No more 'bye-bye borrowers'
Behavioral models, software help lenders target likely repeat customers
Friday, July 12, 2002

By Bridget McCrea
Inman News Features

Mortgage lenders who've stood by helplessly and watched current customers sell their home, then run off to another lender to finance their next home purchase now have a new option for customer retention.

Portfolio Protect, a product introduced six months ago by 12-year-old Boston-based financial services software and marketing firm Domania, already is being used by Countrywide Home Loans, Fleet, Chase Manhattan, Charter One and Indy Mac Bank, according to Domania.

The product is an e-mail-based marketing system that uses behavioral models and statistical projections to anticipate loan runoff and help financial services companies not only acquire new customers but also retain existing ones.

The product helps lenders offer borrowers appropriate and attractive loan products by targeting those at-risk customers who are most likely to be considering moving or refinancing their current mortgage.

Domania Vice President of Marketing Ben Joslin said the mortgage industry was long overdue for a customer retention product.

"Typically, a mortgage broker originates a loan, which then gets sold to a lender and serviced," said Joslin. "When the homeowner sells that house and buys another, they usually close their next loan with a new lender."

Joslin said Portfolio Protect helps banks reach out and retain those customers, instead of watching them walk away every time they refinance or buy a new home.

The product is based on an e-mail alert system that pushes content about neighborhood home prices. The content comes from Domania's database of 27 million home sales nationwide, Joslin said.

"We give banks content that's vital to the banking mortgage transaction," he said.

Domania's years of e-mail marketing expertise helped the company create a system for discerning which borrowers are already in or near a new mortgage transaction.

"We add up the clues and come to the conclusion about which people are 'transactors,'" Joslin said. "We identify sales prospects versus tire kickers and in doing so help banks market their products only to those customers who are ready to buy."

The rate lenders pay for the service depends on the lender's needs and customization, according to Joslin, who said Domania will unbundle services to fit budgets and work with each lender to make sure there is a clear return on investment.

Joslin said banks using the product gain an "extreme amount of interactivity with customers" that they previously lacked.

"Mortgage lenders are not typically at the top of a consumer's mind," he said. "But if the lender gives consumers valuable information on home prices in their neighborhood each month, the (lender) will rise to top of mind."

Market acceptance of Portfolio Protect so far has been "excellent," according to Joslin, who said Domania's internal research shows one-third to one-half of consumers respond to the lender e-mail in "one fashion or another."

The nation's larger lenders appear willing to do what it takes to improve customer retention. Countrywide Home Loans announced in March that it would integrate Domania's Portfolio Protect into its own Seller's Advantage program.

"We are always looking for ways to increase the value we provide our customers and drive loyalty among them, which in turn increases our customer retention and allows for greater profitability," said Stephen Douglass, executive vice president of market research at Countrywide, in a statement. "Domania offers intelligent solutions, and their marketing expertise and technical savvy give us confidence that the program will increase our portfolio retention results."

The latest lender to buy Portfolio Protect was Charter One, and Joslin said Domania expects to add more Portfolio Protect prominent customers in the near future.

Copyright 2002 Inman News Features