by Brian Brady
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
How can Zillow Mortgage become the online edition of the Better Business Bureau for mortgage lending?
The future of consumer complaints is in transparency; breaking down the walls of the “smoke filled rooms” where industry insiders shear sheep and protect their own. This mortgage crisis has seen government response, spun as “consumer protection” but clearly designed to protect the mortgage industry. It sucks.
It sucks because the mortgage industry was a drunken frat party, from 2002-2006. Hustlers invaded our business and gang raped the borrower. First we slipped you a mickey by confusing the mortgage product offerings. Next, we practiced prestidigitation by getting you to focus on payments while reaping in enormous profits through secondary market transactions. Finally, when you couldn’t handle the intense pressure of your “new” loan, the government rallied around us like a college administration protects a red-shirted football star.
You (the consumer) are culpable, as well. You stuck your head in the sand and defined a long-term financial plan as the length of a mortgage prepayment penalty. You eschewed due diligence for the immediate gratification of an SUV or ATV, paid for by your withdrawn home equity.
Done. It’s time to heal.
You (consumers) need to start getting educated. You need a forum where you can get transparent answers to hard questions. You need to know that you’re talking to a mortgage professional who knows the difference between principles and principal.
We (the mortgage originators) need to know that we’re competing for your business against legitimate competitors, not some lead.bot service that parses your volunteered information and sells it to six of us.
You ( the consumer) need a public forum to air complaints about our service offering; real complaints. We’ll take forever to return phone calls, forget to disclose a loan condition, and change up loan terms as loan programs are canceled by lenders. That’s an unfortunate reality of the world I live in today. Demand for mortgage money is high while supply is low.
You can complain against me on the wide-open platform Zillow Mortgage provides.
…and I can respond to your complaint on that platform. I can disclose the nefarious practices the few dishonest borrowers employ designed to “trip up” loan originators. I can point out attempts to game the system, and the double-application methods disingenuous consumers use. I can take my lumps for not communicating properly (it still happens) or overpromising and underdelivering.
I can respond to those complaints under the transparent eye of the community. The community can decide who is an isn’t credible.
Zillow Mortgage has the ability to become the Better Business Bureau on steroids and this is a good thing. Mortgage originators are basically good and honest professionals who have borrowers best interests’ at heart. Borrowers are basically good and honest people who are willing to pay a fair price for good service. We can connect and monitor our behaviors in the fishbowl of Zillow Mortgage and the community can decide if we’re behaving responsibly, professionally, and in mutual good faith.
We need to have these conversations with each other. We need to learn how to trust one another. We need to start working together to determine which originators are hustlers and which borrowers are fraud risks. I’m willing to open my kimono and show you everything inside. I’m willing to do it on Zillow Mortgage because there’s no other place to display it, today.
Are you?
Kaye Thomas says:
Brian,
You said it all.. and very well I might add
March 7, 2008 — 8:47 pm
Sean Purcell says:
Brian,
Quite a post. I think you have enumerated a number of great ideas. Through Zillow there will be transparency. Borrowers will be able to “…start getting educated.” At the same time, orginators will embrace a cleaner competition. An open forum will facilitate a purer marketplace, therefore helping originators and borrowers to help each other.
Unfortunately, most of this will fail. But that’s OK. It’s not your fault and it’s not the public’s fault. There has just been too much faulty education and advertising to turn the tide any time soon.
The problem now is truly a double-edged sword. Our industry, filled as it is with so many entry level order takers rather than debt/equity planners, decided some time ago that rates are what borrowers care about and so rates are what we’ll discuss. Nevermind that rate is about the FOURTH… no: SIXTH… no: EIGHTH most important thing when it comes to coaching a client on an appropriate mortgage.
Borrowers are geared up to shop rate without any education or context. Zillow will now provide a clearing house for that you say? Best of luck having an open forum be much more that a “bitch fest”.
Of course, part of the reason this will fail lies with your assumptions: “…few dishonest borrowers… nefarious practices… double-application methods”.
You are too generous. There are as many dishonest borrowers are there are originators (I am being kind here, there are a LOT more dishonest borrowers than originators). I am so tired of hearing the apologies for borrowers who knew EXACTLY what they were doing – igored the sound advice of advisors with a little grey hair and opted for the short term benefit over the long term view – now that there are some bumps in the road. (And seriously, that is all we currently have: bumps).
This really should be a post of its own, but I am on a rant now. You yourself have espoused a transparent philosophy for years and you know I have been an ardent proponent of “open kimono” lending for years as well. I still negotiate a flat fee (based on the loan) and show clients how rebate, YSP, SRP and every other nonsense fee in the industry works. But my business only thrives because I have so narrowly defined my client base. I only work with clients that are accustomed to financial planners. Each time I break my rule and open up to the wider pool of applicants (that have little financial background) I find myself fighting the same fight (and often as not losing that fight). You point out how “…industry insiders shear sheep…” and I wish to add that they are some pretty damn willing sheep!
Beyond the rant though, the practice of “double application” and “gaming the system” are not nefarious. At least not in the public’s eyes. Why? Because we have told them over and over to do that. Hard to blame a person for practicing the very processes that our industry has encouraged for over five years now. You do not see brain surgeons advertising that a client shop fees or suggest that “when doctors compete, you win” because it is patently false. People should (and do) choose their physician based on expertise and experience. Financial health is second only to actual health, yet our industy has proclaimed itself to be quite a few steps down on the importance ladder. Hard to blame the patient.
My guess is that Zillow will provice a platform for the “sheep” to complain about problems that my (and your) clients never run into. I will join (better to light one candle than curse the darkness) but I doubt there will be much education because the platform will be overrun by the same mortgage “professionals” (the ones that cannot even spell fiduciary); all hoping to generate a medical practice by advertising the lowest cost. I can see their ads now: “Brain tumor? Broken foot? Pregnant? Heart blockage? Our costs are THE LOWEST in town. Best of all, we never expect a referral. Hell, we rarely hear from our own patients again…”
March 8, 2008 — 9:39 am
Brian Brady says:
Sean…dude, that was righteous.
Here’s why you (and I) MUST be on Zillow Mortgage; we can lead the conversation there. Seriously, we can.
If price/fees is a poor offering for the consumer, let’s say it. If transparency and flat fees are the solution, let’s say it. Let’s say it loud, often, and clearly. Let’s speak with a stentorian voice about the way financial advisory must be practiced.
Zillow Mortgage is giving us one helluva stage; let’s use it to effect some change.
March 8, 2008 — 10:51 am
Sean Purcell says:
Brian,
I cannot hide it. When you start talking in that stentorian voice… well, I find myself back at Our Lady of Perpetual Help listening to Monsignor Flynn tell me why I should be good despite all the fun I was having.
I agree with you. Take your Don Quixote message to Zillow and I, as any committed Sancho Panza would, will follow, support and sometimes even lead. Let’s step up and be counted. Saving even one borrower from the financial loss and emotional stress of another poorly designed mortgage plan should be reward enough.
Somewhere up there, I hope Monsignor Flynn is proud.
March 8, 2008 — 11:58 am