Sales Boomerang Q4 report reveals opportunities for lenders

The Mortgage Market Opportunities Report (MMOR) analyzes Sales Boomerang system data to determine opportunities for borrowers and lenders by comparing the aggregate frequency with which contact records trigger loan-opportunity, prescriptive-scenario and risk-and-retention alerts.

Loan opportunity alerts identify the contacts inside a lender’s database who are actively shopping for a mortgage loan or who may be able to benefit from a new mortgage loan. Sales Boomerang includes the frequency of each alert type in the fourth quarter of 2021 across a sample group and compares it with the prior quarter. Those include:

• Mortgage Inquiry Alert, where a customer or prospect has shopped with a competitor in the last 24 hours, seen in 4.42 percent of monitored contacts, down 16.13 percent from the previous quarter.
• EPO Alert, where a customer or prospect whose loan closed within the last six months has shopped with a competitor in the last 24 hours, seen in 1.84 percent of monitored contacts, down 17.49 percent from the second quarter.
• Credit Improvement Alert, which occurs when a customer or prospect has improved their FICO score, seen in 1.14 percent of monitored contacts, down 13.64 percent.
• New Listing Alert, where a customer or prospect has listed their home for sale, seen in 0.64 percent of monitored contacts, down from 38.46 percent.
• Equity Alert, which occurs when a customer or prospect’s home equity has increased, seen in 8.61 percent of monitored contacts, up 7.36 percent.
• Rate Alert, occurring when the interest rate of a customer or prospect’s existing mortgage is significantly higher than current prevailing rates, seen in 5.07 percent of monitored contacts down 27.16 percent.

“Borrowers aren’t always aware of the multitude of ways they can leverage their home equity, yet it’s becoming increasingly clear that equity is creating some of the best financial opportunities for borrowers and lenders today,” Sales Boomerang Alex Kutsishin said in a release. “It is up to us to help mortgage advisors bring these opportunities to the table for their customers. Experts may have predicted 2022 would be a year to focus on purchase transactions, but our data shows lenders would be well-served to shine equal light on home-equity lending.”

In addition to the alert statistics above, the MMOR contains prescriptive-scenario alerts, which analyzes not only whether a consumer could benefit from a given loan type, but also whether the consumer is credit-qualified to apply for financing. The frequency of each of these alerts in the fourth quarter of 2021 was:

• Cash-Out Alert, where a borrower is credit qualified and has built sufficient equity to tap into the cash in their home, seen in 5.08 percent of monitored contacts, up 17.87 percent from the second quarter.
• Rate-and-Term Alert, occurring when a borrower is credit qualified and can benefit from the current interest rates for a refinance, seen in 10.05 percent of monitored contacts, up 160.36 percent from the previous quarter.
• Debt Alert: where a borrower is credit qualified and can benefit from paying off other debts with the equity in their home, seen in 1.33 percent of monitored contacts, down 23.12 percent from the second quarter.
• FHA MI Removal Alert, which occurs when an FHA borrower has exceeded 20 percent equity and can remove mortgage insurance, seen in 14.01 percent of monitored contacts, up 92.71 percent.

For lenders that maintain servicing portfolios, the frequency of risk-and-retention alerts dropped 14 percent quarter-over quarter to 31.18 percent. This alert occurs when a customer is engaging in one or more of 15 credit activities that may put their serviced loan at risk. The drop in the fourth quarter was the first significant decline in this category for 2021.

Despite this drop, Sale Boomerang recommended mortgage servicers keep an eye on their portfolios for default risk, as almost one-in-three borrowers are exhibiting risk credit behaviors.

Based on these statistics, Sales Boomerang suggested lenders be prepared for continuing cash-out refinance and HELOC activity in the coming months; watch for a growing subset of consumers who have the home equity and credit profiles necessary to benefit from a refinance; and be proactive in bringing financially advantageous opportunities to potential customers.