Zillow Mortgage Bourse: How To Acquire Long-Term Clients

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

I might have been hasty in my original assessment of the Zillow Mortgage Bourse. I sometimes suffer from TB; true believer disease. I’m one of the few guys in the mortgage business that actually wants to see the cost of loan acquisition, for the consumer, dramatically reduced. I have never seen my role as a middle-man. I see myself as part financial adviser and part trader.

Permit me a digression:

I have always considered yield spread premium to be the borrower’s money. I have aggressively used it in serial no-cost refinances, throughout the late 90’s and early part of this decade. Critics, don’t bring up the issue of churning. I assure you that every transaction I funded has a tangible net benefit to the borrower.

When a borrower gets “into my web”, by closing a loan transaction, I conduct periodic mortgage reviews. Jillayne Schlicke once commented that the periodic review is just an excuse to “sell a refinance”. My response is a bawld one: “Well, Duh!“. We should ALWAYS be looking for an excuse to refinance the borrower’s loan…IF…there is a tangible net benefit to the borrower AND I get paid. Call that the way of the trader. Traders look for opportunities to profit off market fluctuations.

I digressed but I wanted to give you some background. My initial concerns about The Zillow Mortgage Bourse were two-fold:

1- Customers don’t know what they don’t know. I pontificated that the customers would be EXTREMELY difficult, focusing on price rather than suitability. I found the data byte, on the loan request form that distinguishes the client’s intent. This is the real Web 2.0 offering of the Zillow Mortgage Bourse.

2- I felt that consumers could game the system, waste originators’ time, and damage our reputations if they didn’t get exactly what they wanted when they wanted it. I also thought they would “steal” the advice we offer, and engage in a perpetual RFP process until they found the lowest price. That happened often in securities brokerage ; customers would extract “tips” from their Merrill Lynch broker, and place the big trade at Charles Schwab. I think I know exactly how to identify those consumers.

Two people contacted me, via e-mail, from the Zillow Mortgage Bourse. Both are cost-conscious and both need advice. I directed both consumers to the article I wrote about lock-execution (with my recent performance results) and my article about ARMs. Both customers talked to me on the telephone, this morning.

The first was the customer I feared; the foot-stomping, “you’re just a middle-man” brat. The consumer gleaned some free advice, then invited me to “re-quote” my loan recommendation, on the Bourse. That consumer seemed stunned that I wouldn’t re-compete for the business. That consumer will lock at the wrong time and it will cost lots of money.

The second consumer is EXACTLY who I want as a client. That consumer valued my advice, was astonished with my track record, and extremely excited to be in relationship with me. The loan solution I offered, Thursday, cost the new client a few hundred dollars more, today. This new client locked the loan, paid the deposit, and was relieved that I would be monitoring future “trade” opportunities.

I’m pretty certain that I may have isolated the one data byte, in the loan request form, that can distinguish the player from the serious customer. Today, it’s just a theory supported by a micro-sampling. In two months, it will be a “best practice”; originators will be able to determine which loan request is and which isn’t worthy of their attention. I’ll publish that data here.

“Traders” will profit from the Zillow Mortgage Bourse. Armed with the data byte that announces consumers’ intent, traders will be able to act quickly, provide HUGE tangible net benefits to the borrowers, acquire long-term clients, and lower their marketing costs.

READ MY ORIGINAL THOUGHTS:

Zillow Mortgage Marketplace: One Way Transparency Like A Bad Online Dating Site