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Always respect this guy!

Original content by Jeff Corbett

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...

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