Why does the loan industry turn to online lead generation?

Janis Mara thinks that technology innovation in shrinking mortgage market is one of the reasons why the loan industry has to turn into online lead generation!

"The mortgage market is shrinking and more lenders and mortgage brokers are turning to online lead-generation services and automated systems to stay ahead of the curve."

What online channels and automated processes is the mortgage industry using to attract customers and streamline lending in a tightened market? As growth in consumer lending slows, mortgage companies are becoming more creative in pursuing business, experts say, and one of the avenues they're pursuing is online leads.

"As the market is shrinking, transaction volumes are going down, commissions are getting squeezed. It's a tougher market if you are a mortgage broker. That has made people get more creative and aggressive on how they are going to acquire new customers. We have seen this translate into a much larger adoption of the Internet lead category, both in the real estate side and the mortgage side."

HouseValues, which has four consumer Web sites, provides mortgage leads on its site TheLoanPage. Another major online mortgage lead generator is LendingTree. In 2005, Borrell Associates predicted the mortgage industry will shift marketing budgets to predominantly online channels by 2009, eclipsing total dollars spent on television, print and direct mail advertising. According to Borrell, the mortgage industry currently spends more than $22 billion annually on consumer marketing. Between December 2005 and April 2006, Akeroyd said, TheLoanPage has tripled the number of leads sold to lenders and mortgage brokers. In April, HouseValues raised its guidance as to the amount of money the company expects to make in the first quarter of 2006 based on better-than-expected progress in its mortgage business, as well as demand for its real estate marketing services. Bid4Mortgage, takes a different approach from that of established lead aggregation sites. Consumers can visit the site and choose a lender without revealing their identities. David Prouty, CEO and founder of Bid4Mortgage quotes that his company, established less than two months ago, is getting more and more attention from lenders every day. Amran Kahn, director of marketing for E-Loan, said he believes that mortgage industry professionals have been using technology to generate leads at low cost for some time, not just because of the shrinking market.

"When it comes to online marketing, it's not direct lenders such as Countrywide who are leading the charge. We feel E-Loan is at the forefront of competition with search-engine marketing."

Kahn said this type of marketing has been successful for his company in capturing leads. E-Loan has done so, he said, by leveraging technology to capture all the data and use it to its advantage. Thomas Borcich, owner of Bixby Knolls Mortgage in Long Beach, Calif., and state director for the California Association of Mortgage Brokers, is a big fan of customer relationship management software to keep brokers in touch with their customers.

"It allows you to track all your customers you have put in loans over the last five years so you can contact them regularly. The average customer refinances every three to five years, and if you have 1,000 clients in your database, 20% of them will refinance each year."

Borcich uses B.E.A.T. software that notifies you when six months have gone by without contacting a client and prompts, do you want to send thus and such message, or it can prompt you to call the client or send an e-mail or a letter. Another lead generation trick

"Number one: become a trusted advisor versus a loan hack."

He uses MortgageCoach that helps mortgage brokers work in concert with financial planners to help clients get a mortgage.