The Digital Mortgage Experience – The Battle Is Over, The War Has Just Begun
August 21, 2014
A lot has happened in the last three weeks and there is a winner. The good news for credit unions and banks...a community bank won the battle for my business. The bad news for credit unions and banks...Quicken Loans (and others like them) are better prepared to win the war.
Quick side note: I planned on covering a lot more of my experience getting a mortgage during my current home purchase, but things have been moving way to fast for me to keep up with. I will try to backtrack as things slow down and cover different aspects of my mortgage experience in future posts.
In my first post on my digital mortgage experience I wrote that I would be deciding on the provider of my next mortgage on how well they performed in four areas:
Cost - includes the rate, processing fee, title insurance, appraisal and attorney fees.
Friction - Where in the process do I encounter friction? Why? Is it avoidable or could the provider do something to minimize the impact?
Transparency - This is a big one for me, and I think is a place where most mortgage lenders fall down. There are a lot of variables in mortgage financing and too often when one variable changes the whole picture changes.
Speed - How long did the process take? Were expectations met? Was it reasonable (from a consumer’s perspective) given the type of transaction compared to other transactions I experience day to day and the other three times I have been through the process?
The two lenders left, after the credit union I was working dropped out because I couldn't fit into one of the programs they offered, are a large community bank and Quicken Loans. What I experienced with both organizations held many lessons and I will share two of them today.
- Price and transparency won the day for the bank. What won the deal for the bank was the price and transparency on the elements that went into the price. Quicken Loans did come down in price in the end and had a nice no mortgage insurance option, but they never shared an exact breakdown of the closing costs. They would give summary information by phone needed to commit to them and pay for the appraisal before that would be released. The fact that the bank still had a slightly lower rate won the day as the lack of transparency on Quicken's part reduced my trust. I just didn't want to give them the win.
- Lack of friction, speed and communication were night and day between the bank and Quicken Loans...and are the reason Quicken Loans' is one to watch. Seriously. Quicken Loans walked all over the competition in these areas. With the credit union and the bank, the applications themselves were not that bad (thank you Mortgagebot), but everything else about the process was old-school mortgage lending. With the bank and credit union, if I wanted to know what was going on I needed to call. If I needed to get documents to them I needed to figure out a secure way to get those to them (I haven't owned a fax machine in years). Meanwhile, my Quicken Loans mortgage officer scheduled weekly calls with me, had a secure site where we could share docs and never let me off the hook if I missed one of our weekly check up calls.
Basically, if Quicken Loans hadn't played coy with the pricing they would have won my business. While I trust the bank (specifically my mortgage officer) to get the job done right and on-time, I don't feel it will be nearly as easy as it would have been with Quicken Loans.
Quicken Loans had an application that was fast and simple, the amount of documentation was minimal, and the program options they had were formidable. The mortgage officer was friendly, knowledgable and powered by a kick-ass CRM that kept him from forgetting me (and probably helps his employer monitor productivity and service quality). I really wanted to see how their closing worked as they promised I could close from anywhere, which considering I am selling in one state and moving to another was a BIG plus.
The community bank had: a strong recommendation by my realtor, was very transparent on the cost of each program put before me, and had the better price (by a hair). If it was not for those three things, it would have been game over for the bank. However, trust is HUGE. Between my realtor talking up this particular lender (creating some trust) and the lender being very up front and transparent (reinforcing the trust) it created a large hurdle for Quicken Loans to overcome. Quicken almost made it, but their sales process eroded trust and gave the game to the bank.
The main headline - beware credit union and banks. If Quicken Loans and other monoline lenders like them can put more transparency into their processes to improve trust, your people (who are awesome) may not be able to win the day for you much longer. Keep your people and your transparency but start now to reduce friction, increase communication and improve the speed of your mortgage process.