Charter One Mortgage Corp. is set to implement a new Web-based retention program aimed at borrowers who are most likely to defect.
To spearhead the effort, the Richmond, VA, lender inked a deal with financial marketing services firm Domania Inc., a company whose keystone offering is a national database of the selling prices of 27 million homes called Home Price Check.
Charter One is implementing a Domania service called Portfolio Protect, a rules-based e-mail program that uses Domania's Home Price Check tool, among other things, to analyze customer behavior and communicate with them accordingly.
The service is to be available on CharterOneMortgage.com sometime this month.
“We already have a number of retention initiatives,” said Alton Buie, vice president, marketing, Charter One Mortgage. “[But] as the industry shifts from a refi [refinance] market to a purchase market, it's become increasingly important to maintain relationships with existing customers.”
Low interest rates fueled a refinancing boom last year, and refinancing homeowners tend to stay with their current mortgage companies. Though the refinance boom is reportedly over, the home buying market is still hot. However, homebuyers are far less loyal to their mortgage companies.
“Those transactions are often driven by Realtor recommendations,” said Benjamin Joslin, vice president, marketing, Domania. As a result, the mortgage industry has a 93 percent churn rate — known in the loan industry as runoff — when borrowers sell their homes, Joslin said.
He also contends that the industry is prime for more direct relationships with customers.
“I think pretty soon the industry is going to wake up and say, 'Why are we paying mortgage brokers commissions when we can go directly to the consumer?'” he said.
Domania licenses its data from eight companies nationwide, Joslin said.
The idea behind Domania's marketing services is that if a lender knows when the borrower is preparing to buy another home, the lender can intervene before a competitor swoops in and takes the business.
One obvious sign that a borrower is getting ready to buy is when he or she begins checking home prices.
Countrywide Home Loans Inc. signed with Domania in January to launch its Seller's Advantage program offering customers Domania's price-checking tool and regular home selling tips via e-mail once they answer a few questions on an online questionnaire.
“Domania is helping us identify customers in our portfolio that are most likely to leave right upfront and provide them services that help stem that runoff,” said Bruce Cornelius, senior vice president, Internet delivery systems, Countrywide Home Loans, Calabasis, CA.
Traditionally, mortgage companies viewed borrowers' requests for payoff information as a sign that they are ready to sell.
“However, we've learned that at that point, you're way too late,” Cornelius said. “We've learned you have to interact with them much earlier in the process and provide a value proposition for them to work with you.”
Beyond retention, Countrywide's goal for Seller's Advantage is to help its customers get the maximum price for their homes so they have more funds for their next purchase.
It is too early to determine the success of Seller's Advantage, Cornelius said.
“We're satisfied with the number of registrants so far,” he said.
Domania's is a turnkey, private-labeled service, and most of the Boston company's dealings with clients are performance-based, Joslin said.
CMGI-backed Domania's other clients include Chase Manhattan Mortgage, Fleet Boston Financial, online lender IndyMac Bank, Coldwell Banker Northern California, E-loan and zipRealty. The company also provides its Home Price Check service to AOL, Dow Jones, Realtor.com, CBS Marketwatch, MonsterMoving and The Motley Fool.