|A new mortgage lead generation company is only charging originators for leads that convert to closed loans. But one competitor questions the business model’s compliance with the Real Estate Settlement Procedures Act.
Charlotte, N.C.-based PPF Network said it has set up a lead management system online that tracks the leads it provides.
“PayPerFunding.com releases thousands of mortgage leads to the network’s members and tracks the progress of each member using a web based LEADS management technology,” the announcement said. “PPF governs the entire system to track when members close a loan.”
An annual $1,200 membership fee enables access to the Web-based leads manager and a number of leads specific to match the lender’s needs, the company said in an e-mail statement. A flat fee of $300-500 is then charged per closed loan, with a discount provided “depending on how many closings you secure in escrow.”
The company said it requires a minimum of $1000 in escrow to pay for the first two closed leads.
Marc Diana, founder of LeadPoint, a leads exchange program, told MortgageDaily.com that this particular business model raises a few questions, one of which is compliance with RESPA.
“If they are sharing in revenue on a closed loan basis they are now triggering a lot of components of federal regulations that are governed by RESPA,” Diana said.
Another point to ponder would be the quality of the leads.
“It’s great I have no risk but do I have to make 100 phone calls to fund one loan — quality still matters,” Diana said.
PPF Network representatives were unavailable to comment.
PPF said in its announcement, “A handful of the first loan officers to try the PPF payperfunding.com service have reported a greater ROI than when buying mortgage leads from the open lead market online.”
Greg Harris, an executive for Services-On-Tap, a firm that generates mortgage leads as well, said that the quality of the mortgage sales team is certainly a factor when the question of return-on-investment is presented.
“In our business we have clients that report to us that they consistently close over half the leads that we send them and we have others that struggle to close a reasonable percentage,” Harris said.
Regarding the business model, Harris told MortgageDaily.com that his company has considered similar structures.
“I think this is an industry where there is not a lot of trust,” he said. “We all find on a daily basis, the challenge of building trust with our customer and I applaud the goal of guaranteeing your results; that is a great way to demonstrate that you are a trustworthy firm that is committed to your customer’s success.“
Paula Parisot is a MortgageDaily.com feature reporter and a blogger at CloserBlog.com who has also worked in the mortgage industry.
e-mail Paula at: PaulaParisot@MortgageDaily.com
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