Lenders Using Technology to Predict Refinancing

Mortgage lenders are turning to technology to defend their portfolios.

Mortgage servicers, which lose 12% to 15% of accounts annually to refinancing, are using computerized data centers and telemarketers to boost contacts with customers and help spot potential refinancers before they act.

HomeSide Lending recently complemented its telemarketing sales efforts with quarterly statements that promote its refinance capabilities.

The quarterly statements cost 40% more than annual coupon books, but the effort has doubled the number of refinancing calls to its centers.

"The new environment allows us to send a marketing message that HomeSide Lending has your current loan and that we can streamline the refinance process," said Daniel T. Scheuble, executive vice president of technology and consumer direct lending for the Jacksonville, Fla.-based company.

HomeSide isn't alone. Countrywide Credit Industries and Fleet Financial Group use monthly marketing messages to promote their refinancing capabilities. And First USA Inc. has begun a telemarketing initiative offering unsolicited pre-approved refinances to mortgage customers of its Banc One Corp. parent.

"The slowdown in mortgage lending" has caused mortgage lenders to "look at refinance as the normal thing that it is, rather than something special," said Edward Furash, chairman of the Washington consulting firm Furash & Co.

The companies are devoting the technology to "establishing a relationship with the borrower and providing reminders to call," said Gerald L. Baker, former chairman of Fleet Mortgage Group in Columbia, S.C.

HomeSide's customer service representatives are trained to spot potential refinancers. One clue might be an inquiry about the payoff amount. HomeSide rewards customer service representatives $25 when they pass such customer information to telemarketing sales representatives.

Using an automated program that provides customized credit reports in as little as 30 seconds, HomeSide is able to offer a guaranteed rate to customers.

The acceptance of technology is due not only to competition among mortgage lenders, but to new challenges from one-stop real estate companies that also are armed with data base marketing systems.

"We have certainly seen a growing trend in the idea of one-stop shopping, with realtors and lenders using the data bases they are building to keep the customer for life," said Robert Edwards, a consultant at Weston Edwards & Associates in Laguna Beach, Calif.

According to a study released by the firm last week, 20% of the top 250 real estate agents now offer insurance to homeowners, versus 10% in 1995.

Though technology can help tailor certain marketing campaigns and respond to customer inquiries, such efforts may not be enough, Mr. Edwards said.

Lenders "have to develop a strong enough bond that consumers feel some loyalty" when they decide to refinance, Mr. Edwards said.

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