Volume Still King - Quality…not so much

28 Aug

Posted by Scott Schoberg as Industries, Mortgage

Why are lead buyers buying less leads in the mortgage vertical? The volume of consumers calling and filling out online forms is as high now, if not higher, then it ever has been. Well, quite simply, loan officers aren’t closing loans, companies are being forced to close up shop, and that results in less money in the marketing pool. The reasons for the numerous lay-offs and businesses that have shut down are obvious - the sub-prime meltdown and the implosion of mortgage-backed securities. I’m curious what phase we’re in now though, recovery? Everyone is wondering if we’ve hit the bottom yet, and watching to see who emerges from the wreckage. The question is, are we helping ourselves get over the hump? The continued advertising on radio, television and the Internet - for the same mortgage programs that got us in this mess in the first place - can’t be helping. What are your thoughts, do we need to move past the ads promising monthly payments too good to be true? If so, what is the evolution of the marketing message that will benefit consumers, provide customers with quality leads and - not kill volume? Can everyone have their cake and eat it too? I would love to hear your thoughts?

On a side note, I did find some subtle humor in the articles I was reading:

The article:

“We have to stop them plain and simple. We have to stop the ads and we have to stop the mortgage brokers from their deceptive practices in general.”

Now view the screenshot of the article

The article:

“There is little debate that mortgage industry practices have created ill effects for lenders, consumers, and the economy as a whole,” Eva Weber, the Aite analyst who authored the report, said in a statement. “The question now is when the fallout from these practices will dissipate. The unfortunate answer is that things may still get worse before they get better.”

Now view the screenshot of the article

Don’t you just love dynamic ad content?

2 Responses

Michael

August 29th, 2007 at 3:40 pm
1

In my opinion the reasons that lead purchasing is down is multi-faceted. First I believe that the majority of internet leads come from sub-prime borrowers. Those that have been turned down before, are upside down on their LTV’s, can’t verify income or assets, they have soaked every cent of equity out of their homes and now they are grasping at straws etc. etc. A year ago there was a home for every loan, not so today. Those loans are just not closing. This is not a negative view, it’s a realistic view. The A paper guy doesn’t need 4 banks competing for their loan. He’s not afraid to sit across from a loan officer and discuss his financial history eye to eye. He doesn’t need to seek the anonymity of the internet.

Second, brokers thought that the easy money mortgage game would never end and over extended themselves. Now they have nothing to invest in their businesses and barely make the rent. They won’t admit it but it’s true.

That the government wants “transparency” in the mortgage industry is a joke. Just face time for them to show the voters that they care. They care about steroids in baseball but not in the food supply because that is a problem they are unwilling to fix, follow the money to find out why. More paper? More disclosures? Is there any other industry that requires such? The banks will suggest greater regulation of mortgage brokers making it harder for the brokers to do business. Why? Because the banks are exempt from such regulations. When banks don’t have to compete, they make money. Want answers, always follow the money.
Jason

September 13th, 2007 at 5:56 am
2

Michael,

I agree, however going off of what you said. “The banks will suggest greater regulation of mortgage brokers making it harder for the brokers to do business. Why? Because the banks are exempt from such regulations. When banks don’t have to compete, they make money.

Mortgage brokers knowingly helped people that could not afford a car
payment let a lone a house payment finance a house. You should not be able to make a financial decision for anyone, unless you are a licensed, knowledgeable mortgage broker. The rules should of been much tighter. This was a way for the federal government to take in money, and at the same time get rid of everyone but their best friends the BANKS!

Every industry weeds the good from the bad at one point in time or another, whether it be because of new laws and regulations which make things harder, or competition drastically increasing, or both. Today you’re either wealthy or poor. Soon there won’t be anymore middle class.