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The past few years witnessed the booming of the real estate industry. With it, sales persons saw the opportunity and involved themselves with the mortgage industry so that they can cash in -- conveniently and quickly. According to the industry's 2005 statistics, over a million loan officers and brokers all over the United States flocked the mortgage world, plus direct lenders and banks that kept the industry afloat.
Alongside the upsurge of the real estate and mortgage industry, lead generation companies boomed. For one, LowerMyBills.com, the Web site of an Experian-owned consumer finance corporation, earned, by connecting prospec mortgage borrowers and lenders, a whooping $26,000,000 in profit over sales of $120,000,000 as of March 2005. According to various reports, the company became one of the largest mortgage advertisers in November 2006, and spent roughly $75,000,000 in assuming this leadership. The following year, LowerMyBills.co.uk was launched.
On the other hand, LendingTree, LLC had facilitated over 20,000,000 loan requests, and closed $152,000,000,000 in loan transactions since its launch in 1988. LendingTree provided access to mortgages, and among other things, refinanced loans, auto loans, home-equity loans, personal loans, credit cards and savings accounts.
The recent scenario, however, has become much different. In fact, since mid-July 2007, the real estate market had seemingly cooled, prompting various vendors in the mortgage leads generation to close business, including about 450 mortgage lead providers to loan officers and brokers. By the years 2006 and 2007, the decrease had swelled to a hundred percent. The subprime mortgage industry went into a deep freeze state, spreading layoffs among lending companies.
LendingTree, among other companies, has been hit hard by the downturn. In 2007, the company reportedly laid off over 400 workers that made up 20% of its entire workforce.
According to analysts, generating mortgage leads have become much tougher, as consumers have grown weary of their financial states -- becoming smarter shoppers and customers. Techniques that generally worked for them ceased to become enticing, such as filling out Internet forms, which dangled convenience in process and quick action.
As compared with the past industry conditions, people today who have money and good credit standing do not make decisions as they did during the real estate or mortgage boom. These days, a majority of Internet users who are seeking loans are either buyers or refinance prospects with credit issues and some little cash.
These days, loan officers are struggling to learn to generate mortgage leads of their own, or find the best providers, policy and quality-wise. Analysts say that perhaps, in the past, the focus was merely on the number of leads, instead of zeroing in on actual quality and the company policies on credits for these leads.
With the sub-prime market struggling and the biting effects of credit crunch in the U.S., lead generation companies need hefty capital to develop leads, which will not be worth the expected percentages of real credit prospects, which are estimated to range only from 5% to 15%, assuming that the information at hand is valid and accurate.
In light of the problems besetting the mortgage and real estate industry, mortgage companies have taken a backseat and reorganize themselves as credit repair companies, legally processing consumer credit standing to remove inaccurate data from their credit reports, based on Consumer Credit laws in the U.S.
Among other companies that took the mortgage-to-debt-repair shift, LendingTree is known to have survived the downturn of technology that plagued loan and mortgage industry, and has been applauded by investors at Wall Street. In 2007, LendingTree took advantage of the refinancing boom, and, with the rise of the current rates and the lenders seeking more customers, LendingTree's business of pre-screening borrowers are much more prized. Analysts aver that LendingTree is reaping benefits from its strongly positioned market, and its recognizable brand.
According to the Research Department of the Philadelphia Federal Reserve Bank, th U.S. consumer credit repair and reporting industry has dramatically evolved from joint ventures of a few local retailers in the 1900, to a technologically-dependent industry which supports the country's trillion-dollar credit market. Apparently, credit bureaus have changed, just as lending and retail did.