Mortgage Marketing Update

I was engaged in one of my all too frequent visits to my pharmacist when he asked me why he was getting so many mortgage flyers in the mail. I have noticed this too, so I did a little more research which I hope you find interesting.

You should know that I also get lots of mortgage flyers. Why? Because I have a mailbox. I also have a telephone, an e-mail address, and two FAX machines. I get solicitations on each of them. Yesterday I received five e-mails telling me I was pre-approved for a loan, interesting because I had never applied for one. So I followed up to find out more information about where these were coming from.

When you know a website address, you can go to the WHOIS section of www.networksolutions.com and find out who the URL belongs to. When I back-tracked them, I found that these companies list a foreign address, like Turkey or the Czech Republic . I suppose that means that they are exempt from prosecution under U.S. anti-spam laws.

The other item that was evident to me was that these really aren't lenders. They are lead-generators, companies that hope you will respond to the "lowest rate" come-on, and give them personal information which they will then sell to other lenders. One even had this disclaimer:

"Submitting personal information constitutes a request to generate a mortgage quote and authorize XYZ to send your loan request to multiple qualified lenders and brokers, who will be calling you with no obligation mortgage quotes."

That accounts for the three or four e-mails I get every day offering to sell me "fresh leads." Those guys are in business because someone still finds it profitable to buy leads and follow up on them. I talked with one such guy who said that he buys leads for $18 and gets one loan for every ten or twelve leads he buys. That means his marketing costs is about $200 per loan, not bad when you consider that he makes $2,000 or $3,000 on the loan that funds.

I think that there are a couple of reasons for this heightened activity. The first is that the volume of loans has declined significantly from what it was a year or two ago. Title companies tell me that their business is off 30 or 40 percent. Lenders were out there trying to increase their share of a declining market, and that's hard work.

While one huge lender laid off 10,000 people, other banks and lenders are still hiring. One friend said that he spoke at a seminar for new loan officers, and the room was filled! Obviously, these are people who think that they can be successful. I hate to be the bearer of bad tidings, but most of them will fail. It takes a long time to develop enough business and most will give up before they get that far.

The second reason is that a lot of mortgage activity was generated by telemarketing. As much as you and I might hate it, it DID work and thousands of people made a living calling prospects. They can't do that now so they have to rely upon other means of generating business. That means that you can count on getting a continuing barrage of mortgage marketing materials.

Finally, I should reiterate my warning that you should not deal with people like this. I'm sure that you are aware that there are identity theft problems in our society today. We should be concerned about privacy issues and giving someone in Turkey your personal information is just plain dumb. Over the past couple of years I have recommended better ways of finding reliable, honest lenders, and I hope you will use them.

Be careful out there!