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There are several essential metrics that must be considered when determining where to spend valuable marketing dollars. The acceptable cost per funded loan depends on where one sits in the organizational chart and how much of a stakeholder is the long-term growth of the company. Successful lead generation firms are aware of this and for this reason their products are designed to cater to different segments of the mortgage professional population.
A mortgage banker will seek to increase volume and may tolerate slimmer margins, immediately seeing the benefit of increasing overall lead volume. Costs of $400 to $700 per loan financed are acceptable and very profitable, as the bank will receive revenue from loans originated in more than one way.
There are many different ways to market a reverse mortgage. However, they fall into two basic categories: 1.) waiting for the qualified senior homeowner to walk in your door and request a product from you or 2.) market to the target demographic in a clear and informative way and let them know the product is available Is.
Waiting in the office for hot referrals: Lowest cost per loan financed
The easiest way is to rely on warm referrals from previous customers. In the reverse mortgage industry this would simply be waiting for someone who previously had a reverse mortgage to move the home to a friend or family member and extend the properties to a recently obtained FHA HECM or private equity loan. For.
Ideally, they will have excellent comments to share about the loan company as well as the benefits of the loan itself. In this scenario the cost per financed loan is almost zero and the profit margin associated with the loan is high. The downside of relying solely on these types of warm referrals, especially for growth-oriented firms, is easy to see.
First, senior homeowners keep financial matters private and may not discuss financial matters openly. Second, for many seniors, their personal network of trusted people is shrinking as opposed to growing each year. Third, reverse mortgages have been available in one form or another for decades, and prior to the huge increase in home values associated with the real estate bubble, which significantly reduced the loan-to-value of many properties and increased available equity, very few loans was done when it was the primary means of communication.
A quick trip to the FHA website or a review of the year-to-date figures reveals that this is undeniable.
Marketing Program: Growth-Oriented Referral
Growth-oriented firms, especially those that have an exit strategy that involves being bought by a larger firm or group of investors, will need more than just walk-ins to build their businesses. Even large banks and financial institutions heavily market to the communities their agents serve.
Anyone familiar with the reverse mortgage industry understands that a key feature of a business plan is the eventual sale of a business unit or portfolio. The home equity conversion mortgage and the portfolio developed by Fannie Mae HomeKeeper originators have a value in the securities market that exceeds many traditional mortgage products, because the loan itself is insured by the government to protect the lender and homeowner.
Marketing represents a business expense and as long as the revenue exceeds the cash outlay or debt obligation, the result is positive. Marketing is one of the key components of any successful business and marketing significantly affects the performance potential of the sales force.
Reverse mortgage firms with 15 or more agents on a daily basis need to ensure that their agents are supplied with a steady stream of leads for frequent follow-up and are informed about the future performance of their sales force. Guessing would be required. A sales force without leads is doomed. The sales force with Leeds has an opportunity. And, a company that has lower costs per loan financed is more profitable.
Target states affect the cost per loan financed:
Not all states are created equal when it comes to reverse mortgages. States like North Carolina have very little competition, while California, which has the most reverse mortgage transactions, has the most competition. Recent changes in the traditional mortgage market and the pending financial crisis the Federal Reserve has been working to address have made it very difficult to operate in high-volume states, due to substantial changes in assessed property values.
The challenges faced by the brokers and lenders are also faced by the lead generation companies they use and the prices are set accordingly. A lead in North Carolina or Georgia will cost less because marketing firms will need to spend less to produce the type of lead product the customer needs. Leads in California or Maryland, on the other hand, would require more marketing efforts to produce. In California, the cost per financed loan can easily be $800, while in North Carolina or Idaho the cost per financed loan can be as low as $400.
If your firm has the ability to serve multiple states at the same time, it’s a good idea to spread marketing spending across states in such a way that the total cost of your major event can be balanced against known factors, such as Penetration by market: size, new market opportunity, average available equity for eligible homeowners, lending limits, and state legislative requirements.
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