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Everything we know about the lead business from everyone at the Leads360 family. From online lead providers like LowerMyBills.com to Mortgage Lead Management best practices. We'll tell you what we know and what we've learned.  

Accounting Firms Under Fire For Role In Mortgage Mess

No one who has been paying attention to the mortgage implosion would be surprised by today’s New York Times article about KPMG.  Accounting firms have clearly been complicit in allowing lenders and banks to mask the risks of mortgage packages and mortgage-backed securities.  But, this is nothing new.  As we saw with Enron, WorldCom, and myriad other examples of corporate malfeasance, accounting firms often act in the interest of the current management of a company, rather than in the interest of long-term shareholders, employees, or even common sense.

Here are some highlights:

KPMG, one of the Big Four accounting firms, endorsed a move by New Century Financial, a failed mortgage company, to change its accounting practices in a way that allowed the lender to report a profit, rather than a loss, at the height of the housing boom, an independent report commissioned by a division of the Justice Department concluded.

The 580-page report documents how New Century lowered its reserves for loans that investors were forcing it to buy back even as such repurchases were surging. Had it not changed its accounting, the company would have reported a loss rather a profit in the second half of 2006. The company first acknowledged that its accounting was wrong in February 2007 and sought bankruptcy protection less than two months later as its lenders stopped doing business with it.

The profit was important because it allowed executives to earn bonuses and convince Wall Street that it was in fine shape financially when in fact its business was coming apart, the report contended. But the report stopped short of saying that the company “engaged in earnings management or manipulation, although its accounting irregularities almost always resulted in increased earnings.”

Read the whole story here.

What do you need to know about Lead Mangement Software?


We live and breathe lead management but we often run into prospects and partners that seem a little lost when they try to get their heads wrapped around what we do. It’s not their fault. Lead Management is still a new world and the basic concepts are just starting to get some mainstream business penetration. Leads360′s own Noel Collins has written his first post in a multi-part series explaining how to evaluate a Lead Management Software or Solution. Please visit Lead Critic to check it out.

NOW OPEN FOR BUSINESS: FHA Conforming Loan Amount Limit Increase

People, you heard it here first, okay maybe second, or third, but you heard it here nonetheless. As of now, you should be marketing to all of the old leads in your database so you can capture business that you missed out on in the past. There are strategies to make you successful doing this, they are called Best Practices, and we would like to share them with you.

I like to call times like this “Found Money” times. There is found money sitting in the lead manager of every mortgage company out there, no matter what kind of system you use. Whether there is a stack of old leads piled up in a filing cabinet, or whether you are using the best and most sophisticated lead management system on the market, if you play your cards right, you will come out with a BIG W.

Below is a table of new FHA limits. Take a look at it, then get to work. If you need help, just ask.

County Median Home Price New FHA Limit
Alameda County $995,000 $729,750
Alpine County $438,000 $547,500
Amador County $355,000 $443,750
Butte County $320,000 $400,000
Calaveras County $370,000 $462,500
Colusa County $318,000 $397,500
Contra Costa County $995,000 $729,750
Del Norte County $249,000 $311,250
El Dorado County $464,000 $580,000
Fresno County $305,000 $381,250
Glenn County $230,000 $287,500
Humboldt County $315,000 $393,750
Imperial County $260,000 $325,000
Inyo County $350,000 $437,500
Kern County $295,000 $368,750
Kings County $260,000 $325,000
Lake County $321,000 $401,250
Lassen County $200,000 $271,050
Los Angeles County $710,000 $729,750
Madera County $340,000 $425,000
Marin County $995,000 $729,750
Mariposa County $330,000 $412,500
Mendocino County $410,000 $512,500
Merced County $378,000 $472,500
Modoc County $125,000 $271,050
Mono County $370,000 $462,500
Monterey County $599,000 $729,750
Napa County $615,000 $729,750
Nevada County $450,000 $562,500
Orange County $710,000 $729,750
Placer County $464,000 $580,000
Plumas County $328,000 $410,000
Riverside County $400,000 $500,000
Sacramento County $464,000 $580,000
San Benito County $790,000 $729,750
San Bernardino County $400,000 $500,000
San Diego County $558,000 $697,500
San Francisco County $995,000 $729,750
San Joaquin County $391,000 $488,750
San Luis Obispo County $550,000 $687,500
San Mateo County $995,000 $729,750
Santa Barbara County $615,000 $729,750
Santa Clara County $790,000 $729,750
Santa Cruz County $719,000 $729,750
Shasta County $339,000 $423,750
Sierra County $228,000 $285,000
Siskiyou County $235,000 $293,750
Solano County $446,000 $557,500
Sonoma County $530,000 $662,500
Stanislaus County $339,000 $423,750
Sutter County $340,000 $425,000
Tehama County $250,000 $312,500
Trinity County $200,000 271050
Tulare County $260,000 $325,000
Tuolumne County $350,000 $437,500
Ventura County $599,000 $729,750
Yolo County $464,000 $580,000
Yuba County $340,000 $425,000

The Conversion Conundrum

When dealing with internet generated mortgage leads, the typical agreed upon conversion rate is between 1.5% - 2%. At this rate you can and should be profitable. Of course we’ve seen many clients that are converting much lower and we’ve seen some that convert quite a bit higher. One of the unique aspects of internet leads, in particular mortgage, is that they are often generated once and sold 3-4 times. This is pretty typical and widely accepted by the market. This practice however is the root of what I call the conversion conundrum. That is, even though the industry average for a mortgage lender to convert an internet lead is 1.5% - 2%, the actual average conversion rate of an internet consumer is actually 4.5% - 4.75%. That’s a 2-3% spread in the conversion rate. The reason for that is if a consumer goes online and submits their information as a lead to LowerMyBills.com for example. That lead is then sold to 4 mortgage lenders. Only one of those four companies can actually close that lead and if you calculate the conversion rate across all four lenders, it comes out to about 1.5% - 2%. But, when you calculate the actual conversion rate of that consumer, not taking into account which lender they chose, the internet consumer actually converts at about 4.5% - 4.75%. Interesting right?

Let me put it another way. If there is a 3% gap between conversion rates as I described above, what does a lender have to do to access that increase in conversion? That 3% is won purely by the behavior of the lender. In other words, the difference between the 1.5% and the 4.5% is the activity that a lender does when they get a lead. It’s about how fast they call that lead and how many times they follow-up.  It’s about what offers they give, what the loan officer says on the phone and so on. It’s all about the behavior of the lender after the lead has been given to them. That’s 100% controlled by the lender, not by the quality of the lead. So if a lender wants to reap the spread, they need to improve the behavior. That’s where we come in. We give our clients the tools and the training to get that extra 3% conversion and squeeze out the competition.

So, when we talk to mortgage lenders about conversion, and that’s really all they care about, we typically say shoot for 1.5% - 2%. But now, we tell them there is a 3% conversion spread just waiting to be grabbed. It’s all about what they do with the lead and we’re here to help them do it.

Internet Ad Spending Boom Continues. Will There Be Lead Provider Fallout?

TechCrunch points us to more news about the growth of internet advertising:

Two reports are out today on the size of the Internet advertising market. The Interactive Advertising Bureau has a preliminary estimate of $21.1 billion for U.S. Internet ads in 2007, a 25 percent increase over 2006. (For the fourth quarter of 2007, it is estimating $5.7 billion for the size of the industry, up from $5.2 billion in the third quarter).

Meanwhile, the Kelsey Group puts U.S. Internet advertising at $22.5 billion for 2007 (IDC, as previously reported, is at the high end with $25.5 billion). Click here to read more.

Many lead providers, like LowerMyBills and Adchemy, rely on mainstream internet advertising, primarily Pay-Per-Click and Banner Ads, and these mediums will become increasingly expensive in the future.  However, ad-heavy lead providers are already experts in optimizing the media and may have enduring advantages into the future as other industries and advertisers start stepping into their space.  Others, like LendingTree, that rely heavily on traditional advertising, may benefit from the migration to internet media by other traditional advertisers.  SEO-focused lead providers are relatively unaffected by this continuing shift in the internet advertising landscape.

ZipSearch! Podcast: All About Lead Management

Leads360 CEO Jeff Solomon recently joined David Schneider, founder of ZipSearch!, and Mike Ferree, founder of LeadCritic.com and Marketing Guru at ZipSearch!, for a great podcast about the benefits of using a Lead Management System.

Lead Generation companies like ZipSearch! are increasingly pushing their clients to use Lead Managment technology to get the most from their leads. You have heard it all from us before but it’s nice to get the perspective from the Lead Generation side. We look forward to future installments in this series.

You can find the podcast with Jeff on the frontpage of ZipSearch.com this week, and it will later be moved to their archive.

Keep up the good work ZipSearch!.

Recent Market Developments

Wall Street started the session today racing toward gains however the latest economic data helped confirm investors’ fears that the economy is falling into a recession.  Investors were looking for data that would be help to stave off a sharp economic slowdown, and at the same time still warrant further cuts of the federal funds rate. Investors pulled the plug on trading for gains when a report from the Philadelphia Federal Reserve showed manufacturing fell more than forecasted. This manufacturing reading is the Conference Board’s gauge of leading economic indicators and it is used to predict which direction the economy is headed. It has posted its fourth straight drop.

As a result traders are already pricing in another interest rate cut, as much as an additional half a percentage point, after minutes from the U.S. Federal Reserve’s last policy-setting meeting were released indicating that the central bank will remain aggressive in regards to  fending off recession. Most economists realize the cuts to the federal funds rate take months to work their way through the economy and may not stop the economy from weakening further.

The Dow, the NASDAQ and S&P 500 all fell sharply as a result of today’s economic news. And finally for the good news, treasury bonds improved today as we see the 10yr note improved by 3.40%, or by -0.133, closing at 3.784. Of course you know this improvement will be reflected in tomorrow mornings rates. Tomorrow may be the right time to lock, however we may see things improve more as the next Feds meeting draws near and the FOMC, Federal Reserve Board, is scheduled to meet again on the 18th of March. The last meetings notes forecast for slower growth and continued risks to the economy from housing and credit markets.

Now is the time to talk up this market information using our drip marketing feature in your LMS. Also redistribute your old leads and prepare to work them with improved pricing. Realize you need to move quickly as the market has been extremely volatile and has moved as much as 9.0% and back again in a 12 hour period recently. In the last two and a half weeks the 30 yr fixed at par went from 5.125% back to 5.875%. Chances are tomorrow we’ll see 5.75% and possibly 5.625%.

As you prepare for the influx of applications be sure to contact us so we can help! Thank you for reading and have a great evening!

Project Lifeline: Savior of those to be foreclosed?

Well maybe not a savior, but definitely a helping hand at least. Six major banks have banded together and put a moratorium on forclosure proceedings for 30 days to allow borrowers to work out alternative payment options with lenders. Contrary to what one would think, this is not just for ARM loan borrowers, but all kinds.

It’s an interesting concept. This also may open up some opportunity for mortgage companies to capture good business. Read more about it here.

Be The Market Expert

Hello all. I’d like to piggyback on what Matt is saying by throwing a Wall Street spin on things. As mortgage professionals it is not only important for mortgage lenders to know who to contact and when regarding a mortgage, but once you have the ear of a potential loan client it is important to keep their interest, capture their trust and most importantly you want to be the one to close their loan instead of the other guy. By keeping abreast of market activity, economic data, and following the Ups and the Downs of our economy, you can be the expert instead of an order taker just throwing out rates.

Wholesalers will start rolling out conforming products with a much higher loan amount than the $417,000 loan amount our industry has worked over the past 2 years. This comes as part of the stimulus program recently passed by Congress and it will only apply to specific markets where jumbo loans have reigned supreme in years past. A key factor is this loan amount increase expires December 2008, so it is for a limited time only. In addition to the conforming loan increase due to the stimulus package, be aware that the Big 3 of the stock market, the Dow Jones, S&P 500, and NASDAQ indices has hovered in the same range since the first of the year. Fortunately they have not spiraled out of control nor have they gained any ground. This is due the balancing act of rising inflation, poor economic results, and poor earnings being coupled with efforts from the Federal Reserve and Capital Hill to keep our country out of recession by creating action plans, auctioning off money, working with foreclosure relief, and reducing the cost of money by cutting the federal funds rate.Realize that around the time each meeting involving a decision on the Federal Funds rate, historical data shows us that often times treasury bonds with improve which in turn will cause lower long term rates. So in a sense when the Feds do their magic the mortgage market sees a benefit. Just yesterday Ben Bernanke, the chairman of the Federal Reserve mentioned that our economy will be sluggish in 2008 not picking up until the end of the year. He and the rest of the Federal Reserve board are prepared to cut the Federal Funds rate further. With that said be on the look out for the Feds next action. As the time comes closer use the historical data to help fuel your email campaigns. When things happen like you mention in your emails, customers will be ready to listen when you begin to advise them on the right moves to make for their mortgage.

Thank you for reading and have a great weekend!