The term "mortgage leads" is not well known to people outside the mortgage business.
Few consumers hear this term used, even though, they could be a mortgage lead themselves.
Mortgage leads include information about consumers.
Loan providers use mortgage leads in hopes of making a consumer into a borrower. These leads are given value that is based on the probability that a specific consumer will lead to a closed loan.
Whenever you, as a consumer, fill out a questionnaire about a mortgage, you become a mortgage lead.
In many cases, these questionnaires are filled out when you respond to some kind of mortgage advertisement.
If you've ever filled out such a questionnaire, then you noticed it included questions that a lender might use to determine whether or not to extend a loan to you: employment, income, credit, house price.
Identifying information such as telephone number and email address is also requested because of course, you aren't a valuable mortgage lead if the loan provider can't get in touch with you.
In pre-internet times, loan providers did the work of generating mortgage leads by using public records. Public records might give some indication as to borrower who might want to refinance their current mortgage because their current interest rate happened to be higher than the market rate.
Increased interest rates decreased this type of mortgage lead activity because there was no easy way to tell which borrowers were interested in refinancing their mortgages.
Now that the internet prevails as a means of communicating with consumers, mortgage leads have become more specialized. Leads are no longer generated by loan providers.
Instead, there are lead specialists who do nothing but seek out mortgage leads. These lead specialists often have no mortgage experience. Rather they take advantage of a marketing background to develop advertisements to entice consumers to respond and give information that will lead them to become a mortgage lead.
Some people might think that if a mortgage lead gets you a mortgage, then there is no harm in filling out the questionnaire. It's better to be approached by a loan provider than it is to have to hunt them down, right?
To answer that question, consider this. The lead specialist is paid to do one thing: generate mortgage leads. Once he has been paid for those leads he has no stake in whether those leads turn into closed loans or not.
In essence, the lead specialist can make all the loan promises necessary to get you to give your personal information, yet he has no responsibility to ensure those promises are kept.
The nature of the mortgage leads business is an impersonal one. With lead specialists selling to the loan providers that pay the highest price for their leads and often selling single leads to multiple loan providers.
In some businesses there is an intermediary between the lead specialist and the loan provider. The lack of personality in this relationship will likely carry over to the one that you have with the loan specialist - one that is purely financial.
