Recent CFPB advisory opinion may mean cheaper Google Ads for lenders

In February, the Consumer Financial Protection Bureau issued an advisory opinion addressing how certain mortgage comparison site platforms could potentially be violating the Real Estate Settlement Procedures Act (RESPA) section 8. 

According to the advisory opinion, if the mortgage comparison site “provides enhanced placement or otherwise steers consumers” to certain operators based on compensation, an operator would be in violation of the RESPA section 8. And if the operator received a “payment or other thing of value” that is, at least in part, for the referral activity the site provides, a mortgage comparison site will be hit with a prohibited referral fee.

How have mortgage comparison sites changed since the advisory opinion, and what does that mean for lender marketing?

According to Michael McAllister, president of Empower LO, it means it may be time for individual loan officers to start a Google Ads campaign as costs are lower. He’s already seeing changes reflected in the cost of Google Ads — specifically in pay-per-click direct response marketing, where companies may use pay-per-click campaigns to drive traffic from Google searches to landing pages to generate leads. Some of those landing pages would generate leads by presenting themselves as a mortgage rate comparison or ranking site. 

A drop in mortgage comparison sites

To confirm why the cost of Google Ads is cheaper, he looked at the number of mortgage comparison sites that advertised before the CFPB advisory and after — June 1-30, 2022 compared to February 7-March 8, 2023. “Lead costs had dropped and the number of competitors [advertising] dropped substantially,” said McAllister. He wanted to prove the link to the CFPB ruling.

“I broke it down across seven different states,” he said. “In terms of the final averages, we had a 59.5% decrease in cost per click and a corresponding 50% decrease in cost per lead.” 

In one market, they even saw cost per lead drop by 166%, according to his analysis.

“For a more concrete link, during that same period of time, we saw an average of 60% drop in the number of competitors advertising in those markets,” he said. “Not only is it the cost per lead dropping, but we can tie that to a drop in the number of people that were advertising. From there, I can take a look at some of the names of the companies that were advertising back in June that are not advertising in the last 30 days.” 

What does this mean for lenders?

For most individual loan officers, this hasn’t had an effect unless they’re working with a marketing agency passing those savings onto them. 

However, for those lenders wanting to invest in Google Ads, this may be the right opportunity. With fewer competitors and a lower cost per click, it’s a good time to explore your marketing options.

“There are a lot of lenders out there that have considered running Google Ads for their business but feel like it’s too competitive, too difficult, too expensive,” McAllister said. “We’re seeing reason to believe that if it felt like that before, it might not feel that way now.”

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