Think about the idea of someone doing direct mail and testing 15 different versions of an envelope to increase the chance that you open that piece of mail in your mailbox. Direct marketers try all sorts of different paper and offers on the outside. They test making the envelope look formal, making it look like it is hand addressed, or adding an actual stamp so it doesn’t look like it’s been stamped by a meter. And that is just the envelope.  Direct marketers test all sorts of versions of the content as well copy length, price points, and offers. We have all also seen it in catalogs we get as well. Is it better to offer a 10 percent discount, a free add-on, or free shipping? Which offer will return the greatest revenue and ultimately profit? Marketers have been testing these things for years to maximize their conversion rates.

Let’s take a look at the definition of direct marketing. I found several, but the definition on Wikipedia said it best:

Direct marketing is a sub-discipline and type of marketing. There are two main definitional characteristics which distinguish it from other types of marketing. The first is that it attempts to send its messages directly to consumers, without the use of intervening media. This involves commercial communication (direct mail, e-mail, telemarketing) with consumers or businesses, usually unsolicited. The second characteristic is that it is focused on driving a specific “call-to-action.” This aspect of direct marketing involves an emphasis on trackable, measurable positive (but not negative) responses from consumers (known simply as “response” in the industry) regardless of medium.

Let’s break down this definition a bit, looking at the two key elements:

Delivering Messages Directly to the Consumer

Online, more companies are tuning their messages or Web sites based on a visitor’s profile, previous activities, or anything else known about that person. While many sites are still “one size fits all,” more companies are getting smarter about the way they communicate with Web visitors. Think of some customized experiences you see at Amazon or timely calls to actions you see on other sites when you have been there before.

Driving a Specific Call to Action

This is a big one. What is it we want people to do on the site? Realistically there are a number of things that could define success for any given Web site. When you start to segment your audience, the number of things we want visitors to do on the site can get narrowed down. Your site can be more successful if you narrow down those choices based on your visitors and really look to drive interest in those activities. Think of a banking site when a visitor lands on the home page. If it knows that a visitor has previously logged onto its Web site during a previous visit, it should not dedicate 50 percent of the homepage to getting the visitor to sign up for online banking. It isn’t applicable and she won’t respond. Rather, the visitor may already have an account and the banking site may want to inform her of an add-on service or helpful piece of information about it. Just as the online banking promo might not be applicable to someone who is not a customer, the add-on service promo might not be applicable either. Because the message isn’t targeted, it won’t be successful. More important, the banking site is missing an opportunity to give each audience segment something that makes sense to it. Go back to the definition of direct marketing: the banking site is not giving the audience an applicable call to action to respond to, and thereby, not advancing the visitor as a customer.

But again just like the envelope examples above, the beauty of direct marketing is the idea of testing what works and what doesn’t in order to maximize ROI (define) and profit. Read the original Click Z article online.

Home prices are low. Home prices dropped at a record annual pace of 18.7% this past March. That means discerning buyers can find real bargains. Mortgage interest rates are still good. While interest rates have risen from their historic lows earlier this year, they still are appealing. In mid-June, rates hovered around 5.70% for a 30-year fixed-rate mortgage.

Tax credits will help. 1^st time homebuyers can get money back from tax credits implemented as part of the 2009 American Recovery and Reinvestment Act. An $8,000 credit is available to first-time buyers for homes purchased before December 1, 2009. Home financing legislators are considering increasing the credit to $15,000 and expanding it to include other home buyers

Credit scores matter. While houses are widely available, home financing is limited to those with good credit. Credit scores range from 300 to 850, with the median U.S. credit score about 725. A score below 680 usually results in a higher interest rate or denial of credit. Check your credit score before you make any home buying decisions. If your score is lagging, wait a few months and work to improve the score by paying every bill on time, paying down as much debt as possible and disputing any erroneous information on your report. Note that it can pay to do your homework researching FHA mortgage rates and lenders — credit scores do not decline if multiple similar credit report requests are submitted within a close time period (usually a few weeks).

You must have savings. A down payment is essential today. Ideally, you can put down 20% of the purchase price (see #7 regarding PMI). If not, talk to your mortgage lender about your options.  Do not stretch too far. Standard underwriting guidelines call for keeping housing expenses below 35% of total income. Breathing room in your budget will help you keep your home even if something unplanned does occur. If you are uncertain, wait to buy.

Understand private mortgage insurance (PMI). Home mortgages with less than 20% home equity (which means a 20% down payment for those purchasing a home) require PMI in case the owner defaults on the home loan. When the home owner pays a conventional home mortgage down to 80% or less of the home’s value, the home owner can request the home lender to cancel the PMI and then be able to stop paying the additional amount. Meanwhile, PMI is tax-deductible, at least through 2010.

Know the real costs of buying. The principal and interest on a mortgage payment are only the beginning of home-related costs. Escrow payments - the funds withdrawn to cover home insurance and taxes - and PMI can add a few hundred dollars per month to a mortgage payment. In addition, home owners must pay for repairs and maintenance. A rule of thumb is to budget 1% of the home’s purchase price per year for upkeep.

Know whether you can pay off early. If the mortgage loan has a prepayment penalty, borrowers face hefty charges if they pay it off early. This provision also can apply to future mortgage refinancing, so be forewarned. Review Truth in Lending disclosures to find out.

Buyer beware. Some of the lowest prices on homes today are “fixer-uppers” or homes sold “as is” because of foreclosure. Invest in a home inspection before agreeing to purchase any home. The inspection will inform you of any faults in the home and help you determine the approximate cost to remedy those problems.

For many Americans, the time is right to take advantage of today’s excellent home buying opportunities. If you are among

The AP reported unemployment rate in the West jumped over 10% last month, the first time that regional threshold has been broken in about 25 years. On the state level, eight set record-highs and only two Nebraska and Vermont did not report increases.

The Labor Department reported Friday that 48 states and the District of Columbia saw employment conditions deteriorate last month. The fallout from the longest recession since World War II, was the worst in Michigan as automakers cut tens of thousands of jobs. Its unemployment rate rose to 14.1%.

The West region reported the highest jobless rate at 10.1%. The last time any region had a rate of at least 10% was September 1983, when the country was emerging from a severe recession.  The region is home to California, where the jobless rate rose to a record 11.5 % last month, Nevada, where it’s a record 11.3%, and other states that have been slammed when the housing boom went bust snatching jobs and wealth.  

http://www.jasoncardifftips.com/?p=143 Freddie Mac’s most recent mortgage market survey shows that a thirty-year home loan with fixed interest rates that dropped to 4.80% this week.  At the same time, congress is putting their finishing touches on HR 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009 that claims to address several aspects of the mortgaged origination, loan securitization and servicing process. The mortgage bill was debated Thursday at a House Financial Services Committee hearing.  HR 1728 would require loan officers to determine a borrower’s ability to pay back a home loan, and only extend mortgage refinancing when there is a “net tangible benefit” to the borrower. Loan officers would no longer be able to collect yield-spread premiums or other compensation that many critics say served as incentives to steer borrowers into higher risk home mortgages that cost the consumer higher fees and terms that benefit the mortgage lender.

Last week, Fed Chief, Ben Bernanke talked about the need for government regulation to protect homeowners and American consumers. The central bank had approved new home financing regulations aimed at curbing abuses on home mortgages. The mortgage lending revisions would restrict mortgage lenders from offering home mortgages without proof of a borrower’s income and would require lenders to make sure risky borrowers set aside money to pay for taxes and insurance.  As FHA loan market-share grows, so does the risk for defaults, foreclosures and more “egg on the face” for mortgage companies that originate FHA mortgage loans.

The mortgage reform bill would also drop the trigger for mortgages to be considered “high cost” and subject to the more stringent requirements of the Home Ownership and Equity Protection Act (HOEPA). Mortgage lending companies remain adamant that home loans subjected to HOEPA are difficult or impossible to securitize and sell to secondary-market investors.  To encourage responsible lending, the bill would also create a limited “safe harbor” from lawsuits for “qualified mortgages” prime, fully documented, thirty-year mortgage loans. Those mortgages would be exempt from some of the bill’s requirements.  I find that “exemption” very interesting.  Let me tell you this smells like a short-sided mess that enables the politicians to pat themselves on the back while enhancing their image as “tough” on mortgage crooks.  From a distance it looks great, but they appear to be tacking this bill on poor legislation that lacks the foundation we need for fair and responsible lending.  - Commentary written by http://www.jasoncardifftips.com/?p=140 The Dept. of Housing and Urban Development recently released an important FHA Mortgagee Letter that is imperative for mortgage brokers, lenders and finance companies that plan to see FHA loans in their future.  In an effort to protect the public trust and the FHA Insurance Fund, HUD is enforcing that mortgagees are accountable for their lending practices. FHA expects each mortgagee to exercise the same level of care in originating, underwriting and servicing an FHA insured home loan as it would for home financing in which the mortgagee would be entirely dependent on the property as security to protect its investment.  When a mortgagee fails to comply with HUD’s policies and procedures, HUD will take the appropriate action.  For example, brokers or lenders that materially violate FHA program statutes, regulations and handbook requirements may be referred to the Mortgagee Review Board for appropriate sanctions, which may include termination of mortgagee approval.

HUD believes that many lenders have not lived up to the ethic codes and high standards required with FHA underwriting guidelines. HUD believes that many FHA lenders have not lived up to the ethic codes and high standards required with FHA underwriting guidelines.  That could become a problem because home mortgages that do not meet FHA mortgage lending standards to the letter are likely to result in foreclosure or a home loan default that cause FHA insurance to rise. Assistant Secretary for Housing, Brian D. Montgomery recommends that if you have questions regarding this Mortgagee Letter, please call the FHA Resource Center at 1-800-CALL-FHA (1-800-225-5342).  Read the complete FHA lending article > FHA Mortgage Loans Update with New HUD Rules for Lenders.

Bad credit mortgage options remained non-existent for struggling homeowners seeking home refinancing with fixed rates and lower loan payments.  Millions of homeowners have been turned down by mortgage lenders across the country, because of low credit scores, delinquent mortgages, negative equity or employment instability.  Some homeowners may qualify for loan modification plans if they happen to have their mortgage collateralized by Fannie Mae and Freddie Mac.  However, only conforming home mortgages qualify for the federal mortgage modification program.  Jumbo home loans do not qualify for a federal or FHA mortgage that ensures foreclosure prevention through a loan workout or mortgage refinance loan.

According to FICO, “Credit utilization rate has proven to be extremely predictive of future repayment risk, so it is often an important factor in a consumer’s credit score.  Credit holding companies started taking a pro-active approach to borrowers who access a significant proportion of their credit available because they are much more likely to default on their credit card terms with debt settlement, credit counseling or bankruptcy. However people maintaining lower credit utilization levels whose credit cards and home equity lines of credit are not maxed out are much more likely to continue making their credit debt payments as agreed.

5 % of the population, or 10 million consumers, saw their limits reduced because of some sort of risky credit activity including late payments, accounts in collections, or a negative public record added on their credit reports. The credit score decrease is likely due in part to an increased credit utilization percentage, while the score increase is likely due to the reduction of credit card balances. News reports also indicated that the home loan defaults and credit card debt negotiations have caused the credit repair industry to explode.

Read the complete credit report article > Thousands of Credit Card Consumers Report Credit Line Reductions in 2008.