Consumer Home Research Predicts Run-Off Activity
Stacey Timlin, Editor
February 12, 2001
Inside Mortgage Technology

Lenders can prevent portfolio runoff from housing sales through a new service that allows them to track customer behavior to get wind of a potential transaction before it takes place. This enables lenders to market aggressively to that customer before he or she ends up with another lender.

Lenders subscribing to the new service work with Domania, a Massachusetts-based company, which provides online access for customers to make inquiries about county records data on home sale prices and sales dates throughout the country. Lenders that provide this service through their web sites can then track individual behavior and predict customers who are likely to move soon.

Steve Kropper, CEO and co-founder of Domania, characterizes its service to customers as a sort of Blue Book for homebuyers. The company maintains a database of public records on home sales, including data on when and where a home was sold and for how much, for about 24 million U.S. homes, or just north or 80 percent.

While lenders have many ways to identify potential refinance customers, such as looking at the interest rate on a loan, they don't have good tools for detecting purchase-money runoff. Kropper says the only way to figure out when someone is moving to a new house is to study his or her behavior.

"We're focusing on how to mine the servicing portfolio for value. Because typically when a lender gets a payoff request from a borrower, that's usually the first time they hear that somebody's going to leave the portfolio," he said.

Kropper says the focus on purchase-money lending is important because most portfolio run-off is housing turnover, not refinance activity. He says Domania is the only tool he is aware of for detecting purchase-money runoff.

The new service Domania is launching allows lenders to take advantage of what Domania has been doing on its own for years.

Potential buyers can go directly to Domania.com or to one of its business partner's sites to check out past prices for particular homes, price homes in neighborhoods or areas, or search for homes within a particular price range in a region.

Domania then uses a complicated rule-based system to predict behavior, such as which users will likely purchase a home soon and which are likely to refinance a mortgage.

Kropper explained that if someone does a price search on homes in their neighborhood and then does a search in another local area with home values an average of 10 percent higher, Domania's system predicts that the particular customer is looking to move up to a slightly higher priced district. Kropper said the system has about a dozen rules that would identify buyers.

Similarly, if a user is only looking at houses in their neighborhood, they are likely considering refinancing. If the user looks at several houses in the same time, they will probably be going to open houses that weekend.

On the other hand, if a site visitor does a search on five random houses in a region, most likely he or she is not looking to buy a house, but is perhaps spying on their boss or co-workers, says Kropper.

Kropper says that 65 percent of the site users are "transactors" who will buy, sell, or borrow in the next 6-8 weeks.

Previously, Domania operated as a phone service where callers could call in for information and pay by credit card. Using the information collected through these telephone inquiries, Domania was able to profile callers and deliver the information to lenders and builders to use as leads.

The company went online in 1997 and is now offering access free to users. Non-registered users have access to basic information on homes price and the date of its sale. Registered users can get much more detailed information such as the number of bedrooms and bathrooms and tax information. About 10.6 percent of those who use the site are registered.

Registered users also receive Domania-grams or e-mails when homes sell in their area. They receive solicitations this way as well, although Kropper says that the company sends no more than four e-mail solicitations a month.

"The bargain is we say, Â?Hey this is the Internet and the way the Internet works is you let us market to you and we'll give you some great juicy data,'" he said. "If you are in the phase of buying a house, typically you appreciate us referring you to a realtor and lender because then somebody's soliciting you."

Domania's multiple business partners use this information for lead generation. About 300,000 of Domania's users go directly to its web site to make home price inquiries.

The rest of the searches are through Domania's partners who use private label versions of its search engine on their own sites. Kropper said pricing varies from partner to partner for the service based on licensing agreements.

Domania also allows partners to advertise on its web site and pays affiliates two cents every time they link to the site.