The Business and Technology of Online Lending

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The Business and Technology of Online Lending

• Struggles Best Practices from Industry Experts

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The Business and Technology of Online Lending

• BOB HARRIS
  
  President LendingTree Exchange
• OWEN RAUN President RMC Vanguard
• DON KRACL President Mortech, Inc.
• GLENN HOUCK Co-FounderLeadQual, LLC
• FRANK POIESZPresident Level1Loans, Inc.

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The Business and Technology of Online Lending
INTRODUCTION TO ONLNE LENDING

• What is online lending? Online lending is the
  ability to completely process a loan, from lead
  sales, to application to closing, using
  consumer-facing browser-based capabilities and a
  high degree of automation throughout the process.
• What are the main differentiators between
  online and traditional lending?
• Why choose online lending? This evolving form
  of lending can
• Improve customer service
• Facilitate rapid entry into new markets
• Help in the defense of existing market niches
• Increase lender efficiency, especially by driving
  down the cost of sales

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The Business and Technology of Online Lending

• Question to All Panelists
• What current trends and struggles are you
  noticing, specifically in the secondary market?

Q
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The Business and Technology of Online Lending

• Question to Bob Harris
• As the leading mortgage lending lead
  aggregator, you have unique access to data that
  can help us understand consumer behavior. In
  these challenging times, what does your data say
  about recent changes in consumer behavior? Do
  you see any trends that may persist even after
  recovery starts?

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The Business and Technology of Online Lending

• Question to Owen Raun
• As an online lending veteran you have
  experienced the fluctuation in this space since
  its infancy. How has your approach to online
  lending changed over the last year in response to
  the rather incredible market changes we have
  experienced?

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PRIME PURCHASE ONLINE FOCUS
The Business and Technology of Online Lending

• Pre-Turmoil

• Today

• Less Competition
• Limited Product Options
• Qualification Issues
• Low Volume Higher Margins
• Close Rates Holding Steady
• More First Time Buyers and nice Consumers

• High Competition
• High Product Availability
• Ease of Approval
• High Volume Tight Margins
• Good Close Rates
• Demanding Consumers

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The Business and Technology of Online Lending

• Question to Bob Harris
• Over the course of the year we have seen a
  huge drop in consumer trust in lenders. Has this
  lack of trust been evident in consumer behavior,
  and if so, what can lenders do to help rebuild
  trust? A related question how can lenders best
  differentiate themselves in this market?

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The Business and Technology of Online Lending

• Question to Don Kracl
• What advice can you give mortgage
  professionals to adapt to these changes in the
  markets and in consumer behavior? What is the
  best way to balance technology with human
  interaction?

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The Business and Technology of Online Lending
MIT Study
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The Business and Technology of Online Lending

• Question to Glenn Houck
• According to a recent study by Deloitte, 93
  of homebuyers who applied online researched
  their mortgage on the Internet before applying
  even 71 of those applying by phone, and 60 of
  those applying in person used the Internet for
  at least some of their information gathering.
  What can lenders do to stand out in a crowded
  Internet market while still gaining the trust of
  the consumers?

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The Business and Technology of Online Lending
Deloitte Study
Base Respondents who used each application
method and information source. Note Percentages
do not equal 100 because some respondents did not
use some information sources.
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The Business and Technology of Online Lending

• Question to Owen Raun and Don Kracl
• Given the current market, many lenders are
  looking for new ways to be competitive. If I
  were not already using online lead sources, or
  if they are not a big part of my business, what
  are the three most important things I should do
  to get into the game?

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KEY COMPONENTS OF ENTERING ONLINE LENDING
The Business and Technology of Online Lending

• Internal

• External

• Corporate Culture Issues
• Be Committed to Success
• Define your Sweet Spot

• Vendors Available to Help with Every Step
• Large Supply of Leads
• High Demand for Lenders

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The Business and Technology of Online Lending

• Question to Bob Harris
• The hand-off from a lead source to sales is
  crucial in maximizing conversion, as is the
  filtering of leads so that they go to the right
  lenders. In your experience, how long does it
  take for a lender to become effective in working
  with a lead source? Of those that fail to get
  traction, can you point out some of the rookie
  mistakes they could have avoided?

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The Business and Technology of Online Lending

• Question to Don Kracl
• What technology will a lender need to be good
  at with regards to lead conversion? How much
  integration with their existing systems is
  needed to be successful, and when compromises are
  needed, how would you counsel a lender to set
  priorities?

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The Business and Technology of Online Lending

• Question to Owen Raun and Glenn Houck
• With the current volume of requests coming in,
  how can you make your loan officers more
  efficient to handle internet leads as well as
  the heightened volume of other incoming leads?

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The Business and Technology of Online Lending

• Question to Owen Raun
• Besides using lead sources, what other tactics
  do you use to generate online leads? Are there
  specific tactics you use to maximize lead
  conversion?

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ONLINE LENDING OPTIONS
The Business and Technology of Online Lending

• Free or Low-Cost Sites Bank Rate, Smart Hippo,
  Zillow, Mortgageloan.com
• 2nd Generation Leads Referrals from Online
  Leads, Past Clients, Realtors
• Refinance Purchase Leads we did not close come
  back as Refi
• Google, Yahoo Pay Per Click, Banner Ads
• Our Own Website SEO (Search Engine
  Optimization), Organic
• Web 2.0 Facebook, Twitter, Active Rain, Zillow,
  Blogs

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The Business and Technology of Online Lending

• Question to All Panelists
• What new technologies are the market leaders
  employing that will define the future of the
  online lending space? Are there any innovations
  or best practices we havent already mentioned
  that mortgage professionals should be
  integrating in their businesses?

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The Business and Technology of Online Lending

• Question to Owen Raun
• As a correspondent customer of many of the
  companies represented at this conference, you
  have seen dramatic changes in products, prices
  and underwriting over the past year. For the
  benefit of those secondary marketing executives
  who look to online originators for volume, are
  there any significant differences in online
  lending compared with bricks-and-mortar
  operations? Do you see differences in profit
  margin, fallout and other business drivers? How
  can your correspondents better support your
  business model?

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The Business and Technology of Online Lending

• QUESTIONS?