by Brian Brady
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
Mike Mueller is leaving the Zillow Mortgage Marketplace. A poor consumer performance review drove him to do just that.
From the consumer review on Zillow Mortgage:
Rating: 1 / 5
Comment: I asked for conforming quote, got sent jumbo quote with huge fees. I even specifically noted the request in the ‘notes’ section due to the newly raised conforming loan limits. If a lender cannot start off paying attention to the customer’s needs there’s no reason to go further.
Reviewer: srg418
Is Mike a crybaby? Hardly. Mike Mueller’s one of the real pros out here and that’s what has me worried about Zillow’s mortgage offering. In their effort to be consumer-centric, they are forgetting that the the “truth” lies in a lender’s opinion of the borrower. If the truth (in this case) is the loan terms, then why are we letting consumers wreck lender’s reputations for delivering it?
Mike delivered the unpalatable news that the “new” jumbo conforming rates were different from the conforming rates. I did that about two months ago to a customer and was equally admonished for my “deceitful tricks”…until the customer started applying for loans. Fortunately, the customer was fair-minded enough to tell me that he funded his conforming-jumbo loan with another lender…at a higher rate than I quoted him. Nobody won- he paid more and I lost money because of his inability to deal with the reality of mortgage guidelines.
The problem lies with the one-way mirror used on Zillow Mortgage Marketplace. Like a perp in an interview room, mortgage professionals are criticized by consumers with predetermined bias. It is the bias of “needing to be correct” that stems from an inadequacy to deal with the truth. That sort of bias convicted Ruben Carter and I’m afraid that it hung Mike Mueller as well. Now, Mike won his case on appeal and fortunately it didn’t take 22 years for the truth to come out. From David G, in the comments thread:
I’ve deleted the review. Borrowers on Zillow can only rate lenders that they’ve worked with but I must also say that I thought your response to the review was excellent. We make it clear to borrowers that we don’t want them reviewing quotes. I hope that this doesn’t happen again but if it does, please click “flag content” below the review and we’ll remove it.
Justice prevailed. It is the one-sided rating system that causes these problems. Mortgage providers are not allowed to directly confront their “accusers”; they must “flag” the comments for inaccuracies and plead their case to Justices Gibbons and Meyers. While The Supreme Court of Zillow is fair-minded, the conviction stands in full view of the marketplace until the accused notices it and challenges. That will drive quality mortgage providers away.
Don Polletta, agreed with my original suggestion (in the comments thread) that the transparency be mutual:
Until Zillow gets the prospects to expose themselves more fully name, email, phone they are free to do what they want, ignorant or not. I still say that in order for the program to work it has to benefit all parties, and right now I don’t see the benefit to loan officers. These are not leads they are quote requests and in my opinion there is a big difference.
Full transparency is what will make Zillow Mortgage a marketplace. A consumer verification system, like an independent credit score and verified Zestimate, will require a financial commitment from the consumer. The anonymous function can still be protected by Zillow and the financial commitment displays intent. A marketplace is comprised of two willing individuals with an intent to buy or sell. Today, the intent is only displayed on the lender’s side.
If a marketplace isn’t the goal, then a consumer-facing social network should be. Successful social networks self-police. If social networking is the goal, then real-time rebuttals from mortgage professionals should be allowed. Mortgage providers should be able to rate or comment about specific consumers. This will make the community aware of bad apples and educate the community about changing loan guidelines.
Zillow is on the brink of something huge with the Zillow Mortgage Marketplace. Verified financial information can allow them to offer better demographic information to their advertisers. While the consumer verification process could reduce the number of page views, the more granular information allows advertisers to better target consumers.
The potential eyeballs Zillow Mortgage Marketplace can attract are astounding. Quality, however, should be the goal over quantity.
MEMO TO ZILLOW: Verified consumers will attract more quotes and eyeballs.
David G from Zillow.com says:
Hi Brian –
This is not an accurate review of the Mortgage Marketplace review system. Rebuttals by lenders are already part of the system – they have been since launch.
The current review system on Zillow is not one-way. The opposite is in fact true; a lender actually gets the last word with respect to any reviews that they receive. Lenders on Zillow are able to respond to their reviews. That response could be a simple “thanks” for a positive review or it could be a rebuttal of a critical review. Mike did in fact respond to his critic but in Mike’s case, the reviewer submitted a review without first contacting Mike. That review violates Zillow’s requirements that borrowers contact lenders before they review them and so it was removed. That doesn’t happen often but when it does, a lender simply needs to flag the review for our attention to have it removed.
June 16, 2008 — 9:33 am
Jon Sigler says:
Do you think that it is quality or eyeballs Zillow is after here? I think it is eyeballs.
Very much agree with you that transparency is needed here. It should be on both sides. We as the mortgage professionals need to know who and what they are is real. (For example we are to stand by a quote based on a consumers estimate of their credit score?) They as consumers need to know that what we are offering is real, and accurate. From what I have seen some/many of the quotes offered are as realistic as Zillow’s property estimates.
I hope that they do spend the time to improve the ZMP it is a great idea, and with a little effort could be huge. A benefit for consumer and professional alike.
June 16, 2008 — 9:39 am
Brian Brady says:
“This is not an accurate review of the Mortgage Marketplace review system.
I disagree, David. Consumers can tarnish a mortgage pros reputation without engaging him; violation of terms or not.
“That review violates Zillow’s requirements that borrowers contact lenders before they review them and so it was removed.”
After it was “flagged”. Verify the consumers, David. You have the means to do just that with the Zestimate and a credit pull.
June 16, 2008 — 9:40 am
Bawldguy Talking says:
> That doesn’t happen often but when it does, a lender simply needs to flag the review for our attention to have it removed.
1. Apparently Zillow thinks they’ve found a way to unring a bell.
2. How difficult was this potential snafu to foresee?
‘Consumer’ oriented is a lot like ‘transparency’. It’s often code for, someone’s about to be unfairly smeared.
The fact Mike is getting out of the line of fire is just another example of the unintended consequences of a false sense of what’s good for the consumer. The consumer is often so ignorant of ‘what’s good for them’ they don’t know the questions, much less the answers.
Solution?
Stop forcing consumers to jump into the corral armed with a rope with instructions to ‘lasso that pissed off bull’ and bring home the highest quality beef you can.
That approach is resulting in a bunch of stomped on consumers, and wounded bulls. Meanwhile, the dude ranch owner is rakin’ it in.
Consumer friendly my Aunt Fannie.
June 16, 2008 — 9:48 am
David G from Zillow.com says:
Brian –
In your post you say … “real-time rebuttals from mortgage professionals should be allowed.”
Well, they are. So, how is it possible that this post is accurate? Your proposed solution is already implemented. In case it matters, Mike had already employed this solution by the time I investigated and deleted the review.
For the most part, the lender review system is working well. This case is an exception and it’s one we have multiple good solutions for.
The suggestion that we confirming and review borrowers is another issue entirely. Mike could have received this review even if such a system were in place. Academically speaking, I personally think that borrower confirmation could be an interesting option if it were optional and it didn’t compromise borrower’s anonymity. Reviewing borrowers however makes no sense as I’ve previously explained because very few borrowers are active enough to be able to accrue a useful reputation.
June 16, 2008 — 9:52 am
Jon Sigler says:
David,
To have borrower confirmation could be easy and anonymity would be easy, after all you own the wall between us. They can still be quote 73HY63LS, but I could know for real that their credit score is 701 (not the range 680-720) and if they have put up maybe $10-20 I know that they are a real borrower looking for a real quote. You can validate them through a credit card, phone number record, who knows. Until that borrowers says hey, I’, 73HY63LS how would anyone know?
Jon
June 16, 2008 — 10:05 am
Brian Brady says:
“Academically speaking, I personally think that borrower confirmation could be an interesting option if it were optional and it didn’t compromise borrower’s anonymity.”
It’s doable, David. You realize that those borrowers will get all the attention while the others are left behind. That will force the consumers to get verified which will lead to better quotes.
“Reviewing borrowers however makes no sense as I’ve previously explained because very few borrowers are active enough to be able to accrue a useful reputation.”
Try it.
My position is clear- verified quote requests would make for a better marketplace.
June 16, 2008 — 10:17 am
David G from Zillow.com says:
Jon –
When it comes to using information to attract traffic, quality and quantity go very much in hand. Anyone who has tried their hand at blogging knows this well. You cannot have the one without the other. In fact, quality arises out of quantity. To identify a signal you often need the noise which is why, as imperfect as it is, aggregation of multiple sources online will often trump the opinion of a single trusted expert off-line.
I agree that borrower confirmations could be an interesting enhancement. Thank you for that feedback. We’ve actually identified a vendor who could provide this service – it may be a future feature of the marketplace. That said, it’s clearly not necessary to attract quotes and so it could be an optional feature for borrowers.
Important to note however that such a confirmation system would not have had any meaningful impact on Mike’s experience of the marketplace.
June 16, 2008 — 10:20 am
David G from Zillow.com says:
Brian –
Totally agree that borrower confirmation is do-able. Many banks already use these systems adentified. It could be a future (optional) feature of the marketplace.
That said, Mike’s experience is unrelated to your suggestion that borrowers be confirmed. You’re conflating unrelated issues here. The suggestion that reviews be responded to by lenders is relevant to Mike’s experience but it is already implemented. The 3rd suggestion, that borrowers be reviewed by lenders would have little to no utility as I’ve explained previously.
I would appreciate it if you could clarify your post. Reviews of lenders are certainly not one-sided and can be responded to.
June 16, 2008 — 10:38 am
Brian Brady says:
“That said, it’s clearly not necessary to attract quotes and so it could be an optional feature for borrowers.”
Try it and nobody will quote for unverified borrowers except the truly desperate. Try it and you’ll drive costs down tot he consumer.
“Important to note however that such a confirmation system would not have had any meaningful impact on Mike’s experience of the marketplace.”
Again, I disagree. You had a trawler on Zillow; not a borrower. Commitment weeds trawlers out. If he had $25 at stake, he’d be asking questions of the mortgage professionals, trying to understand things.
You’ll figure this out; you guys always do.
June 16, 2008 — 10:41 am
David G from Zillow.com says:
WOAH Brian … I totally missed the “charge borrowers before they can get quotes” part of your suggestion. Do I really need to explain why that’s a non-starter?
June 16, 2008 — 10:44 am
David G from Zillow.com says:
… and debate aside, this is all GREAT feedback! We are still very much in the “tweaking it” mode with the mortgage marketplace so please keep the suggestions coming.
June 16, 2008 — 10:47 am
Brian Brady says:
“and debate aside, this is all GREAT feedback!”
Just a Zillowphile’s intent
June 16, 2008 — 10:58 am
Jon Sigler says:
Eyeballs, not quality… You decide:
… I totally missed the “charge borrowers before they can get quotes” part of your suggestion. Do I really need to explain why that’s a non-starter?…
My vote is eyeballs right now. Quality in my opinion will come from borrowers “investing” in this just like the mortgage professional.
June 16, 2008 — 12:27 pm
Bob Wilson says:
“Reviews of lenders are certainly not one-sided and can be responded to.”
Doesn’t matter. The site is set up to infer that consumers need to be protected from lenders. Responding to a review won’t clear the air. The consumer can make claims all day long, but the there is only so far the lender can go to defend himself.
June 16, 2008 — 3:44 pm
Robert Kerr says:
If the customer was unqualified, why didn’t Mike Mueller just respond that way, instead of pushing a fatter package?
Justified or not, I can understand why the customer would be upset by what happened.
June 16, 2008 — 4:04 pm
Brian Brady says:
He quoted a jumbo conforming loan, Robert. The consumer perceived it to be a “fat” package because he didn’t know that jumbo conforming rates were higher than conforming
June 16, 2008 — 4:08 pm
Mike Mueller says:
Wow! I had a busy Monday, saw this post in the AM with no comments, and this is the first real chance I’ve had to comment.
Brian – You did an excellent job illustrating the situation.
DavidG – I can’t tell you how appreciative I am. Your responsiveness continues to amaze me.
Robert Kerr – I wasn’t fat. In fact if anything I “gamed” the system, waiting to quote when rates were lower. The rates I quote are real at that given point in time. Check out the original post on ActiveRain. You’re a lender. You know sometimes clients are mis informed. This person heard that conforming loan limits were raised. He wanted a $417,000 or less rate for his $607,000 loan. He incorrectly thought that he qualified.
I’ve said it before, and I’ll say it again here: “I so very much want to see Zillow Mortgage Work” I really do. I want to compete head to head on a level playing field. I want to compete in complete transparency. I want borrowers to make informed, educated decisions.
A boy can hope can’t he?
June 16, 2008 — 6:30 pm
Jonathan Blackwell says:
The Zillow Mortgage Marketplace is a gigantic waste of time for mortgage professionals. What will happen, if it hasn’t already, is that the true professionals will not participate in a platform that encourages low ball quotes and misinformation. It will be left to the hacks to compete and any customer who chooses to get their mortgage from that platform will be forced to deal with unqualified loan officers and misleading quotes.
Jonathan Blackwell
June 16, 2008 — 9:02 pm
David Shafer says:
Right on Jonathan. This was predictable. Once again, trying to turn mortgages into a commodity always ends up with the consumer losing. Is there a way around it? Of course, but it lies in the business practices of mortgage originators not in any “when banks compete” claptrap. Not when mortgage rates change several times a day, not when underwriting is so variable, not when the consumer is so in the dark (not their fault after all how many loans does an average person get in a lifetime?). No, encouraging folks to game the system only hurts them. There are no great deals, only really bad ones from unscrupulous mortgage originators!
June 17, 2008 — 5:52 am
Jonathan Blackwell says:
Exactly David, don’t forget to add that busy and successful mortgage professionals are not all that interested in whittling their profits down to nothing to win a loan either. Getting loans through underwriting in this market, with minimal pain to the borrower, requires careful planning and excellent execution. In other words it takes time.
June 17, 2008 — 3:06 pm
Dan Melson says:
Issues I’m *still* seeing with Zillow Mortgage
1) still lots of low-balling by agents
2) Seeing the same quote request time and time again (looks like they’re shopping the competition, rather than shopping for a loan)
3) Astroturfing the ratings
I don’t need to know property address to write a quote. But if Zillow was requiring that and keeping the actual address confidential while providing maybe the zestimate (and weeding out multiple requests for the same address!), as well as providing information like “how many quote requests has this borrower made within 365 days” it might make the requests better. Thus far, I have been asked for precisely one MLDS, which due to pricing improvements I was able to improve what I quoted – and they then vanished into the ether.
There are any number of improvements that need to be made if Zillow is serious about making the mortgage quote system real, as opposed to another forum. Zillow is also kidding themselves if they think they’re not going to need a paid ratings arbitrator who’s a mortgage professional.
June 17, 2008 — 4:06 pm
Robert Kerr says:
This person heard that conforming loan limits were raised. He wanted a $417,000 or less rate for his $607,000 loan. He incorrectly thought that he qualified.
He wanted a $417,000 or less rate for his $607,000 loan. He incorrectly thought that he qualified.
Thanks for clearing that up Mike, that wasn’t clear from Brian’s post.
June 17, 2008 — 9:59 pm
Louis cammarosano says:
Brian you are hitting on what we discussed when Zillow launched it-Zillow’s inherent issue is they cater to the advertiser, not the mortgage broker so they need volume to please their advertisers.
Since Zillow’s customer is not the mortgage broker, they have less of a vested economic interest in pleasing them (other than they need them to participate in order to have the program in the first place)
If Zillow were being paid on the basis of a closed deal by the brokers or per lead, their interest in lead quality would go up.
But since the mantra for the Zillow mortgage market place is “free” and “transparent” mortgage brokers are getting what they pay for.
June 21, 2008 — 9:21 am
David G from Zillow.com says:
Louis –
The volume of borrowers in Zillow Mortgage Marketplace pleases brokers too. This week, two of the brokers I met had already closed 10 or more loans through Zillow. They seemed pretty pleased to me. One of them urged us never to change the fact that borrowers are anonymous. He also said that the borrowers that he is working with from Zillow have had an excellent idea of what their credit scores are and that they tend to know or under-report their income. i.e. the market place is yielding quality leads.
This feedback actually comes from focus groups held exclusively with lenders this week. Our discussions were focused, in part, on suggestions to further increase the yield of those free loan requests on Zillow that you think we’re neglecting. Now, Louis, you weren’t to know that these focus groups were ongoing while you were typing your comment, but even you have to admit that it is a spectacularly ironic example of FUD.
June 21, 2008 — 10:48 am
Louis Cammarosano says:
Hi David
Its hard for any one to really comment on the efficacy of the ZIllow Mortgage market place. Brian gave one anecdote and you obviously have the complete picture on how well the market place is doing.
You are doing the right thing by speaking with the mortgage brokers. You will find that some love the product and others won’t. You have to run it the way it makes sense for Zillow and for your successful brokers.
It seems you are doing that.
June 21, 2008 — 11:36 am
Brian Brady says:
“You are doing the right thing by speaking with the mortgage brokers. You will find that some love the product and others won’t. You have to run it the way it makes sense for Zillow and for your successful brokers.”
I think Zillow’s pretty good about trying to figure out how to improve the product.
The problem with all these “great ideas” I, and others, have is that we need to remember that the marketplace ultimately has to serve Zillow. They can do a lot of cool things but if they can’t sell advertising around it, they can’t support it.
June 22, 2008 — 8:31 am