top of that, a record number of homeowners refinanced. At this point, however, mortgage originations are off between 30 percent and 40 percent and the industry is struggling.

In the past, mortgage industry employment has varied along with the volume, meaning that lots of people get laid off in times like these. Indeed, one major lender announced the layoffs of over 10,000 people, and there will be more to follow.

My own bank, however, has announced that they intend to increase dramatically their share of market and are adding 10,000 new loan officers. Obviously, that increase is not going to come as a result of the growth of the market, it’s going to have to be taken away from others in the market. Those others aren’t just going to roll over; they are going to fight to retain their share of market. What this is leading up to is a battle royal with lenders using new tactics for marketing.

The first, obviously, is one-stop shopping, a topic I’ve talked about for the last three weeks. Big lenders are partnering with builders and real estate companies to provide one stop shopping and that segment of the market will grow.

Remember that telemarketing solicitations to home phone numbers has effectively been stopped. I you live in a metropolitan area, you will see lenders advertising on billboards. There seem to be more and more of them, so they must pay for themselves. Also a number of lenders are advertising on TV.

But there are other means of getting to directly to consumers and one of them is called Direct Response Marketing. That’s where they contact you directly, rather than hoping you watch TV. You will see a tremendous increase in this arena.

Your bank will stuff flyers into the envelope with your monthly statement. You certainly have gotten e-mails saying that you are pre-approved. You probably ask, “Approved? I haven’t even applied?”

You haven’t. It’s just a way to get your attention. These e-mails are almost certainly not even being sent by lenders. They are being sent by lead generation companies. Someone does respond to those e-mails, and when they do, their name is sold to companies like mine for solicitation by a loan officer. Every single day, literally, I get a call or e-mail from one of these lead companies offering to sell me “fresh leads!” Here’s one I got five minutes ago while I have been writing this artilce:

We now have Mortgage leads available in California and Arizona for as low as $20.00 per lead.  Yes they are Exclusive.

I’m sure you have heard the ads that say “Get Lenders to Compete for Your Loan.” Lenders sign up with them for $10,000. If you respond to the solicitation, your name and personal information is sold to four lenders who then have someone call you.

You will also be getting a lot more mail from lenders who have bought lists of homebuyers from companies like Dataquick. When your Deed of Trust or Mortgage is processed by your County’s Recorders Office, it becomes a public record. Dataquick and other companies scour those records and collect data in any form the client wishes.

I can ask for “Anyone with a loan over $200,000 that was recorded before April 15, 2000 in a particular Zip Code” and they’ll give me a list. If you are on that list, you’d get a letter from me soon thereafter.

The point of all this is that you as a consumer are going to be bombarded with sales solicitations. When you are in the market for financing, I think that you can do a lot better job of finding a competent, honest lender using all the techniques we have talked about during the last year. I would certainly never respond to a solicitation like the ones we have discussed here.

Be careful out there, and warn your friends!