What is sub-prime, and who are the players? The following two sections provide some details so that you can become familiar with the world of sub-prime lending.

Homework question 1: Who are the players in sub-prime home loans?

The below is a short list of who are the major players in sub-prime home loan lending markets. The players are mainly the banks, so unless you are bank manager, bank security guard, loan officer, etc. will be in the list. (Some people may not want to be included for obvious reasons, and these people are: Mortgage brokers, sub-prime originators, etc.)

The banks pretty much stand at the top of the pyramid, in that the largest banks are the biggest lenders.

Homework question 2: What do these banks do to make money? How do they make money on the home loan enterprise?

One aspect of operating in the sub-prime home loan lending system is that the banks have strong brand names, and are recognizable. Other major businesses that make money in the system include mortgage originators like us, and mortgage brokers, who take loans, find people to lend them money, and then package and sell them mortgage packages.

One last homework question: Who are the players in mortgage broker business?

In this world of sub-prime home loan lending scheme, there is no developed market, so you have to gain leverage over your competition by advertising through online marketing, or through a mortgage brokers’ marketing efforts.

When you hear a mortgage broker marketing, it is usually not truthful, just self-promoting. The banks are of course marketing, and a lot of the marketing for mortgage brokers is done by originators, who are also registering investment packages, such as us, in a beautiful scheme that causes people to believe in the importance of sub-prime mortgages.

Now that you know who the players are, we can go to the next homework question:

What is the competition like between companies in the sub-prime home loan lending system?

Here, it depends on the stage of development of the market. Banks and originators are competing against each other, and originators certainly need the leads to develop a competitive market, because their success depends on the flow of new leads.

The competition between all the players

In this world of sub-prime home loan lending market competition can run hot and cold, sometimes offering access to massive amounts of loan leads. Sometimes banks even make some sub-prime home loans themselves.

Here are some questions to consider:

Do originators offer competitive prices, and do they have affordable loan-to-values?

What is the cause of competition amongst the players?

At this point it is undeniable that some companies are harmful to the mortgage market, because they take advantage of desperate borrowers, while others can niche the market well, and market to those who are not really in a panic.

I am concerned about the identity theft risk in this discussion. It should be stated that this kind of marketing is not new, it is just getting more attention from mortgage brokers, and originators alike, now that some of the non-preferred misuse of social security numbers has been made illegal in the US and Canada, as of this writing. So I leave the discussion to you, but I do want you to always be cautious about who you talk to, and where you talk to them.

Do you want to get only the best mortgage lead quality?

Are originators generally the top candidates for mortgage-related identity theft?

How do you decide who will be the best lead for whom company or program?

Does breakout marketing match the functions of different search terms?

What are the key criteria you use when choosing a lead?

How do you test testing the best leads?

What is your process for choosing the best lead in real-time?

Do you lead to an automated phone system or a physical mailing address?

Does the target market have tons of home loan information readily available through internet search engines?

Notice that I did not say the lead must be in a specific state. The only requirement I used was that the lead must have a phone number. Now that you know who is the best mortgage lead of the current day, you will be able to decide who the best mortgage lead is for your company and which lead will be perfect fit for your customers.