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Google Mortgage

Lots of buzz regarding the lawsuit Lending Tree has initiated versus Mortech, producer of mortgage rate pricing software, for apparently licensing their technology to Google for a service that will compete with Lending Tree…from Yahoo Finance:

LendingTree filed a lawsuit yesterday against Mortech, Inc., a technology provider, for violating its contract with LendingTree. According to the lawsuit, Mortech, whose technology helps automate lender offer pricing, violated its contractual covenants by partnering with Google to launch an online mortgage loan aggregator service similar to LendingTree.

So, apparently Google is going to enter the public mortgage quote comparison arena and soon, some sources indicate as early as next week.

Google Merchant Search (old news) looks to be the initial model. Screen shot of UK Google Merchant Search provided by rustybrick on Flickr h/t to Search Engine Land

googlemerchantsearch

The screen shot shows some very basic mortgage search and comparison factors, using very limited data sets and range values. Nothing all that sexy, mainly an advertising play for participating lenders not unlike the Bankrate’s of the world. Google has stated in response to the lawsuit (From the NYT):

We’re constantly looking for new ways to help people find what they are looking for on the Internet. As part of that effort, we are currently working on a small ad unit test that will run against a limited number of mortgage-related search queries in the U.S.

Meh. Actions speak louder than spin. As Lending Tree and Mortech go through their legal gymnastics, lets ponder the ramifications of the 1000 pound gorilla entering the room…

Google tends to enter sectors of business on the light side (see Google Base for real estate), choosing to keep things very simple (at first). Nonetheless Google has the power to alter the way industries function, especially when it comes to information exchange and spook the hell out of the targeted sector along the way. Real estate as a business and listing syndication propose far more complex issues and requires a relatively high level of human interaction (physical inspection of properties, local area knowledge, property is not a commodity etc) compared to mortgage rate quoting and pricing. Mortgage rates are commodities whose price can be accurately be delivered to a consumer entering accurate information using some relatively simple algorithms and a database…something Google is pretty good at.

So, Google is looking to license some pretty robust rate pricing software, the type which mortgage brokers and bankers use and depend on in their day to day business. Does Google offer indigenous rate pricing software to loan originators using their service? It makes a ton of sense as it would increase the accuracy and thus the validity of the service. How much control they allow loan originators over the mortgage pricing data being displayed to consumers is the big question in my mind. I have my opinions…can you hear me in Mountain View? Give me a call, I’d love to chat

It would seem that Zillow Mortgage Marketplace (ZMM) would have the most heartburn over this news since the similarities are obvious. ZMM is primarily a niche advertising/publishing/search platform that allows consumers to anonymously get mortgage quotes based on financial and credit risk factors from participating loan officers. Approved pricing engines tie into ZMM’s API to generate automated quotes on behalf of the mortgage professional using one of these systems to automatically respond to consumers. ZMM’s auto-quoting platform is mostly a convenience/efficiency perk for participating loan officers trying to deal with thousands of voyeuristic consumer rate quote requests.

Is there a benefit in hosting your own pricing engine over tying in APIs from third party services? I think so. Rather than being beholden to third party data aggregators and maintaining these multiple information pipes pulling from essentially the same resources for hundreds of loan officers, why not streamline things even further and eliminate what is an unnecessary information middle man? I’m marginally surprised ZMM hasn’t done this yet…who knows, maybe they will. Maybe they should. Yes, they should…like right now.

Lending Tree’s primary revenue stream comes from the origination of mortgages, something that wouldn’t appear to be in Google’s wheelhouse, yet as stated, Lending Tree is maintaining via the lawsuit against Mortech that Google will directly compete with them.

Maybe this has something to do with Lending Tree’s heartburn: Google is hiring a Mortgage Backed Security analyst.

If Google is looking to invest their cash reserves in MBS’s for internal returns, will they also look to move the market?

The XBroker...

Posted by Jeff Corbett on 08/28/2009 10:02 AM

Comments (52)

52 Comments on Google Mortgage

AUG

With almost all originations going to correspondant pricing prior to year end - I'm not sure this will continue to be an issue.

The gorilla will still have to get around the personal connection that so many buyers need. With all the changes in the mortgage business I guess buyers will still like the friendly face rather than the e-mail telling you to fill out a form.

SEP

More competition in the mortgage industry. Where do you think the lending money will come from. haha

Jeff... overall, I just disagree with these models for one main reason... it costs money to do business. And outside that, it comes to service, honesty, and integrity... and you don't get a lot of this with the Lending Tree models, the Bank Rate model, etc, etc. That whole theme of, "let us shop for you the best rate/program"... is just a ploy to make you feel that you will get the best deal. Brokers have said this for years and I am hearing some mortgage bankers do the same. Who cares how many companies that you can shop with. How about... are you giving me the best advice... comparing the different solutions... and will my service be better than good... these models charge money back to the lenders that are on board.. it's called a fee. Who eventually pays for this fee? The borrower... yet they aren't told this or realize this.

Overall, I know I got off target a little... ;o) You do bring up an excellent point, that what is scary about this is that Google can control on how things are searched. Will they manipulate the whole system? scary...

Sandy said... more competition in the mortgage industry. Not really... what the lending trees of the world bring into the mortgage industry is reverse competition. The companies that sign up for this, usually have to bait and switch the consumer.. or lie, in order to get a shot at the deal. As some that play on the Zillow platform... some of us have lost deals because someone came in lower on the rate and costs.... and I know they couldn't go lower, when there is no profit. The bottom line is that we all basically get our money from the same place when all said and down. Yes, some people will be a 1/8% better in rate or in fees.. but when someone goes below that.. what does that rate quote mean now? Knowing damn well that rates can move daily. This is the biggest issue that has corrupted the mortgage industry in my opinion. This is what is not talked about... the unknown... hence what got us into some of this mess. just food for thought.

Jeff Belonger

Without opening a whole can of worms...didn't Lending Tree basically make their income off not really doing anything at all but organizing a venue for a bunch of lenders to advertise on their platform for a fee...becomming a middle man of the industry and taking their fee right out of the lender's pocket?...and Google is basically going to do the same thing and basically take market share away from Lending Tree...who doesn't really do anything but live like a cancer in the bottom of the pocket of the working man????and it would seem to me that although Google's platform is in essence the same thing...it will probably be cheaper for the lender to use this venue which will make it more affordable for lenders to do their job once again...

They will probably just end up as a conduit for leads to Mortgage People. At the end of the day it is a personal business that needs a hands on person.

It is really too bad that our government that is always looking to "protect and educate the consumer," doesn't do anything when it comes to these business models. Everyone in the business agrees that Lending Tree and like business' do not provide any discount in the long run. And they tend to cast doubt on the local business' that truly rely on personal service, integrity, etc.

Since Lending Tree and others will never tell a potential borrower that they shouldn't be looking at a mortgage, or maybe just less of one, they add to our economic mess instead of help it.

Google will always provide information, and as long as they stay out of the direct selling end, people will continue to use them as a resource

I agree with Jeff.. This will do more damage than good and in the sense old fashioned good biz. This will be no different than Lending Tree (where Lenders Lose and You do too!). Has anyone seen a Lending Tree Lender's GFE? They charge a Lending Tree Fee, which equates to about 1 percent on top of all the charges. This what Lending Tree takes. Thus 'the bait & switch'! I see this idea as another reason to demonize the mortgage industry. Last note, Rates are commoditized but consultation and good service are not. Google will fall right along side Lending Tree and will not deliver the way a professional and knowledgeable LO can.

Fascinating as I've not seen google step out of it's focus on content before

Hi Jeff, I thought Google always focused on providing search results as opposed to being a " Me too" . Still, they do have a knack of going where the revenue is !

I know that this may not be the point of your post but I think it is too bad that there are so many on-line lenders that can't be found or reached in a timely manner. We all know how much trouble they can cause.

Will be interesting to see how deep Google gets into mortgage lending...

Nothing can take the place of a true mortgage consultant who truly helps a family make a decision that is best for them.

yawn, i hope this gives them something to do for awhile.

any potential buyer using this type of service is best served by the time tested advice

buyer beware.

This reminds me of a couple fighting because "someone" left the toilet seat up... I've always said that was not a legitimate reason for a fight... "tell me what you're really upset over?" This reminds me of the buzz about Wal-Mart. This is fight is not about two sites looking the same. This is about power - who has it and who does not want to give it up.

There's a good bit of garbage quotes coming from the likes of sites like the ones mentioned. They hurt everyone, consumer first.

Sites like those give everyone in the Mtg. Biz a target on their back, like we need any more of that!

One thing I believe is that Google and other large search engine sites are always trying to look WAY down the road and be in the right position for what they believe is coming down the pipe, just like all of us do in our own small ways.

Google is positioning itself to be the answer for everything and they almost are already.

Google will have to face the "sniff test" by the internet consumer. Zillow, Trulia, Lending Tree and all the rest would be best advised to keep their eyes facing forward, because if they continue to look back whilst they are running, they are going to hit a tree.

I have to disagree with my colleagues, Jeff and Ted. I can't see anything but good come from this. I enbraced Zillow Mortgage Marketplace and welcome Google, as well. Anything that can drives costs down to the end user is welcome in my world.

Now, the argument will be that consumers will demand certain pricing, because google told them they can get it, and a "full-service" mortgage lender won't be able to deliver the terms with the specified margin. The simple answer is for those lenders not to do them on the discounted margin.

My presence on Mortgages Unzipped has attracted phone calls from many ZMM borrowers. They want me to fund their loan off of someone else's quote. I declined to compromise my required margins to operate my business. Some stayed, some left. The rate, is the rate, is the rate. Over 75% of the borrowers don't really care about getting the "cheapest mortgage"; they want it funded.

Google Mortgage, like Zillow Mortgage Marketplace provide nifty tools for borrowers to get "price indications". Ultimately, only a professional loan originator can provide fulfillment. If the market is dramatically different from what Google and Zillow display (I don't think it will be) , they'll be the ones needing to make adjustments.

This is just another example of how companies try to appear as if they are doing the consumer a favor. In reality, this Google scheme will be nothing more than another way for consumers to get ripped off. Then, mortgage professionals will be spening a lot of time explaning WHY WE ARE BETTER.

A prior post mentioned that consumers may opt to go with a lender on their service just because it appears they are getting a low rate. Typically, those services just reference the rate and how many points are involved. So, how can a lender have the lowest rates offer the internet AND participate in that service? That service costs money !! Trust me, I checked and it is not cheap! Borrowers better review the good faith estimate and make sure they review the closing costs with a fine tooth comb.

Finally, many of us rely upon Google and abide by their search criteria when optimizing our web sites so that potential customers can find us. Now that Google is now a competitor, I fear they will bend their own rules to benefit their own service. For example, anytime someone searches on any mortgage related key word, their service is referenced front and center. Is this fair and equitable?

I have heard many complaints from Lending Tree and other internet mortgage quoters/providers. The people I work with use real people lenders almost 100% of the time.

Good discussion. I believe people are not ready to trust their finances to a computer. The rates are already low and the mix of products are not out there anymore. The local guys have a great advantage in today's market.

THIS WILL BE THE FUTURE. WITH GOOD FAITH ESTIMATES AND FEES BEING REGULATED TO THE DOLLAR THIS WILL ELIMINATE THE NEED FOR LOAN OFFICERS OR AT LEAST THE TYPE OF LOAN OFFICER WE KNEW THE LAST 25 YEARS.

YOU WILL ALWAYS HAVE PEOPLE THAT HAVE FEAR AND NEED SOMEONE TO HOLD THEIR HAND WHEN IT COMES TO FINANCIAL TRANSACTIONS, I AGREE. WHY DOES SOMEONE WITH A MILLION DOLLARS WHO IS HIGHLY EDUCATED PAY A FINANCIAL ADVISOR 2% FOR MANAGING THEIR MONEY? HOWEVER THE LOAN OFFICER OF THE FUTURE WILL BE A HYBRID OF AN UNDERWRITER, ORDER TAKER, AND A LIASON FROM START TO FINISH.

YOU WILL NEED TO BE LIGHTING FAST AT READING DOCUMENTS, UNDERWRITING FILES, CALCULATING INCOME AND ASSETS AND DETERMINING THE RISK LEVEL OF THE CUSTOMERS.

WHEN THE TOP 4 LENDERS ARE DOING 60% PLUS OF THE VOLUME AND DOING IT POORLY CONSUMERS WILL HAVE COMPUTERS GUIDE THEM WITH EVERYTHING THEY NEED TO CLOSE. NO ONE EVER THOUGHT YOU COULD BUY A STOCK WITHOUT A STOCK BROKER IN A MILLISECOND AND NOW WE HAVE ECN'S OR ELECTRONIC TRADING NETWORKS DOING ALMOST EVERY TRANSACTION WITHOUT A MIDDLEMAN.

THE FUTURE IS AUTOMATION, COMPLIANCE, ACCURACY AND DISCLOSURES. THE WORLD WILL BE PAPERLESS, WIRELESS AND MOVE AT A RAPID SPEED. THE GOOD NEWS IS THESE LOAN OFFICERS ARE EVOLVING NOW . THE DAYS OF BUILDING RAPPORT AND TRUST ARE IMPORTANT BUT IMAGINE GETTING EMAIL ALERTS FROM GOOGLE WITH THE TOP TEN BANKS IN THE U.S. POSTING APR'S TO YOUR BLACKBERRY AND LOCKING WITH THE CLICK OF A BUTTON.

I believe we need to stick to the old fashion relationship business model. People have been hurt by this crisis and they don't trust many lenders any more which means you have to build that trust and its' not going to be through email! I knocked on 300 doors a week and meet great people every day and get to know them. I could not do that with a post card or online. Old School is the way to go! Go knock on doors!

Put all these players in a room, hire a band, and you have Dances with Wolves.

Jeff

In the evolution of business, we see constant change. Sometimes for the better, and sometimes not so much better. Our lenders and others have brought up some valid points.

The ones that appear to be getting fat are those creating these new ventures or off-shoots. The consumer in many cases are merely succumbing to good marketing when in reality in most cases are not getting the best deal.

LendingTree is a class act of it's own. Amazing the cost to participate as a lender. This is a "cash cow" in reality along with many other of the marketing sites that compete with them out there. I've seen and compared good faith estimates. Unbelievable.

I am not an attorney, but as a lender faced with constant oversight and regulation, I would be concerned with disclosure. If I were to intentionally misquote, I could be hit with some hefty discipline and potential fines. Possibly even loss of license. In January, new disclosures take effect with the good faith estimate going from one to three pages. This disclosure is in addition to the three page California disclosure.

While I can compete anyday....often with rates at the lowest levels vs the big boys, as a broker my only disadvantage is the requirement that I must disclose all fees and revenue. It is not the fact that I have to disclose, but the fact that as a banker or mortgage banker funding the loan, select back end fees are not required to be disclosed. Go figure........Lobbying must have paid off.

I think come January, Zillow, LendingTree, Google, and all the rest should ensure that All lenders are following proper disclosure. Their entry into this market should bear some scrutiny just as I am subjected to as they will be quoting rates and fees. Like I said, I am not an attorney, just a 38 year lending veteran.

Thanks for the insight and opportunity to respond.

I think the important area to watch is appropriate fees as mentioned above helps the consumer as well as good customer service. I've seen so many issues come up at the last minute during the close process it does not take long for a company to show whether they are service oriented or not. We'll see if Google can do both. Thanks for the post and all the comments.

lendingtree suck

X...

Can I come play in here? People around these parts seem to be a bit stressed out :)

I promise not to RainJack you. I'm just looking for point quota. I didn't even read the post :)

TLW...ROAR!

Come on X...

You and I both know, you thought that was funny :)

TLW...ROAR!

Now let's see...

We have Yahoo, Google, Lawsuit and Mortgages.

Is that enough words to garner points?

TLW...ROAR!

Hmmm...

Kinda looks like a RainJack. I'll stop it now :)

Good seeing you. Thank you for sticking around. There are only so many people who let me do this to them :)

TLW...ROAR!

TO bounce off of JBelonger's statements, I used to to work LendingTre leads. We had to really price things high to make it worthwhile, since we had to pay hundreds, even thousands to close those leads, ON TOP OF what the leads initially cost. Makes me think - as awseome as AR is and blogging etc, we still have to press-the-flesh all the time.

hhhhmmm.. well, I will disagree with Brian, comment #19 and Scott, comment #23.

Brian said this... "I enbraced Zillow Mortgage Marketplace and welcome Google, as well. Anything that can drives costs down to the end user is welcome in my world."

When I once spoke to you, when you were one of the first to be asked to try Zillow Mortgage... on the outside, you said why not. It was okay... but when we talked, you didn't see much value. That you didn't see many deals come from this. So, do you embrace Zillow because of it's platform? What about the real value to the consumer? You can't compare Zillow to Lending Tree... one model is cheap for loan officers and the other model is very expensive. Yet, I have tried it and I have spoke to 3 other loan officers that do get some deals from it, but many the lose to loan officers that give lower rate quotes. It's just common nature in this business when you have borrowers shopping with lenders from all over, that know this, and in order to get those deals in many cases, they need to be cheap up front. But do they close? Does those rate quotes change? etc, etc. Besides, we don't know what the Google model will be like.. The rating system on the Zillow platform... semi a joke... for many reasons..

PS... Brian.. I know you pretty well... you are definitely a great marketer.. someone that has great vision, and can think outside the box... and you love being on the other side of the underdog and on the other side when many won't agree... but you can't tell me with a straight face that these models would be good for the consumer. It invites a bad form of competition in my opinion.. These types of loan officers tend to be order takers and are usually not on top of the mortgage game. They can quote a rate and fill out a GFE... but anything outside of that? Giving good advice? Comparing different programs? Being very knowledgeable? I don't see it as much as I do from that street loan officer..again, just my opinion.

I also disagree with Scott, comment # 23, because he stated this.. "THIS WILL BE THE FUTURE. WITH GOOD FAITH ESTIMATES AND FEES BEING REGULATED TO THE DOLLAR THIS WILL ELIMINATE THE NEED FOR LOAN OFFICERS OR AT LEAST THE TYPE OF LOAN OFFICER WE KNEW THE LAST 25 YEARS."

It won't be the future because you will always need a loan officer and an underwriter. Look at the Countrywide model... you had the manager as a loan officer and an underwriter in many branches. They tried to make it seem quick.. but gee, how many loan officers would approve their own loan, just to make a commission? That model last only so long. You can't have a computer underwrite and close.

Look, when DU appeared... many though you wouldn't need loan officers and underwriters... well, you still do and even more so than ever before. A borrower can't be trusted to input their own info, let alone, be able to fill out a 1003, mortgage application. Many loan officers can't even compute income correctly... and once it goes into the system, you still need an underwriter to review this. To have someone originate, process, and underwrite? Are you crazy? Maybe working at PHH has you thinking this, but I know their operations. They have too many involved, a jr loan officer, some kind of loan officer, a jr underwriter, an underwriter... etc, etc.

Overall, you are comparing that of buying stocks to doing mortgages. In my opinion, a very poor comparison. I see your point and agree that not to many would ever think that you would be able to trade stocks yourself, online. But originating mortgages and underwriting is a lot different. Just can't see how you could believe that it is the same and happen in the future. More than ever before, especially not now.... with guidelines changing over and over... etc, etc. How would a borrower know all of this and be able to do this online.

Jeff Belonger

I think people are looking for someone they can trust and they look online to get started. Some of them end up going with an online company, but the majority of them I see go with someone local.

Thanks for the update. It will be interesting to see where google takes the industry. I enjoye more efficient ways of doing business and google seems to be good and finding ways to do just that.

Hi Jeff -- Anything that Google puts on their radar should make any company nervous. Interesting thoughts and I hope you do a regular follow-up on this.

Google definitely has the chops to dominate the tech side of just about any market they want to play in. A lot of there ventures seem to be landing them in court lately.

Jeff

Thanks for the post.....and the great discussion items! I agree with some of the comments regarding if Google is looking at this model; folks best listen up.

For me, the bottom line is that I anticipate that we'll always have the individuals looking for the best deal.....and some will even work with on-line "companies" and could care less about building a relationship based on trust.

My focus is on building my business by maintaining relationships based on trust in my professional services.

There is a lot of bait and switching going on still in the mortgage industry. I wonder how many will be sued in the future.

With good salesmanship and scripting this site won't matter; just like Bankrate, Lending Tree and all the other ones don't. It depends on how you build your business. Thanks for taking the time to put this article together Jeff, as it's very informative. Does need some more profanity though.

EVen if Google can deliver a lower ate and fee there is no way the hourly paid unlicnesed mortgage consultants they will employ will ever be able to keep up with the all the changes. They would oly be able to deliver a lower rate/fee to the 800 fico, w2'd wage earner, 40% DTI, with assets type borrower. They can have those folks if they want them.....if they want to chase the low margin perfect deals that require no mad mortgage skills then they can have it.

I can't wait unil someone gets baited into working with a google mortgage consultant and after getting into contract they find out AFTER their loan contingency period is up that they don't qualify or after they receive their HUD they see the actual costs or extra points they will charge like Lendingtree and realize they can't transfer the HVCC appraisal to an upfornt lender to save a few $k, or get stuck having to wait 7 extar days to close due to APR changing .125% at the last minute. Then their Realtor will have to go chace down a contract extension.

Bring it on......but I am concerned they will push down our ranking on google to make room for their space.

Great post... and the end is why it is a great post. If Google starts packaging MBSs... and investing in them, they WILL MOVE the market. Which way?

When all the discount brokerages started started up their business, and once all the house information was online, we were told that traditional real estate agents would die out. And now we are told that traditional loan originators are a dying breed. Come on now. People still need guidance from more knowledgeable professionals in the field and most people are willing to pay a little more for the service they need.

This will be very interesting to follow and see the outcome. Looks like this is all about money. No punt intended.

SEP

Consumers need to pay more attention to the difference between the quoted rate and the APR - that's where some of the mischief is - hidden fees.

Mortgage originations have been and will continue to be local for the most part. The number of people needed to originate, process and fund the loan will continue to shrink. The strong will survive and the weak will do something else for a living. MHO.

Mike

I welcome all competition, Jeff. Call me arrogant but I don't feel any heat from ZMM and Google. The more they confuse borrowers, the more valuable you and I become.

SEP

Wow Jeff. I am glad that I am not in the lending business. I am sure that they would be tough to beat.

SEP

Although I agree with most that Google can be a game changer and cannot be ignored or dismissed, for those of us who have been at this for 10 years plus, all I can say is that the same old axiom seems to ring true--"Don't sell a rate--sell a service." My clients aren't with me because I always have the lowest rate; they are with me because I have the best service.

OCT

Hi Jeff! I hope you're doing well! I was looking at the top subscribed blogs and happened upon your name, thought I'd click to see what you've been up to and realized that you're listed in Charlotte! I have NEVER noticed that before! I guess it'll be pretty tough to get that dream job with AR with this being your home base too, huh?! Hey, I'm NOT giving up!

Have a great weekend and hope to see you in RDU for REBar Camp! If you're not going to be there, you know I'll be wearing my "Ask me about Active Rain" button, so I'll represent for the 'team!' :-)

NOV

So many changes that will affect lenders; interesting post and comments. No matter what happens, I think face to face is important for borrowers.

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