Feature
Working with
Realtors, Again
As the refinance
business begins to fade away, lenders in
today's market are now starting to
actively try to work up real
partnerships with local Realtors.
by By Scott
Kersnar
When a homebuyer can go
to the status page of a mortgage website
to find out whether the credit report
has arrived, the real estate agent in
the deal is not always thrilled.
Realtors believe that personally
notifying the borrower of events like
that is what keeps them at the center of
the purchase transaction.
Because buying a home is
a highly emotional process, the Realtor
enjoys a position of significant trust.
Realtors pick the loan officer they
worked with on the basis of the LO's
track record for meeting the terms of
the purchase contract and getting loans
closed on time. Though the Real Estate
Settlement Procedures Act says they
can't steer buyers toward a lender,
first-time buyers in particular beg
Realtors to do just that. Once a
purchase offer is drawn up and accepted
by the seller, the big question buyers
have for their Realtor is, "Which lender
will get us our home?"
"The consumer is
perfectly lined up with the Realtors,"
observed Inman News founder Brad Inman.
"Real estate agents get paid the day the
moving truck arrives." He said lenders
will succeed in the future by partnering
closely with real estate firms. They
can't beat the Realtors for homebuyer
allegiance; they have to join them, and
that means doing more for Realtors than
providing the donuts for the multiple
listing tour. He sees joint ventures
with Realtors, such as Chase Ventures'
relationship with Prudential California,
as the most fruitful way for lenders to
partner with real estate firms.
As another example,
Countrywide Mortgage Ventures LLC has
entered into various realty joint
ventures, partnering with realty firms
like Chicago-based Starck & Company,
with which Countrywide created First
Freedom Mortgage. Though uncertainty
over the future course of RESPA reform
may create problems with the specific
operation of such joint ventures, these
arrangements obviously can offer buyers
one-stop shopping convenience and
streamlined service. Loan officers
dedicated to the JV can routinely brief
real estate agents on new loan programs,
get rate locks done quickly, and give
expedited service to highly qualified
borrowers.
Still, the Internet has
made a place for itself in most
homebuyers' shopping plans. Evidence of
that is the 75% name recognition
Charlotte, N.C.-based LendingTree, Inc.
has achieved, even among people who do
not surf the Net. LendingTree's recent
acquisition of Domania from PRIMEDIA
Inc. adds Domania's HomePriceCheck to
the list of services LendingTree offers
consumers. LendingTree, with its realty
service connected to some 10,000
Realtors, now competes with HomeGain and
other agent referral websites.
These online offerings
may not match the service level afforded
in a cooperative effort between live
agents and loan officers that a joint
venture like First Freedom Mortgage can
provide. However, they can have great
appeal to the growing number of
consumers who prefer to operate in a
self-service mode, with no salespeople
standing at their elbow prodding them to
buy.
A company that expects
to see Realtors welcoming a high degree
of automation on the mortgage side is
Irvine, Texas-headquartered E*Trade
Mortgage, the lending arm of New York
City-based E*Trade Financial. E*Trade
Mortgage was singled out in a 2003
Forrester report for its Fair Compare
mortgage shopping tool, which lets
consumers compare E*Trade's offer with
another lender's before applying - and
informs the borrower when their offer is
beat.
While ABN AMRO is
deservedly lauded for bringing consumer
interest in one-fee loans to the
forefront, E*Trade Mortgage claims to
have been first to offer consumers a
single upfront price for a loan, back in
1999.
"We play in the
self-directed marketplace," said Robert
Bernabe, who heads the retail mortgage
lending division. Thomson figures show
E*Trade ranking sixth among online
retail mortgage lenders. While its
retail Internet originations have tailed
off from a 2Q 2003 high mark of $2.9
billion, E*Trade has repositioned itself
from refinancing toward the
purchase-money market by laying off the
temporary employees it hired to handle
the refi boom and launching its Realty
Members Program.
What E*Trade does with
its RMP program is virtually install e-trade.com
on the Realtor's website, giving the
Realtor a place to let consumers get
approved for a mortgage online 24/7, so
that the Realtor can know for sure that
customers are qualified to buy. From the
Realtor perspective there is no question
that having pre-approved borrowers is a
world above merely pre-qualifying them.
Because the transactional system E*Trade
got itself when it acquired Huntington
Beach, Calif.-based LoansDirect enables
automating the approval process, E*Trade
sees itself as having a competitive
advantage over the level of service
LendingTree, Countrywide and others
currently deliver to Realtor websites.
"From an online standpoint the only
thing the Realtor can offer is a link;
they do not provide online
functionality," according to Mr. Bernabe.
"For tech-savvy Realtors ours is their
best solution."
E*Trade has begun
seeking joint venture opportunities with
real estate firms. "We are constructing
the legal framework to engage in those
joint ventures," said Mr. Bernabe. He
doesn't see E*Trade going head to head
with say a Countrywide and Chase for JV
business, because their efforts are
land-based, and E*Trade's is online.
"Our target audience is the small to
medium size Realtor that does not own a
mortgage company," said Mr. Bernabe. As
more and more buyers and Realtors join
the ranks of the Internet savvy, he
pointed out that Realtors will grow to
love having e-trade.com power on their
websites and the JV movement will be
very kind to E*Trade. For one thing, the
Fair Compare tool will ease Realtor
discomfort about affiliating with a
lender that may not always offer the
best deal for every homebuyer.
While many agents may
love having a mortgage website embedded
in their own, not all Realtors nowadays
want to be that closely tied to the
Internet. Jacksonville, Fla.-based
EverBank offers an alternative it says
secures the place of the Realtor in the
transaction "and allows the Realtor to
provide important services to the
buyer."
In February 2004
Alliance Capital Partners, with $2
billion in total assets, announced
changing its name to EverBank Financial
Corp. Alliance's primary operating
businesses, First Alliance Bank as well
as Alliance Mortgage Company changed to
be known in today's marketplace as
EverBank and EverHome Mortgage Co,.
respectively. In addition to owning and
operating Priceline Mortgage, Alliance
Capital Partners also acquired all of
the assets of OnePipeline.com back in
2002. EverBank offers Realtors the
opportunity to participate in the
mortgage origination and enjoy fee
income via the OnePipeline.com system,
which is still housed in Salt Lake City
and run by its original management.
EverBank's head of
mortgage banking, Pat McEnerney,
acknowledges that EverBank's purchase of
OnePipeline's assets would not seem so
fortuitous had RESPA reform prevailed by
rendering compliance issues moot. "We
recognized that the expected outcomes of
HUD reform would have made the
OnePipeline model obsolete," he said,
"but we made prudent investments in
developing it. That approach has worked
very well for us. Since we acquired the
assets of OnePipeline we have redesigned
the technology to work in our bank. Now
we are targeting specific markets in
Florida, close to us, to refine and
develop the business model. We are able
to fulfill loans nationally, but
developing this is best done locally,
allowing us to do some handholding of
the Realtors."
At present around 3% of
EverBank's mortgage originations come
through OnePipeline.com. "We have signed
up whole real estate offices," said Mr.
McEnerney, "though the focus is to
compensate the individual agent to
perform the services, and compensation
goes to the person directly involved in
the origination, whereas joint ventures
compensate the real estate company."
He said EverBank has
explored a number of joint ventures with
Realtors, "but we still come back to the
OnePipeline model, which is one of the
only models that provides compensation
to individuals based on the services
they perform."
Does that impose another
layer of cost? He says not. "There is a
cost of marketing and providing those
services, but that exists in all
business models, whether the channel be
wholesale or call center or online or
the OnePipeline channel," he stated.
"The all-in cost to the consumer does
not have to be higher than other
channels. The pure online self-service
model still depends on people behind the
website to support it, there is the cost
of technology, and there is a large cost
to advertise consumer-facing websites."
The modest income
derived by Realtors who participate in
the origination has led some real estate
agents to go on to refinance activity,
and even to switch careers to mortgage
brokering, but the appeal to most
Realtors is different.
Wendi Allen, president
of Red Door Realty, Jacksonville, Fla.,
said she has been involved in seven or
eight originations with OnePipeline.com
over the past year. She said the
additional income derived is not a
factor for her, and the biggest benefit
is control, "not having to wait on other
people to finish things." She said the
EverBank processors and loan officers
know the real estate industry very well,
"do what they say they are going to do
to meet deadlines and overcome
obstacles. They know how to present data
in such a way that meets both the
underwriter's criteria and my customer's
criteria." She said EverBank ranks
highly among the three or four lenders
she recommends to her buyers, "and I do
not hesitate to recommend this mortgage
service to any real estate agents
seeking to increase their profits and
gain greater control of the transaction.
Owner-broker Jon
Mendelson of Jon Mendelson Realtors in
St. Louis has worked with
OnePipeline.com for three years, having
had prior experience briefly as a loan
officer. Of the dozen or more loans he
has done with OnePipeline, he said five
were refinances. Because of the risk and
exposure involved in having his four
Realtor associates participate, he said
he is the only one in his office
actively involved in the OnePipeline.com
process with EverBank. He has found the
process "a lot more time-consuming" than
he thought it would be, and doesn't plan
to do any more refis, but will only do
the "absolute slam dunks." In his market
area, where most buyers are looking for
properties $600,000 and up, using the
origination process to make sure buyers
are qualified is not a factor. "Everyone
is pre-approved when they come to us,"
he said. "There are no perfect strangers
walking in all the time that have to be
qualified." Making sure OnePipeline can
meet the contingencies of the purchase
contract in all 50 states is a
challenge, he said. "I do sympathize."
Jacqueline Behr, a
Realtor associate with the Jacksonville
office of Keller Williams Realty, said
the OnePipeline origination process is
"very easy to learn, not time-consuming
at all. Almost everything is done
through e-mail. I have a direct line
that I use that goes to the processor
that works with me." The biggest benefit
she sees is being able to qualify buyers
before showing properties to them. "I
think OnePipeline is a good thing. A lot
of agents hesitate to get involved
because of RESPA, but EverBank has done
the right thing about really making sure
users get things done in the proper
way."
RESPA reform may be dead
for now, but the appetite of borrowers
for one-stop shopping cannot be buried
along with it. Homebuyers don't care one
way or another which title company is
used, how credit is pulled, who actually
provided flood insurance, or which
lender provides the loan - unless there
is a significant cost difference. ABN
AMRO has discovered that if a lender can
roll all that into a single package,
quote a price that sticks, and be sure
to meet the deadlines and contingencies
of the purchase contract, that lender
will do a lot of business, no matter
what ultimately happens to RESPA reform.
Mark Taylor is a
top-producing mortgage broker with
Security Mortgage, Scottsdale, Ariz.,
says one-fee lending "is definitely the
wave of the future." He and his team
close some 25 to 30 loans per month, and
purchase loans account for 90% of that
business. He markets ABN AMRO's
guaranteed OneFee loan with Realtors "to
alleviate the confusion over the GFE"
widely experienced by borrowers.
"Realtors constantly want to have
control of the transaction," he said,
"but the uncertainties with the loan
frustrate that desire. I have them show
me the Good Faith Estimate offered by
anybody else, and I tell them if I can't
beat that, I will buy them dinner. I
never have to do that."
Copyright 2004
Thomson Media Inc. All Rights Reserved.
