October was definitely a month for brokers to vent to me. Some have stopped using Internet leads all together. Their stories all seem to have one common element. Customers have been hounded to the point they no longer want to speak to a broker. This leads me to my frustration and our overall expectations with respect to Internet leads. Are brokers expecting too much with the ever shrinking origination volumes? The chart below shows the story. The later part of 2006 and all of 2007 have seen origination volumes significantly decrease.



So what does this mean for Internet lead companies; less available inventory. It's that simple. We cannot expect the lead company to have the same volume of leads they did last year or the last six months for that matter. I think we have to take a hard look at a lead company and its operations and come to grips with some realities. Each day the lead company spends thousands on advertising to generate their leads. There obviously needs to be an effective return on these advertising dollars. So here is the million dollar question. If their lead prices are not increasing and they are still able to provide the same volume of leads and can guarantee that the consumer will only receive 3-4 telephone calls, you need to ask them how this is possible. It is getting extremely difficult to cost effectively generate mortgage leads online. If a lead company is telling you their lead prices are going up that is the reason and we have to accept the reality if we want to continue to purchase Internet leads. Each lead company is going after the same customer and there are incremental costs to capture that ever shrinking customer base. The lead buyer needs to bare that cost otherwise more and more lead companies will be getting out of the business.

Have you received e-mails regarding "Free Leads" lately? Like the saying goes.... If it looks too good to be true! One cannot go one day without reading about yet another mortgage company or broker getting out of the business. With so many of the larger players either filing for bankruptcy or significantly changing their lending criteria we are seeing applications of the non-prime customer not being accepted.
For the lead companies what this means is the inability to resell the leads they generated and paid marketing dollars for. Most genuine lead companies generate their online leads through the following sources:

1. SEO or search engine optimization of their site
2. Working with affiliate partners, other websites that will place their banners or send out e-mails in exchange for remuneration if someone clicks on the ad or completes the lead form
3. Pay per click advertising

Many lead companies are unable to filter their marketing dollars to attract prime credit internet customers. What this means is each day leads are going unsold. As the industry further realigns itself the cost of mortgage leads to the lead companies will further increase. So how can a company afford to give away leads for FREE? The answer is they can't. It is a common ploy to get you to try them out, some in fact will send you good “free” leads and THEN once you sign a contract they will be happy to flood you with bad lead as part of the mix. At that point you’re on the hook for the full contract amount.
We encourage you to read some of the articles on this Blog to learn more about lead generation and what a true lead generation company does how they generate leads and how they make money. Knowing this will give you a greater appreciation of why mortgage leads are going up in price and not the opposite.

Ok we’re well into the summer and in about 6 weeks the kids are back from camp and ready for another year of school and the parents will settle back into their routines. What are we doing to prepare. It is really difficult tying folks down over the summer. It seems there is always something distracting us. One company I spoke to sends out cards with vacation themes to its prospects simply stating, " I hope you are enjoying your summer and look forward to reviewing your information you sent us. I will give you a call the week of (-----) so we can start working on a financial solution that best meets your needs.

Another company has had success with a vacation photo contest. Potential customer are asked to e-mail their funniest vacation photo and winners are announced on the company website.

The point I am making is that the summer should not be a time to find excuses. One loan officer as she stated, "Hey if my phone is not ringing and nobody is returning my calls, I will go to them". She is sponsoring a table at her pools swim meets. What a ridiculous idea right? Wrong, the table costs $125.00 for each meet 4 weeks into it and she had three deals and the real kicker is that she went through 1000 business cards

Did you ever wonder what happened to the days when a loan officer walked into the office and there were 10 Internet leads waiting for him/her to call? Well those days are gone. I have spoken to several brokers over the past 60 days who tell me of a re-occurring problem they are having with their younger loan officers; they have made a good chunk of change over the past 5 years and are now resting on their laurels. Depending on their compensation program that may be ok since they are only getting paid for funded deals. On the other hand it sends a bad message to the other loan officers who are coming in the office and hitting the phones. There are hidden jewels in old internet leads. One company I know in particular requires their loan officers to make 50 calls a day to old internet leads and closing them. Face it, you paid for them and we all know that consumer circumstances change from month to month. Loan officers should be using every available resource to drum up new business. This included hitting the phones. The industry has gotten lazy to a certain point and it will be the loan officers that change their mentality who will intimately survive.