Yesterday’s Trash Is Tomorrow’s Treasure

Massimo De Candido/Massimo De Candido - Fotolia

WE’RE HEARING that some folks enjoy my creative use of metaphors in my weekly columns, which at least proves that some mortgage bankers have a sense of humor even as times get tough. Just this year, I have compared mortgage technologists to plumbers’ butts, a Fed ruling to vomit and, just last week, I challenged industry participants to be “Sums of Niches” (not to be confused with sons of...well, you know). But, last week’s message was not an expletive, rather it was a challenge to focus on a series of niches that you can exploit to deliver strong results, even while rates rise and the easy refinance volume begins to fall.

So, sometimes my metaphors are in the gutter. So, this week I extend a heartfelt invitation to those mortgage executives to take a look into their own gutters or trash heaps of old business to find consumers who need mortgages. There may even be some purchase nuggets buried in there, which will give you a chance to weather the storm of change that is coming our way.

So, before I discuss the value of yesterday’s trash, let me lay out a key reality of mortgage marketing. That reality is this: compared to a typical consumer marketing effort, a mortgage loan is not a product that consumers need very often. How many boxes of Cheerios could the cereal company sell if you only needed a box every five years? What if the pharmaceutical companies could only count on the average middle-aged dude needing ED medicine every five years? (Uh, sorry if that comment hits too close to home for some of you.)

My point is that mortgage bankers are desperately searching for consumers that actually need the product only when they buy a home (not often) or when rates allow a chance to save money on a refinance (increasingly less often) or if they can get cash out above 100 LTV to pay off consumer debt that they can’t afford (that last part was my silly reflection of how things used to be way back in the last decade, I realize it doesn’t really apply today...oh, the good old days).

Right now, the home buying market is just firming up as the refinance market begins to decrease. In fact, according to lock data from Icon Advisory Group representing approximately 70% of the retail market, the refinance volume was down over 12% last week compared to the previous week, and over 30% compared to the same week last year. No wonder we got so many calls from clients asking “what’s up?” Well, not refinances. But purchases are up, 15% last week compared to the year prior. So, it’s tough to mass market for mortgages; it’s much better to focus on certain niche markets and the elusive purchase transaction so you have a chance to drive volume. So, now let me talk about your trash. Not my trash, but yours.

You see, every mortgage company has a set of consumers that you worked with in the past. You have a chance to work with them again. Many of them may have already gotten their next loan, their low-rate refinance or bought their next house. But not all of them have, and each lender has a couple of big advantages they enjoy when they reach out to former customers they have worked with (or even talked to) in the past.

The first opportunity is to leverage data mart techniques to match your database with data elements aggregated from public records, credit, demographic and other techniques. What do these data techniques give you? These techniques let you know when one of your old customers is likely to be in the market for a new loan. And not just your past closed customers! Even if you did not close the previous loan, perhaps you kept the lead record in a database somewhere. What if you could know that an old lead you tried to close is still in the market for a new loan? What if you could find the bank customer who has no mortgage with your company, but has a mortgage above market with your competitor? And most importantly, what if you could find the old lead who you know is moving into the purchase phase and considering selling their current home and purchasing a new home. Maybe it’s a customer you have not spoken to in years. Maybe you sold off the servicing for the loan years ago. Well, that customer has some level of relationship with you and you have a chance to get their next deal if you know when they are in the market for that deal. That is what the advanced techniques provide you, an ability to drill into the data and find the customers that remain likely to need a loan and are interested in getting one.

Many mortgage executives are looking back at 2012 and thinking how great it was as the refinance volume just continued to grow. I challenge those executives to look back even farther, and to look even wider. Find those customers who may just be entering the purchase market. Don’t just focus on the consumers you closed last year, but also the consumers you did not. Look into all databases you have, and find the tools to append to that data and find the treasure that is buried in all those bytes of data. There are a lot of good opportunities in the refuse of past efforts.

Garth Graham is a partner with Stratmor Group, and has over 25 years of mortgage experience, from Fortune 500 companies to startups, including management of two of the most successful mortgage e-commerce platforms. He was formerly with Chase Manhattan Mortgage and ABN Amro, where he was a senior executive during the sale of its mortgage group to Citigroup.