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Selling mortgages is not rocket science: The virtues of virtual coaching

National Mortgage Professional
Mar 29, 2007

Reaching borrowers with non-traditional creditPeter Harveynon-traditional credit, borrowing, A past employer used to say, "It's easy to generate response from borrowers with non-traditional credit, but getting paid back is what it's all about." Suddenly, more lenders are reaching out to borrowers with non-traditional credit, either by expanding marketing efforts with existing product or by creating and marketing new products. But to be successful in these challenging times when everybody's scrambling to maintain funding levels, lenders need to market smarter and with greater efficiency. Non-traditional credit refers to credit profiles outside of the typical Freddie Mac and Fannie Mae conforming loan criteria. Individuals fitting this profile make up about 25-35 percent of the U.S. homeowner population. Many sub-prime lending industry experts will tell you that this niche presents an opportunity because these individuals will always be in market, despite economic cycles. Now, even traditionally conforming lenders are attempting to reach out to these borrowers by implementing non-conforming loan divisions. How can your organization differentiate within this sudden glut of lenders in their rush to market non-traditional credit to these prospective borrowers? Most lenders believe that it can be as simple as targeting by credit profile. Typically, that theory produces good response but poor conversion, primarily attracting responders with no hope who have already been turned down on refinance. Unless you offer distressed products, avoid this market and don't waste valuable marketing resources with little to show for your efforts, except an exodus of loan officers. Non-traditional credit borrowers are actively seeking credit, but the winning lender may not be the one first contacted when these borrowers take action. However, the winner will be the one that stays in the forefront and can close the loan faster. So what is the most efficient way to reach non-traditional credit borrowers? The big non-conforming lenders are already in front of borrowers who are easily identified on the credit file. Your success against the competition depends on timing. You need to become a stealthier lender by identifying and reaching borrowers that your competition has overlooked. There are several types of borrowers that are hidden from the big lenders' clunky credit screens and acquisition models: The hidden There are millions of hidden homeowners who have not been identified by the credit bureaus. Seem unlikely? There are 65 million homeowner households in the United States. But ask the credit bureaus how many homeowners are in their databases. Their figures will be in the range of 50 million. There are a number of reasons these individuals have slipped through the cracks. Discount those who have paid off loans and there are still upwards of 10 million hidden homeowners. You can be sure that those individuals are not being pummeled with competitive solicitations. The recently out of bankruptcy These borrowers are emerging from bankruptcy in the thousands each month. They're hungry for credit and now they're eligible. The credit sliders There are tens of thousands of homeowners with credit ratings that are sliding downward month over month, as well as those with credit ratings that are sliding upward. Since you are already looking at homeowner credit data and are obligated to make a pre-approved offer, why not zero in on those currently making mortgage or other finance trade inquiries? While the big lenders are searching for large-scale campaign volumes, smaller lenders can take advantage of data-driven guerilla marketing that focuses on the non-traditional credit borrower to achieve stellar results. What's stellar? Response rates over one percent with conversion rates above 10 percent using straight telemarketing or telemarketing that follows up direct mail campaigns. Direct mail alone won't deliver these performance levels, at least not the first time you mail. But don't assume that you can throw together any type of marketing campaign and immediately achieve optimum results. You must identify and work the right leads by sending the right message across the right marketing channels at the right time. Dedicate at least six months to any concerted marketing campaign to reap a worthwhile response. So take the plunge! Reaching borrowers with non-traditional credit can be your secret competitive weapon. Construct a six-month plan to reach those borrowers by targeting the three groups mentioned above. Work with experts in database marketing and analytics to determine the right selection criteria to find those hidden homeowners and determine channel-specific response and conversion models. You will soon see that this is a reliable and scaleable science that can deliver your loan volume and revenue goals. And that's success you can bank on. Peter Harvey is the founder and CEO of Intellidyn Corporation based in Hingham, Mass. For more information, visit www.intellidyn.com.
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