orrower-recapture rates have hit a 10-year
low. Lenders — and the mortgage origina-
tors who work with them — are failing to cash
in on potential future business from the bulk of their
existing clients, according to research from Black Knight,
a leading provider of integrated software, data and ana-
lytics solutions across the homeownership life cycle.
Assume a client buys five homes in his or her lifetime.
The current median home purchase price is $250,000,
and homeowners remain in their homes on average for
nine years, according to National Association of Realtors.
The average value of a customer to a lender in that
scenario would be in excess of $490,000, assuming they
keep that client in their portfolio through a lifetime of
home purchases. That also assumes the current market
interest rate of 4. 75 percent and a modest home-purchase price increase of 5 percent for each relocation.
With the current rampant portfolio-runoff issue plaguing
mortgage lenders, however, the originating financial
institution stands to lose out on at least $400,000 of
that future interest income — or 82 percent of the total
value of that customer.
To compete against other originators, and improve
recapture rates, it has become necessary to take the
steps needed to better understand the borrower’s
behaviors and their needs. In order to improve the revenue realized from the lifetime value of clients, it’s
vitally important for mortgage originators to be front
and center throughout the process of selling and
subsequently purchasing a home.
Mass mailers, marketing e-mails and informational newsletters have diminishing rates of returns, because of
their generic nature and the sheer quantity of materials
a potential borrower may receive. Instead, originators
should form strategic partnerships with companies who
specialize in the identification of these clients, remarketing to the borrowers and the oversight of home-selling and buying transactions.
These can include data-as-a-service organizations. These
companies provide predictive analytics to monitor an
entire customer population for behavioral events that
indicate which of your clients may be considering selling
their current home or purchasing a new home.
Organizations that specialize in the homebuyer shopping journey are able to provide in-market indicators
that alert originators months ahead of credit triggers
and real estate listing alerts — some providing this
information 3 ½ months in advance. This early indication
provides originators ample time to methodically engage
These potential repeat borrowers can then be marketed
to with more timely and relevant messages for greatly
improved performance and customer experience. Without this data, an originator typically won’t even know
that a client is selling their existing home until the home
is listed on the market. That greatly reduces the likelihood of capturing the borrower’s financing for their next
Reports indicate 73 percent of all borrowers (and
81 percent of millennials) that are doing a simultaneous
home sale and home purchase are doing so in the same
geographical area. Therefore, it can be concluded that
often the listing agent of the client’s home will also be
the buyers’ agent for their subsequent home purchase.
Real estate agents are highly fragmented contractors and
independent proprietors. Their business is predicated
on the effectiveness of their localized relationships with
other constituents within the homebuying ecosystem.
Because of this, real estate agents often have tenured
relationships with local lenders. This puts centralized
mortgage originators at a competitive disadvantage
based on the “influencing power” of the local agent. By
having a dynamic-scoring system in place that reinforces
the effective distribution of potential borrowers to the
best-scored agents, originators stand to mitigate the
trend of decreasing rates of repeat clients.
<< Rainbow continued from Page 37
Continued on Page 40 >>
Mike Eshelman is the head of consumer finance at Jornaya, a
data-as-a-service platform that delivers consumer-journey insights
to publishers, marketers, analytics and compliance professionals
with the highest-resolution view of the consumer-buying journey.
Scott Payne is vice president of enterprise sales and client management at Home Captain, a real estate platform that provides
portfolio mortgage lenders with resources to identify, remarket and
recapture customers and increase their funding-conversion rates
for pre-qualified homebuying customers.