Thursday, April 5, 2012

STRATMOR Advises HARP Marketing Should Be Specific

HARP may have expanded its eligibility requirements to reach more borrowers, but according to a mortgage industry advisory firm, that doesn’t mean marketing the program should be so broad-based.
“Mass marketing to borrowers without screening-out those that cannot qualify for the program will dramatically increase marketing costs, reduce productivity both at the point-of-sale and in the back office, and frustrate home owners ,” according to a release from STRATMOR Group and Financial Literacy Solutions.
Recently, HARP expanded to include borrowers with a loan-to-value (LTV) ratio of greater than 125 percent. Prior to the expansion, the program only included those with an LTV between 80 and 125 percent. The program allows underwater home owners who are current on their mortgages a chance to refinance at a lower rate.
Even with the reduced requirements, Garth Graham, President of Financial Literacy Solutions said lenders that don’t approach HARP 2.0 marketing correctly will pay more and be less successful than those that target the right homeowners.
“Many of these borrowers have fatigue – they are tired of hearing from lenders that they do not qualify for government programs,” Graham said. “So, lenders need to do careful target marketing to find those homeowners who can most benefit from HARP and adopt a variety of marketing methods designed to overcome borrower reluctance to engage in yet another loan process.”
Moody’s Analytics projects 1.6 million borrowers to be refinanced under HARP by the end of 2013 and expects an average savings of $250 per month on payments.
According to an FHFA report, the program was initially announced March 4, 2009, and has refinanced 1,021,849 loans as of the end of the 2011 fourth quarter. HARP is only for Fannie Mae and Freddie Mac mortgages.
Matt Lind, managing director of STRATMOR, points out that many small to mid-size lenders don’t realize that borrower data and data tools are available for them to use to screen for eligible HARP 2 borrowers.
Lind also noted that, “there are many third-party outsource service providers available – direct mail shops and outbound call providers, for example – to support lenders in mounting effective marketing efforts.”
STRATMOR said it expects many mid-tier lenders to partner with marketing companies, servicers, and other outsourcers to manage this opportunity.
Information from the release is based on a series of workshops on the HARP 2.0 sponsored by STRATMOR along with Datamyx Information Services, Weiner Brodsky Sidman Kider, PC, and Financial Literacy Solutions.

By: Esther Cho 04/04/2012

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