DID THE CFPB JUST KILL PING POST TRANSACTIONS?: Regulator Finds Sell of Transfer Leads to Highest Bidder May Violate RESPA - by TCPAWorld.com
Anyone selling leads, especially those selling mortgage leads, must read the above article. I believe this is a more complex issue than first meets the eye. I have been around the lead world long enough to remember that before the mortgage bubble burst in 2008, some states pushed to regulate companies generating mortgage leads. The biggest companies were starting to comply, and I recollect that most smaller companies were not. I believe the above ruling is based on forcing mortgage lead generators to comply with these RESPA rules. I am not going to argue that point. I believe what the CFPB is pushing here is the lack of transparency and honesty with the consumer. Going back to some of my previous suggestions (or rants, if you will) and what lead generation companies must do-
- You have to provide a valuable service to the consumer. Matching a consumer’s request with a service provider that can service that consumer may alone fulfill that value. My wife and I needed to replace a septic system several years ago. We got one referral from a contractor, but that company was too busy. We started calling all 20 companies licensed in the county to do septic systems, and it took three months of calling, emailing, following up, etc., to get just three quotes. Huge waste of time. Had there been a matching service that could have cut that time short, it would have been worth it.
- Lead companies must do what they say and say what they do. If you are going to match them with three service providers and those providers will call the consumer...then make that very clear and easy to understand. That also means three and not three today and another three in a week (or, if you are going to do that, make sure the consumer knows). If you would not let your mother fill out your lead form because of the harassment she would receive, then you have a problem with what you are doing.
- Be transparent in what you are doing. I think this is the big issue the CFPB has with their mortgage marketplace example. Do not tell the consumer you are matching them with the best provider if really you are just matching them with the provider who is paying you the most. This can be easily solved if it is your marketplace. Amazon and Google clarify which links are paid/sponsored and which are not.
To take this a bit further, I believe lead companies need to work harder at “knowing” their vendors and lead buyers. The black-box nature of the current flow is not sustainable. If the consumer is being misled by the website gathering their information, you, as an aggregator, should not be part of the problem. Instead, develop a strategy for vetting vendors and demand a feedback loop from your lead buyers so you can stop processing leads from bad sources. If you can also get a feedback loop from the consumers about how they were treated by your lead buyers, even better.
If processing the buyers of mortgage leads by price ends up being the sticking point, then lead companies can always go back to flat pricing and matching on a priority order. Another option is to give the consumer the ultimate decision on what company(ies) their request is matched with by returning the potential matching companies to the consumer. Here is a quick video illustrating that process.
Many options lie between the two extremes, only matching by price and removing ping post altogether, which does not remove the benefits of ping post but utilizes the process to enhance the consumer experience. I do not think this is the end of the world for mortgage lead generators but rather a push to do better. There certainly is room for improvement.
We are not lawyers and this is not legal advice, but when we heard the news we thought you would want to know what is happening and how it relates to the industry.
Brad Seiler
Owner
boberdoo.com LLC