Big news out of the largest lead generation scandal in history.

For back story on the case between LG Technologies and Edward Shin, Chris Smith and others please read the following articles, starting with this one.

It was released recently that Edward Shin, the main defendant of the charges made by LG Technologies switches his pleas to GUILTY. According to the minutes made available through Riverside Court house Shin has switched is plea, waives his right to a jury trial, waives his right to cross examine the witnesses and waives his right against self incrementation.

Here is an excerpt from the minutes:

Case SWF029673 Defendant 1418661 SHIN, EDWARD YOUNGHOON
Defendant 1 of 1
Action:
Case SWF029673 Defendant 1418661 SHIN, EDWARD YOUNGHOON
Action: Preliminary Hearing Date: 05/26/2010 Time: 8:30 AM
Division: S201 Hearing Status: DISPOSED
HONORABLE KELLY L HANSEN PRESIDING.
COURTROOM ASSISTANT: SLH-S. HOLDER
COURT REPORTER: TF-T. FRAZIER
PEOPLE REPRESENTED BY DEPUTY DISTRICT ATTORNEY: TOREY NASIF.
DEFENDANT REPRESENTED BY PVT STEVE HARMON.
DEFENDANT PRESENT.

AT 10:17, THE FOLLOWING PROCEEDINGS WERE HELD:
DEFENDANT’S COUNSEL WAIVES FORMAL ARRAIGNMENT.
DEFENDANT WITHDRAWS PLEA OF NOT GUILTY AS TO COUNT(S) 01 AND IS REARRAIGNED.
DEFENDANT PLEADS GUILTY TO COUNT(S) 01.
DEFENDANT ADMITS ENHANCEMENT(S) D8 IN COUNT 01.
FELONY PLEA FORM IS INCORPORATED HEREIN AND INCLUDES THE FOLLOWING ADVISEMENTS
AND WAIVERS:
DEFENDANT ADVISED OF RIGHT TO A SPEEDY AND PUBLIC TRIAL BY JUDGE OR JURY.
DEFENDANT ADVISED OF RIGHT TO CONFRONT AND CROSS EXAMINE WITNESSES; RIGHT TO
PRESENT EVIDENCE ON OWN BEHALF.
DEFENDANT ADVISED OF RIGHT TO ASK COURT TO COMPEL WITNESSES TO ATTEND TRIAL AT NO
EXPENSE.
DEFENDANT ADVISED OF PRIVILEGE AGAINST SELF INCRIMINATION.
http://public-access.riverside.courts.ca.gov/Ope…actioncode=PH&actiondate=20100526&actiontime=8.3 (1 of 2) [5/27/2010 11:03:28 AM]

SWF029673 – Minutes – Riverside Criminal & Traffic
DEFENDANT ADVISED OF RIGHT TO COUNSEL; CONT. TO CONSULT COUNSEL; ASSIGNMENT OF
COUNSEL IF UNABLE TO EMPLOY PRIVATE COUNSEL.
DEFENDANT WAIVES RIGHT TO JURY TRIAL.
DEFENDANT WAIVES RIGHT TO CONFRONT AND CROSS EXAMINE WITNESSES.
DEFENDANT WAIVES RIGHT TO ASK COURT TO COMPEL WITNESSES TO ATTEND TRIAL AT NO
EXPENSE.
DEFENDANT WAIVES PRIVILEGE AGAINST SELF-INCRIMINATION.
DEFENDANT ADVISED OF CHARGES AND CONSEQUENCES OF HIS/HER PLEA AND STATUTORY
SENTENCING.
DEFENDANT ADVISED OF CONSTITUTIONAL RIGHTS.
DEFENSE COUNSEL CONCURS IN DEFENDANTS PLEA AND/OR ADMISSIONS.
COURT FINDS PLEA IS FREE AND VOLUNTARY. COURT FINDS DEFT. KNOWS AND UNDERSTANDS
CONSTITUTIONAL RIGHTS, NATURE OF CHARGES AND CONSEQUENCES OF PLEA.
COURT FINDS FACTUAL BASIS FOR THE PLEA IS BASED ON COM-COMPLAINT.

COURT ACCEPTS PLEA.

CASE CERTIFIED TO SUPERIOR COURT
COMMENCE CERTIFICATION
DEFENDANT WAIVES PROBATION REFERRAL.
SENTENCING IS SET FOR 12/09/2010 AT 8:30 IN DEPT. S201.
DEFENDANT WAIVES TIME FOR SENTENCING TO 12/9/10.
SPECIFICATION OF PLEA: PS 180 – IF RESTITUTION IS NOT PAID IN FULL BY
11/14/10 – LOW TERM 16 MONTHS.
CRUZ WAIVER TAKEN.
ORAL MOTION BY PEOPLE REGARDING DISMISS REMAINING COUNTS IS CALLED FOR HEARING.
MOTION GRANTED
COURT ORDERS ENHANCEMENT(S) NP IN COUNT 01 STRICKEN.
COUNT(S) 02 DISMISSED IN THE INTEREST OF JUSTICE. (1385 PC)
ORAL MOTION BY DEFENSE REGARDING EXONERATE BAIL BOND AND RELEASE O.R. IS CALLED
FOR HEARING.
MOTION GRANTED
CURRENT BAIL BOND EXONERATED.
DEFENDANT ORDERED TO RETURN ON ANY AND ALL FUTURE HEARING DATES.
RELEASED ON O.R.

This admission of Embezzlement now puts the spotlight on on the co-defendants on the case, I would think. As one of the biggest scams put on on lead gen space, one that involved redirecting lead volume, accepting checks on behalf of LG Technologies and possible joint conspiracy with other lead gen insiders. it would appear to be close to an end. We will now need to see how this reversal will affect the other parties involved in the case.

As usual, I will keep you posted.

Recently key players on the Quicken Loans team who were instrumental in the marketing and lead buying strategies of the company have departed, in one way or another.

Brian Stapp, former CMO, Chris Meerschaert, former Director if Bus. Dev and Jon Moises, Senior Bus. Dev. Manager have all exited the confines of the Quicken Loans community. This is all the while Quicken Loans, like many other mortgage companies are feeling the pain of a declining market.

I find this all interesting because the big player in the space is losing key players of its team for one reason or the other. Now I don’t know if they chose to move on, were asked to move on or let go but I don’t think it really matters.

Yesterday there was an interesting article by the Detroit News Online that included a few interesting comments and quotes on a similar issue:

The company also has temporarily stopped hiring new loan writers, called mortgage bankers, to focus on retraining its staff on the new products and how to sell in a tough environment. As a result, Quicken has 160 fewer mortgage bankers now than it did in mid-August, but has avoided layoffs, company executives said.

160 fewer mortgage bankers than the month before without laying anyone off? Were they all fired? Further along on the article, Gilbert say this is their normal attrition rate.

Some former Quicken mortgage bankers, however, say they aren’t that impressed with how the lender operates. Eight ex-employees told The Detroit News that unrealistic sales goals, in a tough mortgage market, led to their dismissal or decision to quit in August and September. They say the goals were laid out in an “Opportunity Letter.”

“I got a letter saying they wanted me to write 10 loans by the end of the month — superstars were doing five or six a month,” once the market took a dip, said Steven Campisi, a mortgage banker who worked in Quicken’s Cleveland office. “I knew what they meant: They wanted me to go.”

Now the article recounts situations specifically dealing with mortgage bankers, but it does make you wonder if they also apply the same tactics to middle and upper management. I am sure they do. I guess you would have to ask yourself, “What’s the Diff?“.

The man rumored to replace these gentlemen, on some level, will be Quicken Loans insider, former Chief Information Officer and the current VP of HR Todd Lunsford. Todd has quite an eclectic resume building.

I will keep an eye out for any movement with these three guys and I wish them good luck in what ever they do. I hear that Brian Stapp may be involved with a start-up and I look forward to hearing more about it.

An interesting email went out today to the lenders on the Zillow Mortgage Marketplace (ZMM). The letter, shown below, makes the announcement that they will be now charging for the leads generated on the ZMM.

The new initiative will charge for “customer initiated contacts” and prices will fall into a very wide range of $0-$100.

This move goes against everything ZMM stood for or at least I thought they stood for. Just last week there was a Tweet that quoted a Zillow representative at the MBA saying, “Internet leads are dead” “Leads are so 1995″. Zillows war against traditional mortgage lead generation just took a huge step back with this new implementation of their new fee based model.

They just became a whole lot more similar to the LowerMyBills and LendingTree’s of the industry then they set out to be. There are now hundreds of skeptics saying, “I told you so!”, including me. In my review over a year ago I made a quick comment: “Of course the leads will be free, but who knows for how long, though.”

My thought was that the lack of price would increase the amount of fraud and spam that would occur on their network. I don’t know if a high level of fraud or spam ever occurred and I did not publicly write about the challenges they would face monetizing the network, but they did take place.

According to Zillow, the pricing will be implemented to facilitate the growth and expansion of the network. I got to say I did get a kick out of this comment:

"We won’t know for sure where prices will settle out, but given that Google clicks for mortgage keywords typically range from $7-$25, Zillow contacts should be significantly more valuable."

Yes, clicks for mortgage related terms on Google can range between $7-$25. So are leads from any one of the hundreds of lead providers in the industry and leads from these providers will be sold to a max of 5 people, which in this market the leads are being sold to maybe 2 lenders at a time.

On the ZMM I don’t think there is a limit to how many lenders a consumer can reach out too. The argument that Zillow will make is that these are inbound calls and buying traditional leads will require you to call the consumer. There is merit to this argument and the value of leads that call you is more valuable then a lead that you have to call out too. This is why Hot Transfers work so well.

It is hard to imagine a world where they did not see this coming. Did they really think they were going to be able to monetize the marketplace with banners ads only while at the same time hundreds of thousands of potential dollars were slipping through their hands? They also chose to give a very wide estimation of the price of each lead. They have got to know the average price each lead will cost. It is my guess they are trying to reduce the sticker shock of this change by being as vague as possible.

It is crazy to me that they chose to wage war against “leads” and then to become a lead generator is simply mind boggling to me. I don’t think this is going to end pretty for Zillow. Yes, they will make money, but I think they have lost a lot of credibility with their core supporters.

What are your thoughts about their choice to charge for the inquiries? Has Zillow just joined the group they were so much against?

Dear [Confirmed Lender]

As a confirmed lender and valuable member of the Zillow community, we’d like to give you advanced notification of an important upcoming change in the way lenders participate on Zillow Mortgage Marketplace. Namely, we are introducing market-based pricing for customer-initiated contacts that will roll out over the coming months.

When we launched the marketplace in April 2008, it was an experiment to see if we could build a service that successfully connected borrowers with lenders. The results exceeded our wildest expectations: borrowers are submitting an average of 50,000 loan requests per month, and thousands of lenders are helping these borrowers close loans.

While we are thrilled with the outcome, it has been a resource cost to build this vibrant service. In order to continue to grow the marketplace, make it better for consumers, and create more value for lenders, we need to continue to invest in the business. We talked with multiple lenders to discuss options for supporting the marketplace, and we believe we’ve settled on a method that is fair and beneficial for both Zillow and our participating lenders. In a few weeks, we will be introducing a new fee system within Zillow Mortgage Marketplace.

What is it?
Until now, confirmed lenders have been able to submit unlimited quotes and receive contacts from interested borrowers for free. Under the upcoming new system, lenders will still be able to submit an unlimited number of loan quotes for free, but will be required to pay a market-priced fee when borrowers contact them regarding their quotes.

How will it work?
Just like today, borrowers will submit loan requests and review quotes provided by lenders. When a borrower decides to contact a lender, he can either e-mail or call the lender. When that contact is made, the lender will be charged a market-priced fee.

Lenders will be required to pre-fund their Zillow accounts with a minimum of $250. When a lender receives a contact, Zillow will subtract the price of that contact from the lender’s account balance. Lenders can add more funds to their accounts or request their unused account balances back at any time.

How much will it cost?
The market will determine the price for each contact; Zillow will not be setting price. We anticipate prices will adjust as participation increases, and will likely settle out in the $0-$100 range. The price will be shown as part of the loan request, so lenders can use this information to decide which requests to quote. Lenders will also be able to set a maximum price to pay per contact.

We won’t know for sure where prices will settle out, but given that Google clicks for mortgage keywords typically range from $7-$25, Zillow contacts should be significantly more valuable. Zillow customer-initiated contacts are borrowers who are ready to close a loan, having already reviewed multiple quotes, ratings, and lender profiles before making contact.

When will it go into effect?
We plan to roll this out in multiple stages. The first stage will begin on November 4 (subject to change). During this set-up period, lenders will familiarize themselves with the new pricing system and pre-fund their Zillow accounts. All contacts will be priced at $0 during the first stage.

The second stage is scheduled to launch on December 9 (subject to change). The market pricing mechanism will be turned on during this stage, and while it will still be free to quote, lenders must have funded accounts in order to continue quoting. Lenders who fund their accounts prior to December 9 will receive 25% off all contacts received during the launch month.

When the first stage launches in November, we will notify you by e-mail. At that time, you can go directly to the Lender Home page to add money to your account. When pricing is initiated on December 9, lenders who do not have funded accounts will not be able to quote.

Are you using the automated Quote API?
With this change, our Quote API will be updated. If you are using a third-party pricing engine, they will make the necessary changes to accommodate this new pricing system. However, if you have built your own API integration, please contact us for an updated specification guide.

Who can I contact with questions?
We’re happy to help you better understand this new system and help answer any questions you have. You can reach our mortgage team at mortgagesales@zillow.com or by calling 1-877-661-3171.

Thanks for using Zillow Mortgage Marketplace.

If I were starting a new lead generation company, and I’m not, here are a few new things I would try:

1. Start with content - I would focus first on content. I would hire hungry, creative copywriters and journalist and this would be their mission:

• Focus only on topics interesting to consumers
• Scour the industry for smart and interesting voices and engage them
• Snoop out trends, tips, and teasers
• Work like a gossip columnist

2. Add in profiles - Not a Web form on your loan amount and credit grade! Think eHarmony. I want to know:

• Why you are you interested in mortgages?
• How many times have your purchased or refinanced?
• What are your financial objectives & goals?
• What is your current mortgage or rent situation
• Tell me what you want me to Alert (email opt-in) you about
• Tell me when you need a mortgage or even better let me make a suggestions when it is time

3. Sprinkle in Social Tools (Don’t build your own!) - That just gives me one more thing to check. Do it like this:

• Create a Facebook app to feed in your content
• Create a Twitter feed, maybe even a Twitter gram–break news here first
• Leverage LinkedIn, more on this in a minute
• Add in plenty of RSS

4. Build momentum and consumers - Time to stock the pond and create the buzz:

• Do a little PR. DIY or Professional.
• Pepper the network and relationships with some emails and telephone calls
• Find a few more new relationships (make sure they are important) to tell about your cool lead generation platform
• Create some widgets
• Get mentioned where high net worth consumers hang out: here, here, here, here, and even here

5. Add in your revenue (Time to make money and happy consumers) - Bring in the mortgage bankers and brokers:

• Allow bankers and brokers to sign-up for a monthly subscription. Credit card only please!
• Subscriptions gives you the opportunity to post your LinkedIN profile (your reputation is your business card)
• Each subscriber gets a blog or can add in their existing RSS feed
• Each subscriber gets to build a consumer profile. This is where you get your real-time personally matched leads

How would you build your lead generation company?