Big Mortgage Leads Blog

Housing Construction at 17 Year Low

2008-09-17T08:52:00.000-07:00

The depleting housing market has taken a toll on many sectors, this includes, not suprisingly the construction of new homes and apartments. The levels of construction have decreased drastically over the last few years, and have now reached a 17 year low in August.

This 6.2 percent decrease in housing construction was reported Wednesday by the Commerce Department. This is the slowest rate since 1991, which was another tough period for housing.

The Government Steps in

2008-09-08T10:48:00.000-07:00

As the mortgage giants Freddie Mac and Fannie Mae fell further in to trouble the federal government stood by debating what should be done. Some believed that the companies needed to fail in order to preserve the economy. While many others thought that it was time some one stepped in.

Luckily for Fannie, Freddie, homeowners, and investors alike the government chose to step in over the weekend.

So what does this all mean?" Mortgage rates will fall slightly, but is not expected to fall enough to stop the decline in house prices. There may be a new set of rules implemented on the way that mortgage loans are given.

A few advantages to this takeover is that delinquent borrowers may have a better chance at modifying their loan, and the hope is that with mortgage rates lowering that the number of home buyers may increase, which may help stabilize the market a bit more... We could all hope this is the case.

Financial Institutions Need to Fail

2008-09-03T10:37:00.000-07:00

Federal Officials say they must let financial institutions fail for the sake of the economy. Thomas M. Hoenig, the President of the Federal Reserve Bank of Kansas City reportedly said for economies to work best institutions must be allowed to fail.

There has been an ongoing debate as to whether the federal government should step in to save financial institutes such as Freddie Mac and Fannie Mae following the sub-prime mortgage crisis that has swept the nation.

Mr. Hoenig, explained that financial crises will happen despite any efforts to prevent them from happening. Although it is agreed that one cannot have control over everything. Many also agree that there were many things, which could have been handled differently in order to prevent the sub prime mortgage crisis. Which is why it may be wise for the federal government to step in before it worsens.

Mr. Paulson says No to helping Fannie and Freddie

2008-08-11T12:21:00.000-07:00

The U.S. Tresury Secretary, Henry Paulson, stated on Sunday's Meet the Press that he has no plans to bail out mortgage companies Fannie Mae and Freddie Mac, as they both struggle with their earnings.

A plan was established last month by Congress and the Tresury Department to help support Fannie Mae and Freddie Mac. The plan would allow the Treasury to buy the companies shares. Many analyst have thought that Mr. Paulson would have to act, as the housing crisis worsens. But it seems that Mr. Paulson thinks otherwise.

Effects of the New Housing Bill

2008-07-30T09:22:00.000-07:00

A new bill set to be signed by the President later this week will allow the federal government to step in and help the collapsing housing market. The bill will grant the Treasury Department the ability to safeguard two of the nations largest mortgage finance giants (Fannie Mae and Freddie Mac) from collapsing. It is said to be the boldest attempt to aide troubled borrowers since the New Deals Home Owners’ Loan Corporation in 1933.

As the government moves in to offer relief the banks will have the opportunity to supply the homeowner with refinanced loans and loan modifications, and keep the foreclosure rates from sky rocketing further than they have already.

If all goes as planned at risk borrowers will be able to get a handle on their unbearable mortgages with a fixed rate loan insured by the FHA. All in all it is a good move forward for the state of the country. It may even be a good deal for mortgage brokers who are assisting homeowners on closing deals with a refinance or loan modification.

Viva LeadsCon!

2008-04-03T10:03:00.001-07:00

We're off to the first annual LeadsCon show in fabulous Las Vegas. Check back next week for a recap of the event. Looking forward to hanging with all the buyers, sellers and service providers who make lead gen such a fun space.

Time for a Refresher Course?

2008-03-13T09:54:00.000-07:00

It could be time for mortgage brokers to hit the books. New compliance and licensing standards may be on the horizon.

Today, Treasury Secretary Henry Paulson proposed that imposing tougher standards on mortgage brokers could help us dig out of this current credit mess. He's asking for "strong nationwide licensing standards" for mortgage brokers in order to instill confidence back into the market.

"Regulations needs to catch up with innovation and help restore investor confidence but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it," Paulson said.

How do you feel about nationwide licensing standards? In one respect, a nationwide plan could help brokers do more business across a variety of states and also cut down on redundant paperwork and compliance issues that arise up from doing business in multiple states. On the other hand, would turning over licensing to the Feds cause more problems by installing a one-size-fits-all policy that discounts local differences in real estate markets? I guess we'll have to wait and see exactly what the "tougher standards" are before making a decision. In the meantime, it might not be a bad idea to dig out your Real Estate Principals textbook.

On a side note, is anyone else distracted by Paulson's resemblance to 2-time AL MVP Cal Ripken Jr.?

Will the real Treasury Secretary please stand up?

The Fed Steps In

2008-03-11T10:01:00.000-07:00

Today, the Fed moved to add liquidity to the credit markets. To make a long story short, they are allowing investment houses and banks to buy ultra-safe US Treasury Bonds in in exchange for debt that includes risky and out-of-favor mortgage-backed securities.

"Pressures in some of these markets have recently increased again," the Fed said in a statement. "We all continue to work together and will take appropriate steps to address those liquidity pressures." The other banks involved are the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank.

How will this affect brokers? With the Fed's move today and the recent increases in the FHA and Conventional loan amounts there is definitely an ability to do more deals than there was just a few weeks ago.

Now is the time to work on increasing your business. Get out there and close more loans!

FHA Loan Limits Increase! Governator Wants You to Close More Loans.

2008-03-06T09:41:00.000-08:00

Yesterday, the FHA raised the limits on mortgages it guarantees. In a move that could help thousands of homeowners out here in California, the cap was increased from a former limit of $362,790, to a new high of $729,750 in certain parts of the state.

What does this mean to mortgage lead buyers? First off, it means that your pool of potential loans just got much larger. It also means that you can exercise some flexibility in your LTV cap, loan amounts and credit grades. Quite simply, it means that a lot of leads which were "no good" yesterday suddenly look very attractive!

Today is a great day to re-visit any borderline borrowers who you were unable to help over the past several months. Thanks to the new FHA programs, you may now be able to help them.

With our March-Mega Lead Madness promotion in full swing, it's also a great time to jump back into working leads in a big way. There is a ton of opportunity out there with the new FHA limits.

Even the Governator agrees! As Gov. Arnold Schwarzenegger said in prepared remarks, the new FHA limits “will help more working Californians achieve the American dream of homeownership through less expensive and more secure loans.”

Homeowners need your help. Now get out there and close more loans!

March Mega-Lead Madness is Back!

2008-03-03T08:05:00.000-08:00

It's March! That means it's time for college hoops and BigMortgageLeads's annual March Mega-Lead Madness promotion. During March Mega-Lead Madness new customers can Receive 10 Free Leads with the purchase of 100. There's never been a better time to try our fresh, real-time Internet mortgage leads. Fill out our form and a representative will contact you within 24 hours to set up your account, or call us at 800-873-3066 to get started sooner. Act now, before the shot clock expires on this great deal!

Party Now, Pay Later

2008-02-27T10:50:00.000-08:00

If America's negative savings rate, rising foreclsoures, and ballooning household credit card debt weren't enough reasons to worry about how we're going to pay for everything and everyone in the future, now comes the story on TheStreet.com about company issued 401(k) debit cards that allow people to borrow money against their retirement plan.

Wait, let me get this straight ... the idea of a 401(k) is to incentivize people to set money aside for retirement, but now we're going to let them borrow against their 401(k) to pay for vacations, iPhones and plasma TVs? Sounds like a great plan to me!

As expected, a few party poopers aren't that keen on the idea.

"By making it a debit card, you make it sound like the loan that you take on the 401(k) for everyday purchases," says Jean Setzfand, AARP's Director of Financial Security. "In our opinion, a 401(k) loan should only be taken as a loan of last resort, for a dire medical situation, or if there's no other way to get a home loan, not to go shopping."

Lighten up Jean! So what if we end up spending all of the money we had set aside for retirement? I'm sure social security will take care of all of us when we hit retirement age. For now, I say, "Party on!"

People Smarter than Us Disect the Sub-prime Crisis

2008-02-20T22:48:00.000-08:00

I came across this article on the Freakonomics blog about Carmen Reinhart and Kenneth Rogoff, two economists from the National Bureau of Economic Research, who are working on a paper entitled, Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International Historical Comparison.

The authors have some interesting things to say about the current credit crunch and how it mirrors other economic downturns worldwide over the past 60 years. Surprisingly, our current problems aren't that much different than any other crisis since WW2 (basically, had you been studying Sweden's 1991 housing crash you could've seen our mortgage meltdown coming a mile away). As they explain, with a little help from Russia's preeminent novelist:

Tolstoy famously begins his classic novel Anna Karenina with "Every happy family is alike, but every unhappy family is unhappy in their own way." While each financial crisis no doubt is distinct, they also share striking similarities, in the run-up of asset prices, in debt accumulation, in growth patterns, and in current account deficits. The majority of historical crises are preceded by financial liberalization, as documented in Kaminsky and Reinhart (1999). While in the case of the United States, there has been no striking de jure liberalization, there certainly has been a de facto liberalization. New unregulated, or lightly regulated, financial entities have come to play a much larger role in the financial system, undoubtedly enhancing stability against some kinds of shocks, but possibly increasing vulnerabilities against others.

I'd suggest downloading the full paper here. It's only about 15 pages and even includes several color coded charts and graphs,.

For those of you who don't feel like going through the effort and just want to know when they predict this thing will all be over, the paper offers the following:

At this juncture, the book is still open on the how the current dislocations in the United States will play out. The precedent found in the aftermath of other episodes suggests that the strains can be quite severe, depending especially on the initial degree of trauma to the financial system (and to some extent, the policy response). The average drop in (real per capita) output growth is over 2 percent, and it typically takes two years to return to trend. For the five most catastrophic cases (which include episodes in Finland, Japan, Norway, Spain and Sweden), the drop in annual output growth from peak to trough is over 5 percent, and growth remained well below pre-crisis trend even after three years. These more catastrophic cases, of course, mark the boundary that policymakers particularly want to avoid.

Well said.

Debt is the New Mortgage

2008-02-15T09:22:00.000-08:00

Last year, 86,000 jobs were lost nationwide due to the credit crunch, mortgage meltdown, sub-prime slime (or whatever you want to call it).

Where did everyone go?

A number of former brokers have gone into debt settlement business. With homeowners unable to tap into their home equity, more and more troubled consumers are turning to debt settlement firms to reduce their debt by negotiating with creditors on their behalf.

The OC Register recently profiled Ray Kikavousi, an ex-broker who was laid off from former high-flyer Quick Loan Funding. Unable to find a job in the lending industry, he launched his own debt settlement firm. As the article described:

"Debt is something that everybody has, including myself, so it seemed like a new and upcoming business," he said.

He and a partner, Charles Park, have invested about $50,000 to launch their company, People Debt, which has an office in Irvine. Kikavousi said he cashed in a 401-k, borrowed from friends and family and took out a bank loan to start the business.

In a sense, he said, he's trying to make lemonade from lemons. During the housing boom, quite a few borrowers overextended themselves. Now that the bubble has burst, why not try to earn a living by helping borrowers pare their debts?

The fees aren't nearly as lucrative as what he enjoyed in his mortgage days, but Kikavousi says he wants to build a business that will last.

Has anyone else out there gone into debt settlement? How is it working for you? We'd love to hear your feedback.

Also, please visit the debt settlement leads section of BigMortgageLeads for information on getting fresh, real-time debt settlement leads to help drive your business.

Now get out there and close more loan ... or, more debt settlements! :)

Another Refi Boom?

2008-02-07T15:00:00.000-08:00

After a debate that stretched out longer than anticipated, the Senate today approved the much ballyhooed $151 billion economic stimulus bill. Final congressional approval should come shortly, with President Bush expected to sign the bill into law in the coming weeks.

In addition to providing the well publicized tax rebates for the majority of Americans, the bill also changes the guidelines on conventional mortgages. As Bloomberg News explains:

"Fannie Mae and Freddie Mac, the government-sponsored mortgage finance companies, will be allowed to buy loans worth as much as $729,750 in expensive markets, an increase over the current $417,000 loan limit, a move that could help struggling homeowners to refinance large mortgages at a lower interest rate. "

How will this affect mortgage lenders? With conventional rates about a point less than jumbos, homeowners who were unable to get conventional loans before the change will obviously rush to refinance. But are lenders equipped to handle the demand? With the dissolution of major lenders, layoffs at big banks, and a great deal of brokers exiting the industry, there may not be enough mortgage professionals to go around.

For example, during the 24 hour rate-inspired refi boom we saw after the last cut, banks and brokers reported being overwhelmed. The Los Angeles Times reported:

"Homeowners deluged mortgage brokers with calls [on January 23], hoping to take advantage of sharply lower interest rates to refinance into cheaper loans. Countrywide Financial Corp., the nation's biggest mortgage lender, said call volume jumped by at least 50% over last week. Independent brokers such as John West of Orange County also said their phones didn't stop
ringing."

The boost in the conventional loan amount may be a great opportunity for smaller shops and brokers, especially in states like California, to staff up in order to help out prime borrowers refinancing into conventional loans. Is it possible that this could be just what brokers need to get back on track? Stay tuned.

Are You Doing Credit Repair?

2007-10-30T11:56:00.000-07:00

We've had a number of brokers contact us recently about Credit Repair Leads. In an effort to maintain production in a contracting market, more and more brokers are turning to credit repair in an effort to either squeeze more deals out of the existing leads or as an entirely new business channel.

How does credit repair work? Brokers take a lead and run it through a process to help boost the individual's credit score over the course of 30-90 days. Once a lead's score has risen to an acceptable level, the broker can then help the borrower refinance out of their existing loan. With the tightening of mortgage underwriting guidelines, the credit repair industry is growing exponentially. According to a recent article, "credit-repair companies are reporting a surge of business from people who want to beef up their credit scores to land new home loans. "

To help our customers tap into this growing market, BigMortgageLeads has rolled out a new credit repair lead product. So far, feedback has been overwhelmingly positive. Visit our credit repair section to learn more.

Have you ever worked with credit repair leads? Do you have any tips, comments or questions related to the process? Comments are welcome as we build out this new vertical.

You Get What You Pay For

2007-10-04T09:40:00.000-07:00

I hear it everyday when speaking to potential clients – “I was just quoted the same program for half the price.” Many new customers make the common mistake to purchase online leads solely based upon pricing. If you consider many of them are purchasing leads with their own money, it’s hard to blame them for making this mistake. Are you really getting the same program for half the price? Remember, YOU GET WHAT YOU PAY FOR!

There are a number of great lead providers to choose from, but for every one real provider there are 10 providers that are selling you a bunch of junk. To insure you are not buying swampland in Florida, use these tips to find a reliable lead source.

Questions to ask:

How do you generate your leads?
You need to make sure the lead provider is using a legitimate source to generate their leads – CAN SPAM compliant email marketing, keyword search, organic search marketing are a few reliable sources. Stay away from companies that are using co-registration and offers with incentives. Some examples are: rates and programs that don’t exist / free product if you complete their form.
Do you generate your own leads?
Ask the lead provider where they are sending their customers to enter their information. If they won’t tell you or if it does not exist it is usually means they are not generating their own leads.
Are your leads delivered in real time?
Make sure you are getting a real time lead.
How do you verify your leads?
Do they use a program to insure the number is accurate; the Zip code matches the state, etc. Do they call verify any of the leads to monitor the quality of their leads.

Additional Tips:

Check their traffic: Check their consumer website on http://www.alexa.com/ to see if they are sending a lot of traffic there. If you see a lot of traffic at their site it is a good sign they are generating their own leads.

Ask for references: Ask for three references to call that they are currently working with.

Don’t base your decision upon price and do your homework. Remember- YOU GET WHAT YOU PAY FOR!

Now get out there and close more loans!

Trigger Leads In Action

2007-08-08T09:23:00.001-07:00

It's ironic that last week's blog post had to do with trigger leads. Check out the note below for a first hand account on how trigger leads can interfere with a buyer being able to close a lead. This is an email we received on Tuesday from one of our clients.

"I got in touch with the lead that was sent to us yesterday right when the lead was sent. I got in touch with him before any other lenders and got an app from him and pulled credit. He said that now he is getting a call every 10-15 minutes from people saying that the credit company is telling them he is looking into refinancing and that he had his credit pulled. Do you know what is going on with that?"

I'm sure many lead buyers have had similar experiences. My question is; what can lead buyers do to combat trigger leads? Is there anything you can do as a lead buyer to insure that you do not get pushed out of the way by trigger lead buyers once you pull credit on a lead? Any feedback would be much appreciated.

Now get out there and close more loans!

Trigger Leads - Friend or Foe?

2007-07-31T15:33:00.000-07:00

Over the past year we've seen a dramatic increase in the number of clients calling us looking for "trigger leads". What is a trigger lead? A trigger lead is created when a prospective borrower has their credit pulled by a bank or brokerage. When this happens it creates a mortgage credit inquiry event to be flagged on the borrower’s credit record. The credit bureaus take note of this inquiry and sell the consumer's information to other banks and brokers as a trigger lead. Basically, they are letting additional lenders know that a consumer is looking for a mortgage. This is often done without a consumer ever knowing that they have become a trigger lead.

When I've brought up the topic of trigger leads to people outside of the industry, the typical reaction is, "How can they do that? Is that even legal?" Yes, it is legal and it has become huge business.

Credit bureaus say that trigger leads allow for competition amongst mortgage professionals. In their eyes, they are helping a consumer by exposing them to different lending institutions and mortgage options. My question is once the consumer goes ahead and fills out the 1003 haven’t they shopped and made their decision?

Isn’t the trigger lead just a cheap way for the credit bureaus to make some extra revenue by pimping out consumer data all under the auspices of letting them get the best loan? Are credit bureaus supposed to be neutral? Does the consumer actually end up getting the best loan? Interestingly, several states are looking into the practice of selling trigger leads with an eye towards restricting the practice.

We at BigMortgageLeads do NOT sell trigger data like many of our competitors. But after our consumer study earlier this year found that many loans close with banks that do not buy our leads we started looking in to the cause of those results. Are trigger leads truly pushing down our clients conversion numbers?

We are excited to get your feedback and see if trigger leads are truly a mortgage brokers friend or foe. Has anyone used them? How do they work? What's the conversion rate? Any feedback would be much appreciated.

Now get out there and close more loans!

Everybody's Working for The Weekend (But you need to be working ON the weekend if you want to be successful)

2007-07-27T15:18:00.000-07:00

I was cruising around the web last night when I saw this story and video on leadcritic regarding working leads on the weekends. I just wanted to back up that post with some facts from BigMortgageLeads.

Here are some enlightening stats. (Please note that these are states for non-purchase leads, 100k loan amounts and above).

Average # of Sales per lead (Mon-Fri) = 2.94 lenders
Average # of Sales per lead (Sat - Sun) = 1.74 lenders

Digging in to the numbers you can see that the same leads that we sell to 3 lenders during the week are sold to less than 2 lenders on the weekend.

If you're getting leads on the weekend you are facing a lot less competition. Couple this with the fact that most borrowers have more time on the weekends to speak with you and easier access to documents like tax returns and bank statements than they do during the week (when they're at work) and you can see why we've found that our clients who buy leads on the weekend have a much greater success rate than those that don't. The clients we have convinced to go this route have all reported a better contact ratio and greater success getting a hold of consumers on weekends. After five years of selling leads, we know that our most persistent clients - the ones who try reaching customers at different times including the weekends - close the most loans!

Special thanks to LoanBright for bringing up the topic. Am I sensing a possible "Battle of 'The Viral Videos'" brewing between lead providers? If someone can find me a gorilla suit and a hot tub I think we can put LoanBright to shame ...

Now get out there and close more loans!

Additional Survey Details

2007-07-19T11:37:00.000-07:00

Thanks to the leadcritic for highlighting the results of our recent survey. It’s fun to see that our inaugural blog post could generate such a great response!

To help clarify some of our numbers I thought it would be helpful if we walked through the methodology behind the data.

Some quick background:

Results were compiled from a phone survey conducted in June 2007 of 224 mortgage leads from across the country
Follow up calls were placed between 90 – 100 days after a lead filled out a formThe survey only dealt with non-purchase leads (Refinance, Debt Consolidation, Home Equity and Home Improvement)
Our leads are sold to a max of 4 lenders. The average lead surveyed was sold 2.6 times
The goal of the survey was to find out what happened once we sent the data on to our lenders

The leadcritic’s most important question was, “What happened to the 56% [of leads that did not end up closing within 90 days]?” We’ve discussed this a bunch in our office and come up with a few explanations based on customer feedback.

The most common responses from consumers in the 56% were:

I decided to put it off
I was just shopping around
My credit score was too low
I decided to sell instead

The results tell us that a good portion of the leads are just shopping around to see what’s out there. Additionally, one factor to consider is that these leads were generated in March & April of this year. Like most online lead providers, the majority of our traffic tends to be fair / poor credit grades. If we look back over the past 3-4 months, there are a lot less programs available for sub-prime borrowers than there were in the past. So, it’s pretty easy to see how some people simply didn’t qualify for any programs.

One of the really interesting things about the survey was who ends up closing the 44%. Our historical data shows us that large banks and lenders typically close about 1-2% of the leads. Smaller brokers who are experienced in working online leads can close about 5% of the leads. If that’s the case the numbers don’t seem to add up based on how often we sell the leads. Where do the other leads close? What we found is that even though people fill out a form online, a majority of them will still discuss their loan with friends / family and other lenders when deciding what to do. During our survey we asked people who closed “What bank did you use for your loan?” The two most common answers were Bank of America and Wells Fargo – two lenders who we don’t sell leads to have never sold leads to! Quite simply, even if people fill out a form and receive calls from lenders, they still want to shop around.

It’s more important than ever for brokers to do their best to insure that a lead closes with them and not the competition – whether it’s one of the other brokers who purchased the lead, or the local bank down the street.

The good news is that if every lead you buy has a 44% chance of closing! If you’re only currently closing 4% that means there’s tremendous potential. Make sure you can do everything possible to build a great rapport with the consumer. The opportunity is in front of you with each lead you buy. Make the most of it.

Get out there and close more loans!

What is a Lead?

2007-07-17T13:06:00.000-07:00

The most common question we hear from potential buyers is “What can I expect from a lead?”

In effort to better define exactly what to expect in a lead, we recently conducted a comprehensive study of several hundred non-purchase leads in order to figure out just what happens to the people who fill out our forms after they click submit.

The results were as follows:

44% of leads closed a loan or were in the process of closing a loan within 90 days of filling out the form
On average, loans funded for $30,000 more than the amount that the lead entered into our form
76% of leads filled out only one form online when shopping for a mortgage
52% of the leads could not remember the name of any of the lenders who contacted them after filling out the form
61% of leads discussed their loan with friends / family to solicit a reference

What do these numbers tell us? Well, there is A LOT of potential for brokers to close more loans! We know that the best brokers typically close about 5% of their leads (and average brokers close about 2-3%). However, from the survey results we see that there are a huge percentage of people who are closing above and beyond the 5%. Typically these leads will either close with another of the lead buyers, or more likely they will close with their bank or a broker referred by a friend.

It’s important for a lead buyer to do everything they can to get in front of a lead. From the numbers above, we can see that most lead buyers are not doing a good job of leaving an impression on the lead (not even 50% of leads could remember what companies called regarding their loan). We typically recommend that brokers use a lead management system in order to contact their leads quickly and keep themselves in constant contact with each lead. The leads are closing! It is important for the buyers to treat each lead with care. As we see from the numbers, leads typically close for an average of $30k higher than they put in the form. So, don’t leave any lead or any money on the table.

Get out there and close more loans!