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I realize that the refinance market has been a popular place for many companies to hang out. Hopefully, strategy and thought for purchase business has been given just as much attention. However, as you re-direct your lead company you may want to ponder the implications of what you are purchasing.

Let’s say you buy only 760 credit scores with certain zip codes and above average loan amounts for those areas. Some will say that this is how they get “good” leads and it doesn’t make sense to buy bad leads. Some say their originators buy their own leads (yikes!) The issue that needs to be discussed, is why certain zip codes? If your criteria is a certain credit score (and this should be in line with your underwriting policy, not just picking higher credit score clients) then why would you segment by zip code if you do business in all parts of the MSA? After all, a qualified client in an under-served market should equal any client that you would accept. Are you prepared to discuss this with a Fair Lending Examiner?

Take a look at your policy for buying leads. If you are “redlining” by picking certain zip codes or buying leads that greatly exceed company underwriting guidelines…… WARNING!

It is no different than only originating in certain parts of your MSA because those are the only loans you wish to do.

Take a hard look at your lead’s policy. How does it apply to your overall marketing strategy? Are there potential redlining or disparate impact issues? All of this should be addressed, put in to policy and communicated. Compliance folks, do you know what leads are purchased by your company? Do you know the selection process? Once again, the executives should gather around the compliance team to make sure headaches are not being created unnecessarily. If you believe you have a business justification, then hire the consultants and attorneys to build that for you.

I know a few of you just fell on the floor. Pick yourself up and let’s get the compliance people, sales executives and other executives in the same room to solve this very important issue. You will be so much happier come exam time!

Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

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