Retention Focus Shifts to Home Buyers
It's estimated that 97% of the time, when an existing homeowner buys a new home, they obtain a mortgage for the purchase from someone other than the firm currently servicing their mortgage, according to Steve Kropper, senior vice president of Equinox Corp. And that abysmal recapture rate is putting a new focus on customer retention.
"That tells me that all the things that lenders do today don't make much difference," Mr. Kropper said in a recent interview.
Mr. Kropper, who founded a firm that helped servicers mine their data for clues about home purchase intentions, has since sold that firm to LendingTree and is now helping Equinox with its tools for portfolio retention.
He says Equinox has built "the next generation of retention technology."
The core of Equinox's technology is a home price service for consumers. As consumers surf for home price details on the site, the technology collects data about how they are using the website. That "click stream" provides a clue to their intentions, Mr. Kropper said.
Pulling credit reports also can provide clues about a customer's likelihood of moving to a new home, he points out. And Equinox also tries to match portfolio addresses with MLS listings, though Mr. Kropper said that lack of cooperation from Realtors and timing issues currently limit the effectiveness of this approach.
"It uses that data to make a judgment about when someone has moved into the buy zone and when they are at risk of leaving a portfolio," he said.
Signs of life changes that might suggest a home purchase or move include getting married, having a baby and retirement. Realtors get close to their customers and learn about these events through interaction with them. Mr. Kropper believes that mortgage servicers can use their database and obtain additional information to do much the same thing.
Equinox also offers to coordinate call center services to reach these customers before they run off to a new lender. Call center technology is wrapped around the service in two ways. Equinox has a 220-person call center in India that can do outbound calling to a lender's portfolio to inform them about the home price service and sign customers up for free home price estimates.
The call center can also do a "warm transfer" of the call to the lender if the consumer turns out to be in the "buy zone" for a new home purchase.
He also believes that lenders may need to polish up their ties to real estate agents. Because of the refinancing boom, lenders have not depended on Realtor referrals as heavily in recent years. But that is changing as home purchase loans account for a bigger share of the lending market. "Lenders are at the mercy of Realtors, and the problem is that every major lender has ignored Realtors for the last three years."
The trick is to encourage Realtor referrals without running afoul of RESPA restrictions, which prohibit payment for referrals. This creates "zero incentive" for referral business, Mr. Kropper said, and helps to account for the difficulty of alliances or affiliation between real estate brokerages and lenders.
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