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Column Delivered February 4, 2002
"When I visited your new web site
recently, all the articles on the internet were gone. You have a slot for it,
but it is empty. Any particular reason for this?"
Much of what I have written about mortgage
web sites has become obsolete within the last 18 months. Hence, when I revised
my web site a few months ago, I removed all but two. I plan to start a new
series of columns, with this one as the first.
In 1998, 1999 and into 2,000 I was a strong
advocate of multi-lender web sites. These sites offered borrowers an opportunity
to shop individual lenders on an apples-to-apples basis. They showed live
prices, complete lists of settlement costs, and the ability to
"try-out" different loan types, terms, down payments and interest
rate/point combinations.
One of my major projects in 1998 and 1999 was
to develop detailed evaluations of 5 multi-lender mortgage web sites: Keystroke,
HomeAdvisor, Quicken Loans, Iown, and E-loan. Here is what has since happened to
them.
- Keystroke closed its
site and became a technology company.
HomeAdvisor closed its
multi-lender loan operation and contracted with a single lender, MortgageSelect,
to offer loans on its site.
Quicken Loans acquired
a mortgage company, in the process converting its site from multi-lender to
single-lender.
IOwn closed its
lending operation and converted its site into a referral source for Quicken
Loans and MortgageSelect.
Eloan is the only one
of the 5 to stay the course without major change.
It wasn�t that the public didn�t like the
shopping sites. Borrowers flocked to them to get information. But most then ran
to a lender or mortgage broker to get their loan off-line. Few had the
confidence to go through the process alone.
Some that did, furthermore, were unhappy with
the service they received. Once the customer was passed off to a lender, the
sites were unable to control service quality, and some lenders gave a low
priority to borrowers coming from web sites other than their own.
In a recent column I said that a second
generation of shopping sites may emerge that will deal with these problems. In
the meantime, however, borrowers must deal with what is out there now: referral
sites and auction sites, both of which are multi-lender, and single-lender
sites. The good news is that, in general, these sites are far better today than
they were two years ago.
Referral sites are the internet equivalent of
newspaper, television or radio ads of lenders quoting prices. The price
information they provide, however, is more timely and more complete. Consumers
can contact any of the lenders listed on the site by telephone, e-mail or
through a direct link to the lender�s web site.
Auction sites are designed to have lenders
bid against each other for a customer. Where referral sites provide information
about lenders to consumers, with consumers contacting the lenders, auction sites
provide information about consumers to the lenders, and the lenders then contact
the consumers. To use an auction site, the consumer must fill out a form that
looks much like a loan application form. The completed form is sent to a set of
lenders, and any or all of them may contact the consumer with loan
solicitations.
Single-lender sites are those of individual
lenders or mortgage brokers who want users to select a loan from them. They are
easy to identify because the lender�s name will be prominently displayed on
the screens. Single-lender sites account for the great majority of all mortgage
web sites.
You can read about each of these
types of mortgage web site in greater detail by clicking on Referral
Sites, Auction Sites and Single
Lender Sites.
Copyright Jack Guttentag 2003
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