Brainstrom Session: How can Zillow and the Honest Lenders Police the Mortgage Marketplace

In my opinion, this entire discussion should be take to a private forum. If I were casually browsing I would be turned off to this entire discussion ... if you get my point.

That's not a bad idea. Maybe Zillow can offer to set a private area up for some of the regulars  to help thrash  these things out.

 

Tom O'Leary

Why not have it be transparent? Thats what this is all about. If a borrower is smart enough to go find this thread then they should be informed as to what kind of quotes they are receiveing and how Zillow is going to address this. Otherwise, who is going to stop these folks?

I think GV is right. If they found themselves here, they would be more likely to think any good quote here is suspect, and just go somewhere else. Kind of a corollary to Gresham's Law.

 

Tom O'Leary

I don't think it should be private.  

 

Just in case here's a disclaimer to consumers.  Rates are very competitive, that means no one should be significantly better than the mob. 

 

Anyone else feel like about 98% of requests are tire kickers who saw a news piece and want try the new internet toy?  There's a suspiciously high number of credit scores above 760.

 

There was someone asking for a 100% loan with low scores.  I'd guess that one is real. :-)

 

Great discussion -- we're looking for as much feedback as possible to make this mortgage marketplace as good as possible. Keep the dialogue going.

Everything I'm seeing on most of the quotes I've looked at has been overwhelmingly positive.  The coordination here between everyone has been largely right on, i.e. positive, honest.  It sounds like many of the perceived low-balls were based on misunderstandings involving a new medium and input fields, or how to communicate different lending alternatives.  I did see one lender that was cautioning the public against rogues on Zillow as part of their company description.  I think this is inappropriate and runs contary to the prevailing cooperative way this system is being developed.  I'm sure the lender was sincere in the warning, however it's best to simply present the programs and not even make subtle criticisms about other lenders generally or specific lenders.  As far as flagging true low-ballers, it would have to be done privately and with extreme caution.  Occasionally there is a surprise-a new product is introduced, the rate is low, and the knee-jerk response (i've done it) that it can't exist isn't always correct.  I think to have the forums remain public as Darren suggests is a great idea-transparency is great.  I think a direct accusation however should be private, researched, polite, and should offer a chance for a response. 

I'm seeing the word "misunderstandings" coming up frequently in these discussions...come on!  If you can't figure out this simple quote form, how do you ever get a 1003 completed???

 

They are attempting to be politically correct Mirada.  We all know the people we are speaking about are intentionally low balling quotes to get the prospect to contact them.  Then change the terms because of some "unforseeable" change.  With no monitoring it will regretably continue.

Colorado- That was my point.  "I made a mistake" is no different than "The market has changed and your rate is now half a point higher".  If something isn't done soon to purge the low-ballers, no lender fees, and these 'accelerator' used car salesmen... this great idea is going to go down in flames.

I would really have to agree with everything that has been said here. In the short period of time that this side of Zillow has been up and running I have come to quickly see who is for real and who is not. Day after day I think we all see the same people making outrageous offers that seem to be well below current market conditions. I have a very hard time believing these are legitimate offers unless people have begun to do charity loans at sub-par rates and free of charge.

If Zillow were to create some sort of policing system I would welcome this, having said this, I think it would be difficult for it to be set up and maintained since Zillow may not have the resources to check and monitor the thousands of quotes to make sure that they are accurate and legit. For us to do it ourselves would probably be the most effective and efficient way since we know what the prevailing rates are but at the same time how would we make sure that a person is honestly flagging a quote and not doing it just out of spite?

I’d like to be optimistic and hope that over time those lenders that make these unrealistic quotes get weeded out, weather it be by negative consumer feedback or some sort of policing system. I have a lot of respect for those of you that I see posting accurate information and know that we will be the ones standing once this housing storm blows over!

Agreed.  How about a system where a daily "range of realism" is posted where the customers can see it and compare their quotes against it and make their own calls?  The range could be prepared by Zillow or by a roating group of loan officers who have shown integrity with quotes.  Jared is right, the best way is for loan officers to police it, but as he correctly states it opens up all sorts of avenues for nastiness.  With a posted range of realism, if someone wants to quote really low and have to answer as to why they are so far off to their informed client, that's their problem.  If a loan officer really has a rate sheet, bank, or program that can support their quote they can contact the group that posts the range and argue their case.  Any solution is going to be cumbersome, but something needs to be done-it's hard to post a realistic jumbo rate/fee scenario next to something suspect and not come off as a robber baron simply by presenting reality. 

 

I frequently have used the websites of large banks to essentially create a method of comparison.  I quote a rate/fee then direct the client to a large bank's site and have them input their values and see what they get.  They usually start doing this with competitor's quotes and will question why a quote is far lower than an average of the big bank's postings. 

Not practical. Different state have different rates, different situations require different prices, and rates can change 4 times a day.

 

The 80-20 rule wil work here like anywhere else. 80% of the problems will be caused by 20% of the people. A flagging system will over time let Zillow identify the problem children, reasonable and fair posting guidelines will give us the standards to adhere to. Right now, we don't really have standards, and don't really have a means of identifying problem posts.

 

Tom O'Leary

"Not practical. Different state have different rates, different situations require different prices, and rates can change 4 times a day."

 

On conforming, regardless of region, rates really shouldn't be below Fannie's 60 day delivery price.  I've seen several that have been below the 10 day delivery price.  So, either they're market geniuses taking huge risks or they're fibbing.

 

 

3 changes here so far today, by 11:00. Who is going to keep up with that? I am seeing lowball quotes on almost everything this afternoon, people quoting yesterday's rates and playing dumb, I guess. I am sending polite little notes to the lenders or brokers making bogus quotes this afternoon suggesting that they "double check their quotes", but that should be Zillow's job, not mine.

 

 

 

Tom O'Leary

I completely agree with everything that's being discussed here, and feel this forum should be kept public.  I just hope we can come up with an effective way to flag the bogus quotes.  Tom, how can we expect Zillow to police the bogus quotes being given by some of the Brokers/Lenders?  That would require Zillow to hire an entire team of QC specialists to do just that and nothing else.  I don't think my $25.00 contribution will go that far.

A flagging system will let them identify repeat offenders. Clearer standards for quotes, such as requiring a 30 day minimum lock and requiring that people respond with the type of loan requested instead of some other program would even out the playing field. Spot checking quotes- requiring that brokers and lenders provide the basis for a quote on request. You don't have to police every quote, just put reasonable controls in before the scam artists quoting all over the site drive out all the honest brokers and lenders.

 

 

 

Tom O'Leary

I think Zillow should hire Planners! ;)

They could not afford me, but thanks for the thought.

 

Tom O'Leary

Lol!

We should all put pressure on the bad actors. I caught a BofA guy completely misquoting deals, as I input the info into the BofA website and got the real quotes. He quoted 6.125 on zillow and the Bank gave 7.125. I emailed him and challenged him on it.  He said he would not come to my office and question me and to respect myself! He didn't btry to defend the quote! I told him to go back and sell cellphones. Then I caught him again on another quote. This one was even better. He quoted 6.375% on a 92% purchase jumbo.  The Bank gave an 8.875% at 2.8 points! I emailed him again and told him that he has no ethics and that he is giving us all a bad name. How many clients has he lied to in his 14 years?  My point is that we should be challenging these bad actors.

I even went as far as to use my friend's email and post a refinance quote here on zillow. If you want to see what happens, try it yourself.  I posted no bad remarks, but two quotes were from unlicensed idiots. Only 1 was willing to give me a written GFE. They all wanted me to call and lock that day- no surprise there. I quoted my current rate at 5.5% at a 30 year fixed and not one quote told me not to do anything right now. They all tried to sell me a 15 year at 5.25%, paying points and fees! It is no wonder why loan brokers have a bad reputation, we don't police ourselves enough to get rid of the bad ones. Looks the the golden rule has gone out the window.

Mark, with all due respect, you are quoting 6.0% with $3200 in lender fees on a 30 year fixed. Now, you can sit and complain, or you can do your homework. There are legitimate quotes out there for 5.75% with fees under $3000. I could name 3 lenders that are offering 5.75 at par so it's just a matter of how much you want to make. The complaining from people who cannot compete is getting old. You either are greedy and overcharging, you don't have the resources or associations to be competitive or you are just too lazy to research the best rates for your clients. Either way, it's not everyone else's responsibility to dumb down their quotes to accommodate you.

Yes some quotes are just plain stupid, I question the 5.625% quotes today but you have to look at why your quotes are so much higher than everyone else's. You can charge 6% all day long if you want to, but if you want to compete here, you are going to have to take short deals. None of your quotes are competitive and it's your own fault!

QuoteCop,

 

Name the three lenders.

Under 60% LTV, FICO above 740, purchase, cash out or no cash out refi, impound account, 30 day lock at application, I am 1/2 point plus exactly $1,184 in lender fees assuming a $350 appraisal fee right now.  I am in CA, and other states are often an eighth or so lower than me.  It's a makeable number today.

 

Where the real hole is in the Zillow aystem is in not requiring any specific lock in term, or requiring that any quote made must be lockable at all.

 

Tom O'Leary

Exactly $1,204, actually, I forgot the credit report fee.

 

I'm not trying to say I'm anything special, since there are at least a few other brokers out here quoting right in line with me. I am just trying to make the point that we are all in different markets and have different cost structures, so we can't be too quick to assume the worst when we see a number that looks unusually low.

 

I don't think there's anything wrong with sending a  polite private e-mail if you have a concern, but a lot of times it's either real or just a typo. Heck, I did two myself yesterday where I forgot to change the loan term, and was quoting fifteen year rates but claiming they were thirty year loans. Fortunately another broker brought them to my attention and I was able to change the quotes before the client  saw them.

 

Tom O'Leary

 

Tom

Tom we get the "lock term" already, can you find something positive about your first paragraph? I can. The lock term is my very least concern.

I think the policing should be done, as it is set up, by the customer.  Unfortunately, Zillow is asking them to commit time to something they probably couldn't care less about.  It appears only a very small percentage of customers actually rate the lender/brokers, so unfortunately there is no real consequence to filling out low ball quotes.

 

The only idea that I can think of, that may spur more ratings, is follow up emails by Zillow or (I'm not sure how it is set up) a more pronounced link to rate on the offering emails.  Maybe with ratings for four or five questions that are averaged.  The questions could include the quality of the quote provided as well as items such as lender response.

How can you have a "flagging system"?  How would you determine who should be on probation?  If one customer doesn't give a 5, then should that lender by flagged? Where does it begin and where does it end?  Unfortunately, I do not believe that there is a way to "police" the Mortgage MarketPlace.  Zillow confirms each person is licensed to do mortgage loans for teh state they wish to do business in.  Unfortunately in this day and age, that is pretty much all you need.   Whether they are honest or not, is a different story.  

 

I do agree that alot of the rates quotes are inflated.  Borrowers are smart enough to read between the lines and if not, they can ask questions on a forum on Zillow and those of us honest lenders/brokers can respond with what we think. 

 

Any how any day, I will provide proof of EVERY quote if I am ever questioned.  If for some reason anything in my quote is different than what the borrower asks, it is addressed in my comment to them.  For example, a gentleman wanted a 90% Jumbo purchase, I/O.  I gave a quote and followed with an explanation that he would fair much better doing an 1st at $417k and 2nd for the balance. 

 

 

"I do agree that alot of the rates quotes are inflated. Borrowers are smart enough to read between the lines and if not"

 

 

 

 

Unfortunately, no they're not

Maybe there should be both a User Rating for a Lender and then a Lender or Colleague rating, so I can go check a Lender and see that every other Lender is saying about this person.  If every lender on here says this guy is a douche bag I'll stay away, but if his Colleagues say he is good, i'd be more inclined to contact them.  Of course, this could get abused as well, but it gives a different perspective of a Lender aside from just the borrowers opinion on here.