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Selling the option loan

National Mortgage Professional
Jan 31, 2006

Second mortgage prospecting: Where to go and what to do nextBrian Ricedirect mail, telemarketing, radio/television ads Over the years, there have been three major marketing verticals for mortgage prospecting that have been used by everyone, from large banks to mom-and-pop brokerage houses. 1. Radio/Television: These media outlets are typically used by companies that don't have a pressing need to reach a targeted audience in order to pull in as many prospects as possible. The problem we have seen with radio and television marketing is that most of the applicants are either looking for a purchase loan, or lack the credit and loan-to-value necessary for a refinance, second mortgage or debt consolidation loan. 2. Telemarketing: A greatly missed vertical, telemarketing once created the lowest cost-per-loan marketing and was the fastest way to increase pipelines, mostly due to the ability to contact prospects quickly and use targeted lists to ensure the prospects were likely candidates. However, this was before Do Not Call legislation. The DNC laws have greatly decreased the amount of callable prospects, creating consumer negativity towards calling and leaving us with a small amount of phone numbers. These remaining prospects are inundated by telemarketers, which decreases the number of applicants and increases the cost per loan by three times. 3. Direct Mail: Stronger and smarter than ever due to technology and better list segmentation, direct mail has proven to be the winner of all verticals. Recent statistics released by the U.S. Postal Service have shown that majority of consumers not only read advertising mail, they look for it. But more importantly, direct mail has proven each and every time to always create a positive return on investment (ROI). The newest addition to mortgage prospecting has been lead generation via the Internet - purchasing prospects that have filled out or expressed an interest via a mini 1003 on the Web. This form of advertising has proven successful for some companies, while others have seen major losses or unworkable increases in their cost per loan. If a mortgage company is marketing for any type of mortgage without targeting a particular audience, than any one of the aforementioned verticals can be used to create pipelines. The cost per loan at the end of each campaign will allow you to pick what works better for ongoing efforts. However, when isolating a particular program such as second mortgages, selecting prospects by underwriting guidelines and tracking ROI are key elements. Putting together the most targeted marketing list will create the most successful vertical. It locates applicants that already fit the necessary underwriting guidelines as well as the criteria that creates the need for the program being marketed. When purchasing mailing lists, make sure to select specific data on prospects including credit scores, revolving debt, mortgage amounts, open mortgages and loan-to-value to compile a list of highly likely and approvable candidates for a second mortgage or debt consolidation loan. The next step is designing a variable mail piece that quickly addresses why, how and when. By using variable financial formulas in your mail designs, you are able to give the prospect the exact financial benefit without over-informing. Your main concern in creating campaigns of this intelligence is the validity of the data being used, so that your message and variables make sense to the prospect receiving the mail. To do this, first make sure that the public mortgage data being utilized is updated weekly by your list provider and that the credit bureau data being used for the campaign is updated monthly. Most importantly, only purchase lists that have been modeled on comps in a zip code to ensure real loan-to-value, not assessed. I recommend always using first class postage to guarantee delivery, tracking each response by time and location, and call duration via dynamic toll-free numbers. This will give you the information you need at the end of a campaign to calculate ROI and, more importantly, marketing costs per closed loan. Keep your marketing material simple, clear, intelligent and consistent and don't forget to have the same level of professionalism in the way you conduct your business. Brian Rice is co-founder and CEO of Red Clay Media, a direct mail and mailing list company. He may be reached at brice@redclaymedia.com.
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