Mortgage Rate Engine 2.0
EDUCATING THE CONSUMER ON THE LOAN PROCESS
The mortgage transaction process has customarily been an opaque experience and hard for the consumer to control. Although the consumer chooses their mortgage broker or lender, they don't have enough knowledge about the mortgage procurement process to effectively choose the best one. They rely on referrals from their real estate agent or friends. Once chosen, the mortgage broker or lender works with the client in one-to-one advisory with regards to identifying the best loan options, and then processing the loan. The experience can be frustrating for the consumer because the process tends to have kinks - delays associated with reliance on loan processors and escrow officers, unexpected lender requests, etc. They feel they have no control because the process is time sensitive and once started, their options are limited until the transaction closes. It's difficult to change horses midstream and they may feel captive. Finally, this lack of control opens the window for less scrupulous mortgage professionals to take advantage of the client's desperation to close the deal, allowing them to charge higher fees.
The solution? Good mortgage brokers and lenders understand the need to educate the consumer on the process so expectations can be met. It's a key component of that often used buzz word "service". It's following a simple professional creed - setting expectations makes a comfortable and long term client, and generates referrals.
WHY RATEWINDOW™ AND RATESPEED™ ARE REVOLUTIONARY ONLINE MORTGAGE QUOTE ENGINES
In this spirit, two new mortgage rate engines launched recently - RateWindow™ and RateSpeed™ - both with the mission to educate the consumer about the mortgage process. At face value, both engines' obvious marketing tactic is to display all the relevant rates, including the Yield Spread Premium (RateSpeed™ explanation / RateWindow™ explanation), that consumers pay for in a mortgage. The mission is more than just "rate-busting", the main objective is to give consumers enough rate information to be able to interview and make intelligent hiring decisions of their broker. Second, both services partner with specific mortgage professionals who state their adherence to the ethical codes of providing a "transparent" mortgage processing experience, with full fee disclosure and no surprise closing costs.
It's this second criteria that differentiates RateSpeed™ and RateWindow™ from the traditional online mortgage quote applications like Refinance.com and Bankrate.com. These applications are pure lead generation vehicles that sell consumer information to any broker or lender who will buy them. With RateWindow™ or RateSpeed™, the consumer interacts directly with brokers or lenders who have been qualified to provide transparent service.
DIFFERENT MARKETING PHILOSOPHY
Bought leads do not market mortgage brokers, nor do they support referrals. They are simply cold calls, and often unwelcome. RateSpeed™ and RateWindow™ are designed not only for lead generation, but also for marketing and referrals. Both position the mortgage broker, even the real estate agent who wants to provide accurate rate information, as focused on what is best for their clients. Both are "widgetized" and capture the consumer at the mortgage brokers' websites.
Another new mortgage product conforms to the philosophy of supporting the consumer. Complementary with RateWindow™ and RateSpeed™, the Zillow mortgage service allows mortgage brokers to quote directly to a consumer request. By forcing brokers to custom respond to a request, consumers benefit from analyzing a portfolio of quotes with consideration to brokers who tailor their marketing message to that consumer. Similar tools like Lending Tree simply push four quotes from brokers who are paying Lending Tree for the privilege. Unlike RateSpeed™/RateWindow™, the Zillow mortgage product won't show wholesale rate data, but if enough quotes are submitted, an aggregate loan pricing range can be deduced.
RATESPEED AND RATEWINDOW FUNCTIONALITY
As rate engines, both share the same functionality - they pull wholesale rates from lenders that the mortgage broker partner is qualified to receive. Quotes will often not match depending upon what city the rates were pulled and from which lenders. A wholesale rate is often lower for top producers. The differences between RateWindow™ and RateSpeed™ are in their 1) marketing message, 2) their functionality - marketing features, back end, analytics, and 3) business model. See their websites (RateSpeed™ RateWindow™) for more details.
Background and disclosure:
Jeff Corbett, through his blog TheXBroker pioneered the concept of the wholesale mortgage rate engine in late 2006. I immediately saw the engine as a valuable transparency service for the industry and communicated with Jeff from the start. My consulting firm works with RealESpace, the development company behind RateWindow™, whose management also understood the implications of the wholesale mortgage rate engine. RateSpeed™ and RateWindow™ are distinct products developed separately.
Wow, this really opens the door up and educates the home buyer. My question is, how will mortgage brokers make money if the consumer can see the wholesale rate?
Could something like this effect the real estate industry like wholes sale prices on the internet effected the automobile industry? Now, when you buy a car, you know exactly what the dealer paid for it, so you can negotiate a much better price.
Bad for the mortgage broker, good for the home buyer. I think I like it!
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I'm trying to think of another industry where the buyer get's to see exactly the gross margin being made by the seller. I'm drawing a blank.
However even without these engines anyone on the net and is a shopper is already pitting one agent against another, and forcing agents to quote their best rates. So I don't expect these new services to have much additional impact.
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@fremont real estate guy - Do you mean another industry other than the automobile industry I mentioned?
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Pat
Thanks for this review. Rate window looks like they have created a great product.
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I like the concept behind both offers but I think the difficulty both are going to have in todays market is getting users to give the real emails. Even if the system is transparent... doesn't mean it's accurate for the consumer "during" the loan process.
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