Mortgage Direct Marketing News

The Mortgagor Marketer (Volume 25)

Which is The Most Profitable Mortgagor Data;

Court House or Credit Bureau Mailing Lists?

Every week I speak to a couple dozen mortgage professionals of various experience and from top to bottom, I get asked this question from most:

"What type of homeowner (mortgagor) data is out there and which is the best Return on Investment?

Folks, there are the ONLY two sources of mortgagor data in the US - courthouse based compiled data and credit bureau data.

The paradox lies in that credit bureau data retails for much more than court house mortgagor data. So we will address the reasons why this is and look at which will vastly improve your marketing return.

What factors play into the cost of a mortgagor database, or really any marketing database for that matter? I have listed what are 4 major factors that go into pricing a marketing mailing/telemarketing database.

• Source royalties
• Update Frequency (how often the source documentation is updated.)
• Source data itself
• Intended offers?

Factor	Credit Bureau	Courthouse
Source Royalties	Royalties include the credit bureau itself. Cost is typically 23 cents per record based on volume but its priceless to know your prospect is going to fund!.	This is public information.
Update Frequency	Soft Inquiry or products which require FACTA approval typically update biweekly.	Every county updates differently and the compilers will not get a full update but once every few months and in some cases like adjustable note riders or rate / loan amount information, the data could be as much as 3-5 years old.
> Source Data	Credit report which is updated through current creditors that the mortgagor has.	Recorded Deeds of Trust, Note Rider, etc..
Intended Offer	Requires firm offer of credit to a specific profile.	General offers such as pools, decks, home security, purchase for certain areas, mass mailing, etc...

Most data companies will offer a couple of products, even some nameless credit bureaus sell credit profiled databases but the information is still mainly based on compiled court house data. Be careful of this because the accuracy of the mortgage related information can be as low as 50% or less because of the infrequent updates and limited information provided by the source documents.

Whereas credit bureau or truly scored data requires a specific firm offer based on the variables you are pulling by. This inherently makes the credit bureau data more valuable.

Looking at the source is probably the main reason why credit bureau data costs so much more than courthouse information.

The bureaus themselves will sell courthouse data because it is still good data for general marketing purposes and has loose FACTA laws because the data is so inaccurate. Keep in mind that there are very few representatives at any credit bureau that know what the cut off score is for certain loans and are mainly leaning on their company name when selling you an inferior product.

Be wary of credit bureau data represented that does not include specific scores, debt amounts, loan amounts, etc...

When exact scores make or break deals, modeled data is unreliable at best.

This brings us to the credit bureau data that exists for lenders with a firm offer of credit.

While this data is not easy to get, it is the most comprehensive and accurate file in the country because lenders make their decisions on the results of these credit inquiries.

Court house data boasts being able to target adjustable rates, interest rates, lender information, etc... The problem is of course that each county updates at different times and the data sources that compile and collect this data are not in the court houses everyday recording new note riders, deeds of trust, and other source documentation that is compiled into the products we offer. This data, because of the infrequent update, can be very dangerous to any marketing budget.

And with the soaring costs of postage, rising interest rates, and expensive payroll (on bad phone leads) modeled information as a basis for direct marketing campaigns create problems and strife among your top performers (or yourself if you do your own marketing).

Calculating the Costs

Now from an accuracy point of view, credit based data (or soft inquiry data) is timely since you can make a good part of your lending decisions based on the information provided in a credit report. Credit Bureaus offer a soft inquiry file that from what I have seen, converts better than any other database on the market.

However, the cost associated with true credit based data can reach up to 25, 35 or 40 cents a record. Is it worth the price?

The analytics of cost really come into play here - let's look at the mean retail value of both databases:

9 cent modeled Court House Data

Mortgagor Credit Data

Something to notice are the fixed cost of mailers and cost of telemarketing not including data (print and mail) ($.30-$1.00). Hourly callers pay $12 x 5 hours per shift or $60 per day). This equates to $300 per week, $1,200+ per month excluding revenue sharing commissions to telemarketers.

Since we are working with credit based data and modeled data, let us assume that the credit based data will conservatively convert 25% more qualified mortgagors than the modeled data. In other words, 25% more respondents will be qualified with the credit bureau data conservatively because it is scored to fit your loan programs.

Additionally, the Credit bureau database is more accurate so we can assume that it conservatively converts 20% more callers. What does this combined effect of more conversions and more qualified mortgagors do to the overall response on a 5,000 piece mailer and 2 week calling program?

Assume a conservative 1% call in rate for the modeled data and 1.2% (20% more) for the EQ data. Assume 10% closing ratio for modeled data and 12.5 (25% more) for the credit based data.

 

Results Matter

Based on our calculations previously, here are the results of the campaign:

50 Responding Leads Generated on the modeled data with 5 closings

60 Responding Leads Generated on the credit bureau data with 7 or 8 closings

The cost difference of data should be examined. 5,000 modeled records hypothetically would cost $450 while 5,000 EQ records would cost $1,250, a difference of $800.

For an additional cost of $800, we see conservatively 50% more loans or in this case 2 or 3 additional loans which yields anywhere from $3,000 - $10,000 in profits.

These numbers look even better for more expensive direct mail pieces since the relative cost % is not much on $1.09 / $1.25 verses a cheaper mailer of .45 / .60.

Telemarketing Insight

Calling campaigns are not as obvious to analyze since the quality of your telemarketer is directly related to the quality of your lead. Think of it like this - the better telemarketing agent, the better quality lead you should provide for the following reasons:

• Good TM's do not want to waste time on non-qualified clients whereas a new or non-performing TM may not be as conscious of the time they are spending with dead leads.

 

• TM's that perform consistently should be held to a higher standard for conversions and with no excuses about leads, they will not have off days or slow weeks..

 

• Good quality leads make telemarketers happier and for the most part, they will work harder to pull out good leads for your mortgage planners if they know the source of leads is consistently high quality.

Once a person shows proficiency with a weak lead, giving them stronger leads is the best way to retain their efforts and generate the most production.

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My intention here is to bring awareness to mortgage professionals of new ideas and current topics related to marketing. Please contact me with any questions and take care.

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