Targeting Home Equity Prospects
Home equity lending is increasing, which is good news for lenders; however, the landscape is much different than it was before the housing bubble in 2009. Lenders need to hone their acquisition strategies not only to acquire more customers, but also to be sure they are gaining the right customers.
Targeting good Home Equity candidates
Lenders need to be more diligent than ever when identifying candidates for home equity loans or lines of credit (HELOCs). Thanks to improved technologies in big data, there is more information available to help lenders evaluate the two critical factors: borrower data and property data.
Identify the ideal borrower
When considering the ideal borrower, you will want to include a number of factors, such as the age and payment status of the current mortgage, including the current status and the worst status during the life of the loan. Also consider the terms of the current mortgage, including the amount originally financed, the balance of the loan and the payments.
Determine whether the borrower has an existing HELOC or home equity loan. If so, consider the amount originally financed; the balance, both outstanding and available; and the monthly payment. Don’t forget that home equity loans must meet an Ability to Repay Standard.
Gather data on the property
The second part of the equation is the property itself. You will want to access data on property values and loan-to-value, as well as local house price indices and listing status.
Consider automated valuation models (AVMs) as well as public records for lien data and assessed property data, including characteristics such as square footage and the number of bedrooms and baths. Other important factors include REO flags and owner occupancy indicators.
Listing data is also useful to tailor your offer to the consumer. This includes active amounts, dates, broker contact information and days on market.
Identify eligible borrowers
Once you have gathered and aggregated credit and property data, you can market to potential borrowers with both pieces of the puzzle in hand.
Potential borrowers will fall into two categories: your existing borrowers and new prospects. Combining the profile of your ideal borrower along with any data on existing customers (such as estimated mortgage interest rates) can help you determine which of your customers may be eligible to refinance.
By targeting borrowers with specific, personalized offers, you can retain them as customers, preventing them from shopping around for other offers and possibly increasing their loan balances to reflect their increased equity.
To target new prospects, you can use the data you’ve collected to construct a marketing campaign with a call-to-action for prospects to contact you via phone, mail or your website. Alternately, you can extend pre-approved lines of credit to the right prospects, using FCRA-compliant firm-offer-of-credit marketing campaigns.
Using the available technology and immense stores of data available, lending prospects can be more accurately identified and marketing campaigns more specifically targeted. Lenders can market with confidence, turning qualified prospects into loyal customers more quickly than ever before.
Image source: Flickr
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