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Recent Developments in Mortgage Web Sites

Recent Developments in Mortgage Web Sites

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


Jack Guttentag is Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania. Visit the Mortgage Professor's web site for more answers to commonly asked questions.

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