Written by Brad Dawson
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Loan modification leads and loan modification marketing is something of a new industry. Born in the last couple of years, it has grown at a staggering rate since 2006.  I don’t know if any official number exists regarding the overall size of the industry, but 100% growth year over year up to the end of 2008 is probably a reasonable estimate.  Every mortgage broker that realized their business was going to be much tougher for the foreseeable future thought that loan modifications would assuage their worries and keep the doors open. Many of them learned quickly that a modification is not a re-finance and the dynamics of the loan modification deal are very different. Along with this phenomenal growth came political pressure from just about every angle of our government that nearly destroyed an industry that has, and still has the potential to offer tremendous benefit to the American consumer. There has been so much written about the loan modification process that I could spend a considerable amount of time covering it.  We’ll leave the mechanics of a loan mod for a different time; I am going to spend time writing about the marketing for loan modifications here in this blog.

There are basically three types of leads for loan modifications: Live leads where a call is generated and sent over to a sales person to close up the deal; Opt-In web leads where a home owner has intentionally placed their name and asked to be contacted; and leads generated from a list for direct mail and cold calling. I want to make sure I stress that we can deliver all three types, but for the purpose of this article we are going to spend our time concentrating on finding deals using a dialer and direct mail.   

If you are an experienced marketing professional you can probably skip down to the bottom of this and have a quick look at the criteria section. You should be able to take a look and determine pretty quickly that we’ve got the real deal. If you are not a marketing professional you should probably read below about finding your deals using a dialer and direct mail. Most individual companies who are responsible for their own marketing are going to use one or the other, if not both. 

I should probably throw in a special note to the marketing companies generating leads for their attorney clients.  The modification processing is dominated by attorneys, yet most state Bars expressly prohibit attorneys from soliciting this business. As federal and state governments have played a heavy hand in this industry, attorneys have hired front end marketing companies to find prospects. If you are an attorney or marketing for an attorney please just give me a call.  You already understand your needs and our conversation will focus mainly on complying with the Bar requirements for your particular state.

Successful loan modification marketing starts with the right data.  There are two basic types of data: Public NOD (county recorded data or some derivative of it) and credit bureau data from one of the 3 major credit bureaus. They are very different in scope and understanding the difference is very basic but central to getting outstanding results on your marketing campaign.  

Public Record Data (NOD ‘Notice of Default’ and NTS ‘Notice of Trustee Sale’) generally relies on feeds from county recorders and is batched up and available on a daily or weekly basis. The big drawback to public record marketing lists is that there is no real way to find people before the notice of default or notice of sale is filed.  If you have spent some time in the business you already understand that public record data is a losing strategy even though people continue to use it.  

Credit bureau data utilizing a real time soft inquiry offers a robust solution for greater flexibility when looking for short sale prospects. There is one driving factor that makes this data type extremely successful – the database is not part of the public record and we can get your mailer there before the NOD or NTS has been filed.  By targeting the reporting state of the late mortgage (30, 60, 90, 120+days), loan amount, and lender name (just as an example), we can have your offers arrive prior to any set foreclosure date or before the notice has even been filed.

Criteria Summary:  Here is a quick breakdown of reasons why we filter the way we do:

1. Credit Score 300-850 - This data is included - it’s not of paramount importance but is part of the data set.  You can pull a tighter credit range if you prefer.  Most late mortgagors will be under 700.
2. Number of Open Mortgage Trades - This is important for a couple of reasons, and helps to determine what kind of deals we are going after.  In most cases we are going be looking for single lien data, as it’s easier to modify a single lien than to try and deal with two lenders.  The junior lien is usually in a difficult situation; if the mortgage goes to a trustee sale they are wiped out and have no interest in the property so they tend to be a more cooperative than the primary lien holder.
3. Current Mortgage Balance – The current mortgage balance is one of the most important factors when we look at the data set.  I’ll usually look for balances in excess of 150,000.  The point of doing this is finding people who can afford to pay for the loan modification service.  The folks with the sub 100k mortgages are still in need of help but generally don’t have enough to cover the attorney’s fee.  If you have a special niche and have the ability help these people I would love to hear from you.  It’s an unfortunate economical reality that the sub 100k mortgage crowd has not been serviced like the higher balance crowd.  
4. Most Recent Mortgage Payment Amount - The same principal applies here with the current mortgage payment.  We can screen by the mortgage payment and we occasionally do.  We will do this when we are trying to match the mortgage payment to the service fee.    For example:  If you charge 1500$ for the modification we can look for people with a minimum mortgage payment of 1500$.  
5. Days Late (30, 60, 90, 120, 150, 180 days) – This is where we make the decision on how late to go for your particular market.  The decision will depend partly on the foreclosure statutes for your state, whether your state’s process is judicial or the power of sale is written into the trust deed and no court involvement is required.  In most non-judicial states the decision to start the foreclosure process is left to the beneficiary (lender).  Over the duration of this economic cycle the interval of which we screen for days late have changed.  When this cycle started we had our best results screening for 30 & 60 days late.  We needed to beat the competition and be the first arrive on the door step.  This changed almost overnight when our government told the county that a loan mod should be free and servicers were mandated to comply with federal loan modification guidelines.  This was a monumental shift, and the change in consumer behavior was immediate.  At that time we pushed back the days late to 90 & 120 days late. We had to wait for home owners to experience gross incompetence of their servicer and lender, and it was not until they were about to lose their home that they agreed to pay for professional help when they realized their government and lender were not going to help.  The marketing winds have blown back in the direction of getting there early.  There is enough consumer awareness now that their lender or servicer is not going to help and they are better off getting immediate professional help.  I’m writing this in July 2010 and we are back to screening early.  I want to make a special mention here that our clients were not left holding the bag when the shift occurred. We were ready for the change and our clients kept their pipelines full!

The mail piece:

This would normally be the section where we talk about the various types of mail pieces we can send.   For loan mods we can summarize this quickly.  Envelopes and post cards are a waste of money and time.  The only thing working is the snap pack, or self sealing mailer.  The snap pack gives the ‘official’ feel and conveys an impression of a large institution. 

The Mail Piece Generally Needs to Convey a Message That Addresses 3 Points:

1. First, that you or your business has a good deal of experience handling this type of transaction and the customer is dealing with a safe pair of hands.
2. Second, if you are local, we want to stress that you are local and you can meet with them face-to-face to discuss how to best solve their problem.  If you are a large institution, we are going to do the opposite by drawing attention to your size and national reach to get their deal done. 
3. Third, and perhaps most important - we need to let the recipient know that you understand this current situation is not their fault.  Whether it’s true or not, empathy should come across in your mail piece. Building as much trust as possible is paramount on the mailer.  We have to remember that everything these people have been told over the last couple of years could very likely have been a scam type of situation, leaving a negative taste in their mouth.  It’s unfortunate what the media and our government have done to create such a climate of suspicion, but that’s the world we live in so we just need to be smart about what we do and the deals will happen. 

Building as much trust as possible is paramount on the mailer.  We have to remember that everything these people have been told over the last couple of years is that people who approach them offering to help are scammers who are trying to screw them to the wood.  It’s really unfortunate what the media and our government have done to create such a climate of suspicion but that’s the world we live in, we just need to be smart about what we do and the deals will happen.

Cold calling:

We can use the same criteria that we described above to create a calling list that can be loaded into a dialer. The list is a great way to reach short sale prospects. If you are a cold calling animal and can make deals happen this way you already know the game - your success depends on the number of qualified conversations you can have in a single day.  Just call me and we’ll get the list put together.

Summary:

For the people who are new and doing their research, this should be enough to get you asking the right questions. If you are not new to short sale marketing, this should be enough to show that we know what we are doing and some of your experience should match with some of the things we have said. 

We have a wide variety of products to help you find loan mod prospects; this particular blog is only focused on using soft inquiry credit data for mailing and cold calling. The next entry here will be about using opt-in data to find loan modification prospects, which I urge you to read.

If you like what you have read here give me a call or drop me an email

Brad Dawson
888 818 3282 x 236
Brad@blackbookdata.com