Magazine article Mortgage Banking

Boardroom View

Magazine article Mortgage Banking

Boardroom View

Article excerpt

BOARDROOM VIEW

Countrywide Funding Corporation, Pasadena, is experimenting with some new approaches to help generate mortgage business. A special unit has been set up to market mortgages directly to customers without relying on the traditional Realtor/builder network.

Sidney Lenz has been charged with leading this innovative division and she says the unit has been producing $15 million a month in originations. Lenz, an executive vice president with the Pasadena-based mortgage lender, outlined the variety of different approaches her unit is testing to bring in this new business for Countrywide. She divulged some of the results they have achieved so far at a seminar recently in Chicago called Communicating for Profits sponsored by the Mortgage Bankers Association.

Lenz launched into the discussion by first emphasizing that today this type of direct consumer approach represents only a secondary supplement to what is still the primary source of business - Realtors.

However, Lenz told the audience that the long-range plan calls for the mortgage volume from the direct consumer division to ultimately equal originations produced by the retail division. For the would-be skeptics in the audience, she noted that even Countrywide's wholesale business struggled in the very beginning with slow growth, but now that unit produces roughly half the volume of the retail business.

The type of business that this new venture produces has appealing characteristics. Lenz said her unit's originations have been 90 to 95 percent conventional business, with an average loan amount that is slightly higher than that brought in through other sources.

Market research appears to be a necessary precondition to carrying out a direct consumer media approach that has a good chance at succeeding. She emphasized this by noting that in some markets, consumers rely almost exclusively on what their broker tells them in terms of getting financing. She said that the Nevada market is such an example. Countrywide's research shows that direct consumer advertising in Nevada would almost certainly be wasted because that market is "100 percent Realtor-driven." By contrast, Lenz said, the Long Island market is almost completely controlled by individual consumers deciding which mortgage lender to use.

Countrywide's direct consumer division, in general, decided to go only with national advertising mediums in targeting the 49 states where it wants to generate business, Lenz said. Two vehicles that reach that audience are the Wall Street Journal and USA Today, she added. Those two publications tend to generate jumbo loan customers and consumers looking for creative financing, she said.

Another publication that has generated good business results for Countrywide, Lenz said, is Money magazine. Lenz pointed out that there is even a vehicle in that magazine for getting free publicity. HSH is a company that regularly tracks and prints a list of mortgage lenders' rates, and that listing appears in Money magazine. Lenz said that even though Countrywide is not among the most aggressive on rates - it tends to be in the middle with its pricing - that HSH listing generates phone calls for the lender.

Lenz offered some tips on what lenders should emphasize in any advertising they do. She said, "We can advertise service all day long and we are throwing our money away. It's rates [that matter] in advertising." She also told the audience that to make your advertising effective, you should never quote rates with more than 2 points or you will discourage business. …

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