Monday, July 23, 2007

New and Improved Tools

by Tanta on 7/23/2007 08:46:00 AM

Captain Obvious! Please report to the Marketing Department!

Now, I have no idea what marketing people do when Captain Obvious is temporarily off the premises, but I have always believed that it involved "networking" and "teambuilding" with occasional bouts of "work" such as calling a very busy person in Secondary Marketing at market open on quarter-end during a blizzard resulting in severe short-handedness to ask whether a pricing special from two months ago was for all the "Super Expanded" loans or just the "DeLuxe ARM Super Expanded" loans. But I may be jaded by my own sad personal baggage.

It appears that at Countrywide they do really empirical scientific methodologically-rigorous stuff like asking complete strangers whether they would prefer to choose from a list of options or just get handed the same thing everyone else gets. Sit down, folks: this being early 21st century America, not the Politburo under Stalin, a majority of respondents picked "choice"! I am like so totally stunned and surprised. Who'd of thunk?

CALABASAS, Calif., July 23, 2007 /PRNewswire via COMTEX/ -- Countrywide Home Loans today unveiled a broad national initiative designed to educate mortgage consumers about the fact that they have many options available to them regarding how certain costs are paid when refinancing or obtaining a home loan, no matter which mortgage lender they choose. Countrywide is arming its more than 9,000 loan officers and mortgage sales force with new and improved tools, such as specialized mortgage cost calculators, that will allow them to thoroughly and transparently show customers cost-effective choices for structuring their home loan packages.

To understand how strongly consumers feel about the issue of choice versus a one-size-fits-all mortgage, Countrywide commissioned a national survey of more than 2,280 homeowners. The results show that the majority of respondents (76%) strongly agreed that they wanted to be informed by mortgage lenders about as many closing cost choices as possible in order to arrive at a decision best suited to their individual circumstances.

"Specialized mortgage cost calculators." What will they think of next? Fax machines?

I don't know exactly how many hours (days, weeks, months) my own personal butt has spent parked in a conference room listening to some front-end mortgage software vendor go through the dog and pony show on the "specialized mortgage cost calculators" that are included in the package and that allow the loan originator to run something between six and eleventy-jillion "scenarios" for a customer since the mid-90s, but it's a lot. I will say that back in '97 probably only the bigger shops had this cool technology, but then only the bigger shops in those days had fax machines that didn't use thermal paper rolls. If there is one mortgage originator out there today doing more than $25,000 a month in volume that does not use a multi-scenario pre-qual module, I want to know who it is.

You see, this isn't just a rant about stupid marketing strategies. This is about whether we did or did not just spend the last six years or so inventing endless new products, new fee schedules, and new underwriting "guidelines" such that every consumer had a giant Chinese menu to choose from. Word on the street is that a large percentage of these folks chose the one with the smallest monthly payment and the smallest cash-outlay at closing, since they really didn't have any other choice. Word in the back room, which is trickling out into the street, is that a very large portion of those folks are doomed.

But by all means, let's keep encouraging people to think that "I'm only going to be in the house for two years" is something other than the wallpaper on the corridor to Hell. The diaper aisles are full of people who were only going to have two children. The universities are full of 24-year-olds who were only going to take 4 years to get a degree. The county jails are full of penitents who were only going to have one more drink. The bankruptcy courts are getting a tad crowded with REITs who were only going to buy back less than 1% of their mortgage loans. You think there are some folks who bought in mid-2005 with no-down low monthly payments whose plans are under adjustment right about now?

When Countrywide has to drag out a marketing campaign that was stale before the invention of the internet and is putrefying since then, you know we're getting a little desperate to keep clinging to the illusions. What a bunch of tools.