Mortgage Lender Mines for Data Dollars
New Freedom Mortgage is a full-service lender with resale branches and a wholesale division. But a major part of its business always has been Federal Housing Administration and Veterans Affairs loans, and the company claims to be among the nation's 10 largest government lenders.
The company has a call center focusing on government loans.
"Our main marketing method has been direct mail, and previously we were buying names from vendors who were just offering things like what time period a mortgage was obtained in, loan balances and loan type," said Thomas Wright, senior vice president of New Freedom Mortgage, Salt Lake City. "It was very generic data purchasing, and we didn't feel like it was the best way to purchase data but there was really nothing we could do about it until Intellidyn showed up and said, 'Look, we have the same access to the data but we can parse data differently than other vendors, and we want to help you determine who your converters are, not just who your responders are.'"
Intellidyn is an aggregator and provider of credit, transactional, demographic and behavioral business-to-consumer data. It houses the complete TransUnion and Experian credit files and has extracts from Equifax as well as non-credit-related marketing data from other sources including Acxiom and, importantly for New Freedom, deed file data.
The first step in better targeting government mortgage prospects was for New Freedom to gather information about its inquirers and customers, since it is a multi-step process from receiving a direct mail piece to calling for more information to applying and getting approval for a loan.
"There was some work to do on our end to more effectively track what was going on so we could get Intellidyn the information they needed to analyze," said Rich Warner, systems and business analyst at New Freedom Mortgage.
The process included tracking all the calls that came in, where they came from and what happened after the call so that Intellidyn could analyze the attributes of these people in terms of responders and converters, he said.
"One of the biggest things that we've learned is that the people who call in don't necessarily have the same attributes as the people who do loans," Warner said. "What we can do is eliminate a chunk of people that are likely to call in but unlikely to do loans, and that saves us both in marketing costs and human resources."
The results of the customer analysis surprised New Freedom.
"The real situation is sometimes completely different than logical conclusion," Wright said, though he would not share the results of the demographics analysis. "We were shocked by the results. When I first saw them I questioned their validity but they were correct."
Taking that data into consideration, Intellidyn began identifying good prospects for New Freedom, starting by identifying through deed files consumers with existing FHA and VA mortgages. Intellidyn's deed data come from two major U.S. deed companies, First American Title and Fidelity.
"A lot of these people are not going to stay in that home forever and will want another FHA mortgage," said Peter Harvey, president/CEO of Intellidyn, Hingham, MA. "The more challenging and more interesting is the huge pool of homeowners or potential homeowners that don't have an FHA or VA loan but would be eligible."
Harvey cited relaxations in the federal government's loan-to-value requirements, making it easier to borrow and put down less, as a big impetus to target the FHA and VA loan markets.
"In the U.S. market about 62 percent of adult households are homeowners," he said. "In the next six to eight years that will go to 73 percent."
Intellidyn also used income and debt data to find better prospects for New Freedom.
"If we can get a solid picture of debt-to-income ratio, then we can find better prospects," Harvey said.
Identifying those prospects has let New Freedom decrease marketing costs and increase response rates.
"We're sending anywhere between 180,000 and 500,000 mail pieces per week depending on factors in the market," Wright said. "The number has gone down dramatically from what we used to send based on the new targeting system. Before, we had to do a shotgun approach because we just didn't know who was the best fit, and we were spending about triple to quadruple on direct mail prior to starting to use Intellidyn."
He estimated the savings so far at $6,000.
Intellidyn is working on using the latest results to build better targeting models.
"Like any type of analytic work, the more experimenting you do where you bring back results, the better the mousetrap you build," Harvey said.
Kristen Bremner covers list news, insert media, privacy and fundraising for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters