Online mortgage lead generators typically sell each lead to multiple loan originators who then compete with each other to get the mortgage application. Some of these loan originators are terrific, some are not no so terrific, and some are good sales people who are desperate for business and will tell borrowers anything to win a mortgage application. The Mortgage Bankers Association forecasts annual origination volume for 2014 will be $1.1 trillion, down from $1.75 trillion in 2013," the lowest overall annual total since 2000. Mortgage interest rates have been stable since the start of the second half of 2012 so borrowers have less of an incentive to refinance, and this is creating many desperate loan originators. Yet, there is almost no data available regarding the risk of online mortgage lead generators on borrower early payoff behavior, their attitudes towards their lenders and servicers, and a detailed study is needed.

Tree.com is the parent of LendingTree and several businesses that connect borrowers to lenders, focusing on Internet marketing and developing mortgage leads. In the 4^th quarter of 2013 Tree.com's revenue totaled $36.4 million, up from $23.9 million in the prior year's fourth quarter. About 84 percent of its revenue for the fourth quarter of 2013 came from mortgage products. Tree.com's Chairman and CEO Doug Lebda said, in the company's news release concerning its financial results, "In an environment in which mortgage originations continue to decline significantly, we believe the role of our performance-based marketing services takes on greater importance for lenders, as indicated by the activity on our exchange." And Mr. Lebda proved himself correct - continuing the divergence from overall market trends, revenue at Tree.com

from mortgage products was up 35% in the first quarter of 2014 over the same period last year, while total mortgage market originations fell by 50%

during same this time.

In the news: May 8, 2014 - Mortgage Lead Generator will pay $225,000 to Settle FTC Charges That It Deceptively Advertised Mortgage Rates. The FTC charged that GoLoansOnline.com, a Houston, Texas-based lead generator that operates several websites that advertise mortgages, advertised low interest-rate loans as fixed-rate mortgages, when in fact they were adjustable-rate mortgages that could become more expensive for borrowers over time. The company also allegedly failed to include important disclosures, such as the annual percentage rate, amount of down payment, and repayment terms that figure into the advertised payment amounts and interest rate. According to the FTC's complaint the ad below was on the company's website:

A link to the full FTC press release is below:

http://www.ftc.gov/news-events/press-releases/2014/05/mortgage-lead-generator-will-pay-225000-settle-ftc-charges-it 

It is clearly time for mortgage servicers to proactively employ the Internet as a strategic borrower customer retention and communication tool. Bank and nonbank mortgage servicers need to get ahead of the risk from online mortgage lead generators on borrower early payoff behavior. And they need to get ahead of the new regulatory scrutiny as the CFPB's onslaught on mortgage servicers' operations increases the pressure to improve processes and communications with borrowers.

Today there are numerous online mortgage lead generators convincing borrowers to refinance with different lenders to get the best interest rate. Some of these companies have revenues in the hundreds of millions of dollars and combined they have generated hundreds of billions of dollars in refinances for mortgage lenders and brokers by convincing borrowers it's time to refinance. Many of these borrowers would not have refinanced if they truly understood the loan they already had. But what can be done to reverse this trend?

Enter a newly patented "Method for Mortgage Customer Retention"! Patent law specifies that inventions must be "useful", which means have a useful purpose and must be sufficiently different from what has been used or described before that it may be said to be nonobvious to a person having ordinary skill in the area of technology related to the invention. The idea that led to the "Method for Mortgage Customer Retention" patent - and in de facto deemed useful and nonobvious by the United States Patent Office is: Borrowers who are online considering refinancing should have easy access to discuss all options with their present mortgage servicer first. The "Method for Mortgage Customer Retention" patent provides a proactive mechanism for improving loan servicing borrower communication and retention by capturing borrowers who are about to refinance, via web capture, directing them to a free Internet portal that links them via a database to their mortgage servicer, and provides them with a valuable link to a customer care agent to advisethem of all options and tools they have available to them. When implemented properly this process will increase customer retention, increase customer satisfaction and decrease the miscommunication complaints to the CFPB. (See white paper link at the end of this article.)

For example: Anne went online looking to refinance. She saw a website that said: Want to find out what your mortgage servicer will do to keep your business? Anne went there and spoke with a customer care agent who, in reviewing Anne's current mortgage, saw that the Anne is already 4 years into a 15 year mortgage. She showed Anne her mortgage's amortization schedule and Anne saw that a larger percentage of her monthly payment was now being applied to principal reduction then when her mortgage first began. Anne then used a refinance calculator, provided by the customer care agent, which took into account, interest rate, closing costs, and loan terms of the new mortgage and compared them to her existing mortgage. Armed with all the facts - Anne determined that keeping her present mortgage was her best option.