There have been some interesting posts lately about the lead exchange model. I felt it might be an entertaining topic, so entertaining that it may even be worth coming out from my long slumber to make another contribution. Firstly, I’ll try and give a little color to the background of the lead exchange as I understand it. Ultimately, there have only ever been a few lead exchanges in existence.

There is one relatively new attempt. The first lead exchange remains solvent, but has required numerous rounds of funding to do so. The second lead exchange which is now out of business, was started with a great deal of capital (from what I understand). Lewis Ranieri, who is now infamous in this industry as the father of the CDO (Collateralized Debt Obligation), contributed millions of his own funds on top of additional venture capital money that was raised to help start this company. Yet, today the company doesn’t exist. Why is one operating after raising a Series E round of funding while the other is insolvent? There are a number of contributing factors, but ultimately it is because the lead exchange model can’t work. There are two reasons why the model can’t work: the margins are too thin and the market does not need an exchange to operate. I will elaborate. Continue Reading

I am back after a little hiatus and many of you have been wonder where the only out spoken consumer advocate on the Internet has been. Well, I can only tell you that lead providers should beware! I have been on the prowl scouring the Internet for offensive behaviors. If you are out there foregoing the rights of the consumer please change your ways or I will find you and call you on it.

In the in the spirit of the NFL playoffs I am going to throw my first penalty flag at a specific lead generator for unnecessary roughness on the consumer. It is my opinion that there is a fine line of how many offers you can present to a consumer in one form and how many different types of leads you can generate from one consumer. A person fills out a mortgage form to receive quotes for a mortgage and that is it. Although a form may be able to present a few options for the consumer and possibly offer them credit repair solutions if applicable and of course only with their consent.

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Adteractive, admitting to no wrongdoing, settles with the FTC over questionable incentive-based lead generation. According to MediaPost Publications the inquiry by the FTC focused on Adteractive’s use of “free” incentive language in their Internet lead generation campaigns:

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We often banter, in marketing and sales, about delivering customer satisfaction or the WOW factor. What does that mean? Does it translate into real long-term success? My morning blog reading came across a post about the difference between the WOW and YUM.

It is a great way to frame the problem.
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Does anyone else find this ironic? (By no means scientific or authoritative, but ironic)

LowerMyBills’ Vendor Perspective:

LAS VEGAS, Sept. 21 /PRNewswire/ — TARGUSinfo honored LowerMyBills.com, an Experian company, yesterday with the Best in Lead Quality Award at the Online Lead Quality Summit here at the Palms Hotel and Casino. The Summit, sponsored by TARGUSinfo, is dedicated to helping companies drive profits through successful online lead generation and improved lead quality.

LowerMyBills’ Client Perspective:

Does anyone know how i can get out of my contract for lowermybills

It is in my 3rd week with them and probably over 75% have been d/c numbers, they say I have to be with them for 31 days before I can cancel and also after 31 days I have to send a letter of cancelation [sic] that takes another 31 days.

Hmmm…At the very least it demonstrates that long term, "lock-in" contracts are not trust or performance-based. And I am sure, what I am guessing to be a small account, is not threatening to impact LowerMyBills’ strategic media buy forward contracts.

Being a consumer advocate I am intrigued by the concept of advertising methodologies for social networks. I think there is grand opportunity to engage consumers more effectively within social networks.

Sales Happen with Good Conversations

Why do I think the opportunity is significant? Sales happen as the result of good conversations. And good conversation happen when you are an organic or invited part of them, not when you interrupt them.

So, then I think the answer to my next question is obvious. Do I think the advertising methodologies are the same (i.e., affiliates, display, search, etc.)? Certainly not and this goes to my ultimate question.

Does Social Network Advertising Scale?

Scaling Social Network Advertising

I guess my first reaction is frustratingly–No.

Sure, I can put up Facebook flyers and get a few clicks, or SmartHippo may refine the data I get from advertisers, and Mint may give me incremental incentives; but, nothing that inspires a lead generation platform company. Generally, I need to be a part of conversations within the network to ultimately be successful. Being a part of the conversation certainly yields me a higher conversion factor. Unfortunately, propagating good conversation does not intuitively scale.

As an individual advertiser, solving this problem is relatively easy. You simply need to release it beyond the confines of the marketing department. Your employees are already plugged into these communities. Let them have meaningful, lead generating conversations about their work.

But, how do you create a compelling advertising network or lead generation business plan out of this?

Lead Generation for Social Networks

Here are a few of the opportunities:

• Provide content

Most lead generation and advertising firms are loaded with content and content factories. Unfortunately, social networks and the groups that form within them are very typically starved for anything beyond idle, randomly valuable chatter. However, every community organizer knows the value of one or two respected members that provide well thought out, engaging, and relevant content. Be transparent and sponsor one or more of those roles.

• Provide interactive advertising games

Increasingly, with platforms like Facebook, simple, fun, and collaborative games are the rage. Sponsor or design one for your company and then release it to the wild. See Facebook Food Fight.

• Provide useful widgets

This is a great opportunity to sponsor functionality that many community organizers within a social network don’t have the capability to commission. And the big benefit is that it becomes an attractor for the community and the advertiser to get visitor loyalty and return. See Facebook Mortgage Calculator.

• Provide experts

Experts are the crown jewel of any community or social network. You ability to provide or sponsor that consensus, evolved, or sponsored expert into the conversation is again a community builder and traffic generator.

Now Scale Your Process

The key to gaining consumer inquiries from social networks is stop interrupting their conversations with your traditional methods and start building these communities to source you quality lead generating traffic.

Generate the leads from the sponsored traffic. If you become a trusted, valuable contributor to the network you will become the default provider of your service to community.

Tags: advertising, lead generation, social networks, social media, facebook, smarthippo, mint

First, and most obvious start doing it.

Stop whatever you are doing right now and look at your website or any marketing material you have laying around. Who are you talking to? If you have terms like IO, ARM, LIBOR, The Fed, or DTI you are talking to yourself. Throw it out and start over. Borrowers are in a complete state of confusion right now–don’t add to the noise.

Here are some immediate steps to help you gain trust with consumers and build a great consumer focused lead generation platform:

1. Start with a list of questions. What are the top 20 things prospects or clients ask you in the mortgage sales process?
2. Turn 5 of those questions into consumer presentations (PDF and make available for download)
3. Turn 5 of those questions into 5 consumer focused press releases (publish one every two weeks)
4. Turn 5 of those questions into an online consumer education center, with links to the other 5 downloadable presentations, and the 5 press releases
5. Turn 5 of those questions into blog posts

By the way, if you do mortgages in a local community plaster the city and State on everyone of these pieces of content and add social tags–you will own that corner of the Web for search on mortgage <your hometown>, <State>.

Have your friends, family, neighbors, and clients digg, reddit, stumbleupon, and delicious your content.

Write your success story below.

Tags: mortgage, marketing, lead generation, consumer

LendingTree does a nice job of explaining, in simple language, what is going on in the mortgage market. Is this the first step in building mortgage (lending) content directly for the consumer? C. D. Davies, LendingTree CEO and former President of Wachovia Mortgage, sits down in shirt sleeves for a very Web 2.0 style YouTube video.

This is one example, in a series, of consumer focused videos that seems to compliment a “press release glut” of consumer education content.Add to this a bit of industry comparison. Is LendingTree beginning to look

a little more like a lender

or a publisher

and less like a lead generation company?

Is this an example of an old line lead company beginning to put the consumer at the center of the mortgage transaction or positioning themselves to become the consumer’s “mortgage expert?”

BTW, did anyone notice that LendingTree misspelled mortgage in ALL of their YouTube tags and titles. I guess there are a couple of bugs to work out before they can become a true mortage mortgage expert.

Tags: lendingtree, quicken loans, lowermybills, bankrate, consumer, mortgage market

Looks like LowerMyBills and their too good to be true ads are pissing off everyone. As the new punching bags in the mortgage mess frenzy, it is LowerMyBills and Countrywide’s turn in the hot seat. During yet another report on deceptive lead generator ads Bob Sullivan (MSNBC) uncovers several LowerMyBills ads using an apparent endorsement from Oprah Winfrey.

"We were not aware of this unauthorized use of Oprah’s name and we have turned the matter over to counsel," said a spokeswoman, who asked that she not be named. "We have not endorsed this product."

LowerMyBills was mentioned in an Oprah Winfrey program earlier this year, but that reference had nothing to do with mortgages. Winfrey’s financial planning expert, Jean Chatzky, who also is the financial editor for NBC’s “Today” show, recommended that consumers struggling with debt look for lower-interest credit cards by comparing rates on Web sites like Bankrate.com or LowerMyBills.com.

And what lenders responded to the ad click-through?

Consumers who fill out the LowerMyBills advertisement by answering basic questions about their desired mortgage may encounter another familiar name at the end of the process. When MSNBC.com responded to the ad last week, a solicitation from Countrywide Financial Corp. arrived almost immediately.

Countrywide, the nation’s largest mortgage lender, is struggling financially as it deals with the fallout from just the kind of exotic, risky mortgages touted in the LowerMyBills advertisement.

It is interesting to watch the media transition so quickly from the lenders to the advertisers as the source of the grand mortgage implosion. Will the FTC, consumer advocate groups, and class action lawyers be next in line?

Tags: lowermybills, countrywide, oprah winfrey, lead generation

I wonder if mortgage companies and the tightly coupled lead generation companies have the guts to depart from the “Gigantic Lead Generating Contraption for Business-As-Usual?” What does that mean? What would it look like?

Glenn Kelman at Redfin has a proposal that seems like what a lot of us in the idustry have said, but few have had the guts to execute:

Our purpose is to use technology to put consumers in charge of buying or selling their home. This is the most valuable change we can offer the consumer. We hope that it can lead to our becoming the most valuable company in our industry.

Hats off to a leader in putting smart consumers in the drivers seat!

-Silence Dogood
telldogood@gmail.com

Wachovia wraps themselves in their warm cozy self-made blanket of innovation for their customers. Most recently, announcing a new podcast, full of drool economic psycho-babble with no words for real people.

This performance makes clear how Wachovia approaches Internet innovation and Internet consumers–slap Web lipstick on the old fat ugly pig.

Here is the real consumer kicker. Did you know? If you fill out one of their Web forms or one of the thousands of consumer inquiries they buy per month from lead providers you get slapped into some arbitrary loan officers email inbox?

That’s right, you get the same consideration as the viagra ads, the stalking boyfriend, mom’s latest chain letter to save their soul, and a flurry of jokes and stupid YouTube clips!

Where is the obligation to the consumer? Forget for a moment their stupidity in flushing marketing ROI down the toilet. Where is there respect for you–the consumer? We just gave you our personal info. How about a little consideration.

I am not a lead! I am a consumer with power! I think I will stop answering your haphazard phone calls and throw away your direct mail.

-Silence Dogood
silencedogood [at] gmail

Interesting thread that is beginning to evolve from the sports world, NBA specifically. Could movements, or more accurately the lack thereof, forecast trouble in darling of the mortgage industry–Quicken Loans?

According to Dan Gilbert’s email statement, reported in the Akron Beacon Journal, there is no linkage:

”There is zero connection between any current events in the mortgage markets with the strategy, tactics and payroll of the Cleveland Cavaliers,” Gilbert said in an e-mail message Monday.

But, some local bloggers are wondering otherwise. Their theory:

there has been a rumbling among Cleveland Cavalier fanatics that there might be a hidden reason why the Cavaliers have been so slow at re-signing free agents Anderson Varejao and Sasha Pavlovic or go after any other free agents.

Maybe we should look back and a little deeper at recent quicken mortgage news for more clues:

In this Detroit Free Press article, about how the mortgage squeeze will be good for Quicken, there is this statement:

Quicken has moved in recent weeks to cut costs, slow hiring and shift all its retail lending to “plain vanilla” very-low-risk loans, Gilbert said. But it has not laid off any workers and still expects to grow mortgage lending volume this year by about 10% to more than $20 billion.

Then take this statement from the longer version of the same Detroit Free Press article:

The firm currently has a backlog of about $100 million in unsold loans. “That sounds like a big number,” he said, “but it’s really not that significant to a company with a credit line of $2.5 billion.” His plan is to whittle the backlog gradually, rather than trying to dump all the loans on the market at a loss

Now do the math: $20 billion/365 days = ~$54,794,520 on a $2.5 billion credit line (assuming that you can draw 100%, which is never the case) that gives you just over 45 days of lending. And they are already behind $100 million or 2 days worth of lending.

Not to alarm anyone they seem to be making the right moves:

Quicken/Rock responded by shifting rapidly — in a week’s time — to make 100% of its loans the plain-vanilla type for sums less than $417,000 that are purchased by Fannie Mae and Freddie Mac, the congressionally chartered agencies that pool the loans for sale as mortgage-backed securities.

But can they make them fast enough?

One more thing. You have to love how fast the tip line begins to work (telldogood [at] gmail). I was tipped to look into whether or not the Quicken loan officers are getting paid or summarily fired??? And there seems to be some truth if you believe the comments here and more direct posts here.

Only time will tell. This is a real roller coaster ride for lenders and borrowers. Hang on to your hats!

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-Silence Dogood

Chris, smart and kind of cute in a close shaven head kind of way, what am I supposed to do with this post?

You are right it is a long list of closed mortgage companies, so what? Are you trying to depress me? Are you trying to freak out your customers that the implode-o-meter boogey man is around the corner?

Probably not.

What you probably meant to say was that all of these companies have something in common–they didn’t respect the trusted relationship a customer gave them.

The formula for an imploded mortgage company is simple and predictable:

1. Show a lack of respect for the consumer
2. Turn and burn them into whatever program makes YOU the most
3. Get them off the phone so you can do this as many times as possible
4. Throw them on a warehouse (credit) line (held for sale)
5. Mix in the studs and duds and unload them quickly to the investor
6. Wait 6 to 18 months and mix in a nice size rate increase
7. Watch borrowers and loans pop like Jiffy Pop in the investors’ portfolio
8. Institutional investors sell their MBS
9. Warehouse lenders roll up their credit lines
10. Investors (loan buyers) shove back avalanches of bad loans
11. Watch lenders and brokers go pop like Jiffy Pop

It all starts with respecting the consumer! Did you call to check on me today? Should I be nervous about that option ARM you gave me last fall?

-Silence Dogood

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Hi, I would like to introduce myself as Silence Dogood! Yes, I am obviously the namesake of the slightly prudish widow of Poor Richard’s Almanac. I felt obligated, having observed this market for numerous years, to wade in where there lacked a fair representation of the fairer (and notably smarter) sex and an advocate for the poor and downtrodden Internet consumer.

Enough introduction. You will grow to know, love, and perhaps even fear my pen a bit in the coming months. Therefore, I think it is only fair to warn those who will come under my wrath and those who will receive my fair praise…This is my mantra:

“I am a mortal enemy to arbitrary consumer thrashing and unlimited power to lead providers”

And since a proper lady does not herself wade into the muck and mire of Internet consumer lead “gin” feel free to reveal those who deserve the mighty pen: telldogood [at] gmail

-Silence Dogood

“He that is good for making excuses is seldom good for anything else.”
Benjamin Franklin