This is one I did for the St Paul Real Estate Blog.
"These are the new leads. These are the Glengarry leads. To you, these are gold; you do not get these. Because to give them to you would be throwing them away."
Any independent REALTOR or mortgage broker will tell you that getting new customers takes up a lot of their time. They come from friends, referrals, and a vast network of people who know the REALTOR is hard working and honest. It's all about personal reputation and the ability to deliver the desired service.
Large companies do not work that way. They require a constant feed of "leads", or potential customers, from a complex network of contractors and lead vendors. As this is constantly being refined, the market for mortgages is changing for everyone.
It all starts with ads that you might have seen. One series has dancing figures celebrating the fact that they were finally able to get a mortgage! Like any mass marketing, it begins with excitement and eye-catching appeal. Other ads proclaim that "When banks compete, you win!" The excitement of somehow beating the system is another way of generating excitement.
When you click through these ads, you get to sites such as nextag and lowermybills. They are basically the same, in that in both cases you enter a lot of personal information and they promise you that up to four mortgage companies will be with you very shortly.
From there, these "leads" are sold off to four different places. About half of them are mortgage banks and vendors, with the other half being "lead incubators" such as Mosthome. The latter checks out the leads and puts them into appropriate categories such as "prime" or "subprime" so that they can be sent to the right people in a larger operation. These leads are sold for upwards of $15 each for a purchase loan, and $30 for a refinance (which requires more work).
You can imagine that after paying that much for a lead, the banks in question will be aggressive in tracking them down. The competition is intense, especially to be the first one to call. Some of the operations that call you are large, and some are regional brokers based in your area. What they all have in common is that they rely on this system to serve up ready customers, and they have paid quite a bit for it. They cannot afford to let these leads simply slip away.
From this point? I can't say. I don't know anyone who has found a mortgage broker this way. I would love to hear from anyone who can speak to the final product. All I can say is that I am suspicious, given how it all begins.
The system starts out in such an impersonal way, with a large centralized database. It winds up sending out leads to the highest bidder, which generally are not going to be independent mortgage brokers. The main points of competition are speed and price - and not whether a mortgage is the best one for the customer. The internet and these "lead vendors" are shifting the market more and more to a less personal kind of service than you can get from an independent mortgage broker.
"If you can't play in the man's game, you can't close them, you go home and tell your wife your troubles. Because only one thing counts in this life: get them to sign on the line which is dotted."