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Even today they exist, and even today, they illegally spam. Lead brokers. Giant telemarketing operations that sell (and resell) data of dubious quality to mortgage brokers who then pass it down to their originators. Mortgage lead companies are ultra-middlemen–selling stuff to the middlemen mortgage brokers (and yes, bankers) the names of customers that have been bothered at home and basically, haven’t hung up. Lead companies still exist, they are still scum, and they are like the financial equivalent of fast food companies: you can’t argue with their right to exist, but they make the country a worse place.
The lead brokers happened upon a technique that–with minimal skill, care and effort, people’s worthless home equity could be magically transformed into valuable brokerage fees. They could start the boiler room process, paying people very little, and ship loads of “lukewarm” leads to mortgage brokers. Leads really harmed things by transforming the culture of the industry from abundance to scarcity.
Someone starts a business as a mortgage broker to help serve their community, to help fill a need, and to offer their expertise in lending to their customers. Noble, good. They figure if we build it…they will come. But then the fax comes up with faxes offering free mortgage leads. These leads don’t require the same attention to detail, care, or service than local customers that they might bump into at the grocery store. It doesn’t matter if you “slam dunk,” someone that’s a lead, so you learn that you can get ‘em for all you can.
The March to Scarcity
Fees go up, so the broker orders more, and so the meth addiction starts. No longer interested in being part of the local scene, the broker that wanted to do it better is corrupted by the cheap dollars. Local accountability is removed from the process, so it doesn’t matter what you charge. Instead of working with local Realtors, the relationship that brokers have becomes adversarial (Here, the classic: “Why do you care what I make rears,” its familiar head). The shortcut path promotes a mentality that you must wring ALL YOU CAN from the limited supply of leads. You’re not building a business, you’re closing people on deals.
So the race to the bottom continues. Nobody forced the brokers to take the leads, just like nobody forces people to go into a pawn shop. The practice should be legal. But it doesn’t make it any less scummy.
And the beat goes on. A worse variant of these leads exists though. Trigger leads.
Trigger Leads: Credit Repositories are Buckets of Filth.
Any human being that sold, bought, called on or profited from these foul little slips of paper has irrevocably and permanently ceded the moral high ground in every disagreement that they may have at any point in their lives. Trigger leads work like this: A mortgage company pulls credit on a customer with their permission. That same credit file is then resold by the credit bureau to one or many different mortgage companies because the customer didn’t opt out at www.optoutprescreen.com. That the credit bureau have any credibility left after having resold consumer data is unfathomable to me.
Who would think the credit companies would be able to sell information about you–your score, your phone number, and the fact that you’ve applied for a mortgage in 24 hours? Who would opt IN to such a list? This is nothing more than institutionalized identity theft, and another thing that created false urgency, and rewarded perverse behaviors. The credit bureaus sold this again to lead companies (and in some cases mortgage companies directly), and customers complaine about getting 10-20 calls in a day regarding their mortgage.
Brokers with the “everyone’s doin’ it” mentality should immediately and permanently exit the industry. You’ve received stolen information, permitted the credit bureaus to cannibalize our industry by profiting from a scuzzy, repugnant and sick business practice. Please leave the industry now, and go back to selling vinyl products to senior citizens.
Chris Johnson points the finger at someone new each Monday. When he’s not tilting at windmills he runs the Ten Day Team at First Ohio Home Finance in Columbus Ohio. chris@tendayteam.com for more details.
EXACTLY! Distant borrowers don’t get the same level of service as do borrowers from the same locality as the loan officer - especially borrowers who were referred by a valued referral source (Realtor, past customer, etc.) That’s why intelligent borrowers generally don’t get a loan from a distant loan officer they found on the internet or after having been targeted by marketing from a distant mortgage company. Good attorneys, CPA’s, physicians. financial planners - heck, auto mechanics - don’t come by their business by advertising on the internet, telemarketing, spamming or by “buying leads”. They get their business based upon their reputation for top-quality service. That’s why people successful in those fields use local mortgage loan officers with a reputation for top-quality service. By and large, people who look to the internet or a 1-800 # for a mortgage loan are suckers. For every one who gets a good deal with good service, there are many more who are treated merely as “marks” by inexperienced boiler-room loan hacks.
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