Originators Search for New Lead Sources

Loan originators discuss various strategies they use to develop new leads.

Many loan originators insist on developing a referral-only business rather than seeking leads from unknown prospects, some of whom will undoubtedly be unwanted rate shoppers. These originators believe that ongoing referrals from loyal Realtors, builders, and past customers are the best source of business and they tend to avoid new lead generation strategies. However, numerous other originators look for diverse opportunities to obtain new leads to supplement their other marketing techniques. Of course, they are aware of the challenge involved. Unlike referrals, which are based on established relationships, leads are often just names obtained from a seminar registration list, newspaper advertising, Web site, or other source. In most instances, originators still need to sell these prospects on doing business with them. But the successful ones are able to convert these often cold leads into closed loans and long-term customers.

Following is a selection of lead generation strategies that top producing originators have found to be effective:

Lead Lists
One of the fastest ways to obtain potential leads is to acquire them from a list supplier or compile your own new prospect database from various sources. Jeff Lazerson, president of Portfolio Mortgage Corp. in Lake Forest, Calif. and author of “How to Make a Fortune in Loans Without Leaving Your Desk,” has purchased a number of lists for his marketing letter campaigns, which complement his other origination sources. “If I’m busy with referrals and other activities, I most likely won’t purchase a list,” he said. “When things slow down, it’s often more appropriate.”

Lazerson noted that based on his experience, a mailing of 1,000 pieces should result in an initial response rate of seven to 10 prospects. “When you consider how inexpensive direct mail is, this can be very successful,” he said.

Lazerson stressed the importance of data integrity. “One key to ensure success is making sure that the list you acquire is reaching the right target audience,” he said. “You need to ask for the list company’s references and be comfortable with what they promise you.”

Sharon McCormick, an originator with Prime Lending in Dallas, Texas found a unique way to form a new database. When she first began originating, McCormick used a reverse phone directory to create a list of refinance prospects. The directory indicated when homeowners obtained their telephone line, which told her when they moved in and the approximate interest rate. “I pinpointed some of the largest houses in the area and found their phone numbers and then began calling prospective refi customers,” said McCormick. “I made as many calls that were necessary to get some loans and I had a good response.”

McCormick noted that this strategy might not be as effective today because many homeowners have phones with caller identification, and they screen out calls from salespeople. “But even though this might not work as well now, it does demonstrate how you can do something different to stand out,” she said.

It’s easy to overlook the most basic lead generation tools, including fliers and personal brochures distributed at various locations. Sue Woodard, an originator with Hometown Mortgage in Maple Grove, Minn., uses her brochure to reach new clients and past customers as well as prospects. Her brochure is distinctive because it opens like a greeting card and has the following phrase: “The greatest good you can do for another is not just to share your riches but to reveal to him his own.”

Woodard and her staff distribute the brochure wherever possible. “I use my brochure as a business card and hand it out at events, Realtor meetings, and other gatherings,” she said. “A personal brochure has more impact than a business card and is more likely to remain on someone’s desk or in a resource file longer than a card,” she said. Woodard cited a recent instance where her assistant was at a restaurant when the waitress overheard him speaking about the mortgage business. The assistant handed the waitress one of Woodard’s brochures and they started to discuss the potential of homeownership. “By the time dinner was over she was ready to meet with us and she’ll soon be a customer,” Woodard noted.

Adam Slade’s brochure includes company and personal background information, along with a pre-approval form for customers to complete. Slade, president of U.S. Mortgage Network in Wexford, Pa., provides the brochure to Realtors, builders, financial planners, and others. “We often get calls from people wanting to know something about us, and the brochure takes care of that. It’s a great lead generation tool.”

Advertising is an effective strategy for increasing company/originator visibility as well as producing immediate leads. Byron Webb, president of Webb Mortgage in Boca Raton, Fla., has advertised in as many as 50 newspapers throughout his state. The ads include his 800 number, which is popular with prospects who have been shopping rates, regardless of their distance from his office. He also advertises in his local daily newspaper, including an ad in the business section that draws more affluent readers. Webb’s ads will often feature a special offer, such as a coupon for $200 off closing costs. He also has his name and company logo imprinted on the plastic bags that cover the newspapers. “That is really the best advertising I do. If someone doesn’t open up the paper, they won’t see your ad. But everyone sees my ad on the plastic bag.”

Webb is a strong advocate of advertising as a lead generator. “We’ve had great response from our advertising,” said Webb. “During a refinance period, approximately 40 percent of our new business came from new sources, as a result of this newspaper lead activity. During an average period, it will be about 25 percent of our business.”

Billboard advertising is a more unique ad strategy, one that Ed Naworol has employed for the last several years. Naworol, an originator with SunTrust Mortgage in Belair, Md., typically rotates four billboards in different parts of his market at a cost of $500 per board per month. The copy of one board reads, “Need a mortgage? Building, buying, or remodeling? Call Ed today…”

“It’s definitely one of my top lead generation sources,” he said. “This is great name recognition; thousands of people see the boards every day. This is something that very few originators have done.”

Naworol also advertises on local restaurant placemats. “I position my business card ad and photo toward the top or bottom right of the placemat and include a coupon for $100 off the customers’ closing costs.”

Dennis Duncan, manager/originator at JP Morgan Chase in Blacksburg, Va., has tried a different type of advertising—the ValuPak coupon book program. He has included a coupon for $100 off for refinancing, which he said has been quite effective. “Appearing in the book costs about $1,600, but it reaches 30,000 people,” he explained.

Renter-to-Owner Program
Several originators have tapped into the apartment renter market. They collect immediate leads of apartment residents ready to purchase, as well as future potential customers. For instance, Jim Bane initiated a co-op marketing strategy with a major builder in his Ft. Worth, Texas market. Bane, an originator with WR Starkey Mortgage, arranged to have door hangers placed on the outside of apartments. The headline reads “Why pay rent?” and the copy explains how the renter can save money by owning a home. “This is a great technique because you don’t have to secure a mailing list or pay postage,” he said. “We’ve received a few calls from this and others will hold on to the hangers until they’re ready to buy.”

Nancy Davis, originator/manager at Mortgage America, Inc., Melbourne Fla., has taken a slightly different approach. Davis identified apartment complexes of 100 to 300 residents and obtained their names and addresses from a title company. She sent three different mailings to encourage them to consider homeownership. Davis noted that her past mailings have resulted in an initial flurry of calls, with additional prospects contacting her a year or more later.

Special Events
Some originators hold a barbecue, holiday gathering, or even a weekend loan-closing event to attract prospects. Pam Eaves pointed out that her company’s weekend same-day refinance closing event in 2001 resulted in substantial initial business as well as an ongoing stream of leads. Eaves, an originator with First Reliance Mortgage in Salt Lake City, Utah explained that the company advertised on radio and newspaper ads that promised low interest rates and one-day closings. “We started getting calls the minute the radio ad went on the air,” she said. “On Saturday morning, we had people lined up at the door waiting. We closed about $2.5 million that weekend and figured we got maybe another $3 million in residual business, as a result of the advertising. I was recently doing loans for contacts we had made a year ago.”

Eaves suggested two critical keys for converting leads to customers. “Certainly the first thing is to promptly follow-up with the leads you obtain,” she said. “Then make sure that you stay in contact with them over a period of time, keeping track until they’re ready to do business with you.”

Seminars and Fairs
First-time borrower and other seminars offer another cost-effective way to attract a group of new contacts. Naworol conducts weekly seminars for custom home customers. He has a database of 5,000 lot owners and invites different groups to attend the seminars that he holds in surrounding counties. He estimated that approximately 50 percent of those who have attended his seminars during the last five years have become customers and many others are waiting to design their home or purchase a lot. “This is an unbelievable way to attract customers,” he said. “Those who attend see the seminar as a chance to get educated about the custom home process and they appreciate the one-stop shopping—because the seminars include myself, builders, attorney, Realtor, and an inspector.”

Joe Siau has made quarterly first-time homebuyer presentations to such groups as Consumer Credit Counseling Services and the Association of Community Organizations for Reform Now (ACORN). “We get 15 to 30 people at each session and then we’ll follow up with them (using a list of attendees),” said Siau, an originator with Chase Manhattan Mortgage in Roseville, Calif. “Over a year’s time, we convert about 10 percent of the attendees to solid leads.”

In addition, Siau has participated in local street fairs for Asian communities. He sets up a Chase Manhattan exhibit and then distributes promotional materials as he discusses homeownership opportunities with visitors. Siau averages three shows a year, with approximately 50 people stopping by each time. He estimated that slightly over 5 percent are converted to customers. “It may not sound like much at first, but it’s well worth the effort because they eventually make referrals to other borrowers, so the base grows.”

TV and Radio
Highlighting your message on radio and television is yet another method to gather prospect names. For example, Aaron Jernigan, an originator with The Bank in Springfield, Mo., has appeared on a local TV program to provide homebuying information. It has helped establish him as a mortgage expert in his market and he has obtained a number of inquiries from potential borrowers. “After each show, I would receive about five to 10 phone calls from people who had watched,” he said. “It has definitely provided good visibility.”

Jernigan noted that because he hasn’t yet started to track the leads, he doesn’t know how effective the TV appearances have been. However, he’s confident that the exposure has been worthwhile. “I know that we get calls after the shows and I’m sure we’re getting business as a result,” he added.

Kevin Ruby has been successful with a unique radio promotion. One of his choice builders has held remote radio promotions, having a radio station set up its broadcast booth at a weekend open house or other event. This allows Ruby a chance to speak to the crowd about his company and their loan programs and to collect names and phone numbers of those interested in obtaining a mortgage loan. “All I have to do is show up with my laptop and prequalification forms for a couple of hours,” said Ruby, executive vice president/originator with Community Mortgage, Cordova, Tenn. “I get leads from the people who attend the specific development and others from those who are looking elsewhere but stop by because they hear me on the radio and are interested in talking about a loan.”

Ruby believes the remote promotions are definitely worthwhile. “Generating leads from the radio remotes has accounted for about 10 percent of my annual business in the past, but it doesn’t take much time to make such valuable contacts. I reach new people with whom I wouldn’t have otherwise come in contact.”

Internet Connections
In recent years, more originators have turned to the Internet as a proven means of obtaining prospects. Even though many site visitors are rate shoppers, originators have found that an effective Web site that includes an application form can result in a steady stream of closed loans. For instance, Dave D’Aprile of Coast to Coast Mortgage in Austin, Texas, considers his Web site to be a significant lead producer. He noted that approximately 50 percent of the customers doing business with the firm have “touched” their Web site.

D’Aprile boasts a closing ratio of 25 to 30 percent of his online leads. He devotes a portion of his marketing budget to listings in various portal sites and advises originators to take a cautious approach with such advertising. “You’ve got to check cost versus return,” he noted. “You never know, in the first month you may not get anything.” D’Aprile suggested that originators check to see what other originators are already advertising on specific portal sites, track the results, and drop the sites that don’t work.

Slade has also benefited from his company’s Web site. He said that the site is good for generating basic visibility and borrower calls. “Initially, we advertised rates, but we no longer do so,” he said. “We’ve learned that the site is an excellent avenue for people to pre-qualify. We get five to 10 Web-based pre-quals a week and are able to convert close to 40 percent of those to completed loans.”

He noted that a key to his online success is highlighting the Web site address in his Sunday newspaper advertisements. The ads feature company information and interest rates and prominently display the Web address. “We usually get our Web-based applications on Mondays after people have read the Sunday paper,” he said.

More Lead Strategies
Here are some other lead generation techniques to try:

  • Advertise on the outside of a truck or bus. One originator stated that he’s received a number of calls from the ad he placed on a friend’s delivery truck.
  • Use a 24-hour hotline service, which includes a phone number on Realtors’ property signs, enabling borrowers to call for a pre-recorded guided tour and other information. You’ll develop a list of prospects to qualify.
  • Ask the human resources director at local companies if you can insert an informational flier into their employee paychecks.
  • Prepare a refinance (or other) flier to be inserted in your city newspaper’s zoned editions.
  • Make sure your Web site is listed with all appropriate search engines.
  • Exhibit at a bridal, home, or other consumer show. You can hold a drawing for a TV and get the phone numbers of the attendees. Later, you can follow up with these prospects.
  • Distribute fliers and other information at Realtor caravans and builder open houses. One originator created a small house-shaped pop-up display to hold his business cards.
  • Advertise your services on movie screens.

There’s no question that referrals are the lifeblood of top producing loan originators’ business. However, it’s wise to keep an open mind concerning lead generation strategies. As the originators in this article have emphasized, new leads can be a positive addition to your pipeline, especially during those periods when refinance business disappears.

By David L. Robinson