The business of mortgage spamming is shrouded in mystery, and it appears to be powered by a small number of secretive companies with ties to Eastern Europe and Russia, said David Brussin, chief technology officer of TurnTide Inc., an anti-spam company near Philadelphia.
"Some of these companies seem to have taken some lessons from organized crime," Brussin said. "They operate very much like they do in the underworld."
Brussin's research indicates that mortgage spammers create multiple shell corporations and sell lists of e-mail addresses from these seemingly separate entities. This makes it impossible to follow the money trail, he said.
"There is no direct cash trail between people they are e-mailing to and themselves," Brussin said.
The business may be lucrative, as e-mailing costs close to nothing. Spammers do charge mortgage lenders -- legitimate and not-so legitimate ones alike -- a fee for their lists.
"They get referral fees for sales," Brussin said.
The profitability comes from two factors, he said. One, the low cost of e-mailing, and two, that many of the lists used by spammers in Eastern Europe are obtained illegally. "Spammers operate with a peculiar economic model," Brussin said. "They in large part steal the resource for their operations."
This is causing severe marketing problems for legitimate online lenders and brokers.
"It's getting harder to communicate with consumers," said Lyons of GetSmart.com. "All the spam-filtering software out there moves mortgage pitches to the bulk mail folder and the like. That raises the concern among consumers of, 'Gee, should I deal with any of these online dealers?' It's absolutely frustrating." However, spammers now routinely try to slip by filters, perhaps misspelling "loan" as "laon" or rendering "mortgage" as "mo.rt.ga.ge."
To ease consumers' anxieties, many online mortgage sites are increasing their television advertising and adding ways for consumers to contact them, such as toll-free numbers.
"When they go to the Web site, they can see that we have an 800 number, and they can call and say, 'Hey, where are you located? How long have you been in business?' That's important to consumers. They don't want to give up financial and personal information and have the Web site disappear tomorrow," Lyons said.
"Consumers can also see that it is a secure site, too. . . . That means the information is all encrypted. Lots of these little things add up to trust," said Lyons.
It is unlikely that mortgage-related spam is going to stop any time soon.
"Interest rates will climb very slowly, and there have been people who have been waiting to refinance," said Susan Larson, vice president of SurfControl PLC, a content-filtering company. "They may think, 'Now that rates are going up, I've got to do it now.' So there is that element that we will see. The flow of mortgage spam will be pretty steady for quite a while."