Intellidyn Corp., which for several years has been "harvesting" aged leads for mortgage lenders, now has an automated version of the service.
Harvesting involves combing through a batch of leads that were generated online weeks or months ago, weeding out the ones unlikely to bear fruit, and checking and updating contact information on the more promising prospects.
The re-screening aggregator that Intellidyn announced Tuesday can check to see if a competing lender has already funded a loan for the borrower.
If not, it will update contact information on the lead as necessary and confirm that the prospective borrower's credit score and desired mortgage still meet the lender's underwriting criteria.
Peter Harvey, Intellidyn's president and chief executive, said about 25 lenders use the Boston outfit's services.
He estimated that with the automatic re-screener Intellidyn could convert a fifth of all stale leads into fresh prospects for about 25 cents per record.
The leads, in batches of, say, 100,000, can be submitted overnight online using the file transfer protocol site and returned by morning, Mr. Harvey said.
When mortgage lenders buy contact information on a prospective borrower, sometimes for as much as $100 a pop, they tend to count its shelf life in hours and minutes.
After that, the general thinking goes, other lenders are likely to have reached the prospect already, and the chances of funding a loan plummet.
No wonder, then, that when a reporter submitted his contact information to Experian Group Ltd.'s LowerMyBills.com two weeks ago, he received around a dozen phone calls and e-mails within an hour. An inquiry at LendingTree, a unit of IAC/InteractiveCorp., produced a similar result.
But Intellidyn says rushing to contact a potential customer may not be that critical.
Only 2% of all new leads result in funded loans, the vendor says, but the vast majority of mortgage inquiries could be converted into loans weeks or months later — after the prospective borrower has better scoped the market.
"The majority of them are just poking around" on mortgage Web sites when they enter their contact information, Mr. Harvey said. But "they are likely to make a transaction. It's a matter of when."
Tightening lending standards and the elimination of many subprime products have narrowed lenders' supply of eligible borrowers over the past year. As a result, marketing costs have risen on a per-loan basis.
Pointing to Intellidyn data, Mr. Harvey said the average cost incurred by lenders on each loan they close increased from $1,000 to $2,500 over the last 18 months.
As such, harvesting leads can offer "tremendous cost savings" to lenders. Some lenders do this work in-house, he said.
Steve Haslam, senior vice president of retail lending at NovaStar Financial Inc., said the Kansas City, Mo., subprime lender has achieved the same conversion rate on leads harvested two or three times as it has with newly acquired contact information.
Given the cost of acquiring new leads, it "makes more sense to invest more dollars into incubating" contact information by harvesting leads and following up.
"The ultimate result is that it allows you to focus on leads you have already bought," he said.
(His company has said it will slash retail lending and it stopped funding brokered loans this year as a result of the liquidity crisis.)
Mr. Harvey said the primary reason most leads "just fall to the floor" is that call center employees report, sometimes dishonestly, that information on certain borrowers was incorrect or invalid.
"Feedback from sales people says they can't get in touch with them or the lead was no good," he said. "I know that sounds counterintuitive … but branch managers understand sometimes how lazy branch people can be."
Not everyone in the mortgage industry is eager to embrace harvesting, however.
In February, Lewis S. Ranieri, the founder of the lead trader Root Markets Inc., told American Banker that his company dealt only in current leads, because resuscitating contact information months after it was collected could raise consumer privacy issues.
A spokeswoman for Root Markets, which declined a request to be interviewed, said the New York company was against lead harvesting.
A spokeswoman for LowerMyBills said by e-mail that the lead generator does not recycle contact information on prospective borrowers and sells "only fresh, real-time leads" as a courtesy to consumers and lending clients.
