Zillow launched its mortgage product tonight and from my review of the platform seem to have taken a major step in the right direction when it comes to leveraging the internet to provide consumers with quality mortgage options without the treachery that is online lead generation. I had a sneak peak at the platform and I’m duly impressed at the way Zillow has put consumers in control of the transaction right from the start.

You’ll see the new Mortgage Marketplace as a new tab in Zillow’s home page navigation and there are two paths once you get to the marketplace, either as a lender or as a borrower. If you remember about a month ago Zillow started taking lender applications to prime the system to be ready for this day. I made a big deal out of the vetting that went in to the application process and I’ll go in to detail now about why that was such a big deal. The lender side isn’t that sexy, so let’s talk about what the Zillow Mortgage Marketplace means for the consumer.

Accurate information without the hounding

The paradigm-shifting change at Zillow is the separation of the consumer’s contact information from the loan information.  This gives the consumer total anonymity when soliciting mortgage quotes which is something that must sound like music to consumers’ ears.  With this one move Zillow has eliminated a MAJOR pain point for borrowers shopping online for a mortgage.  

The number one complaint we received from internet-based leads was that they had been hounded to death on the phone for business.  I knew of a lady who lost her job because her office line rang incessantly after she filled out a lead on lowermybills.com.  People turn off their phones, unplug their home phones and generally do whatever they can to avoid be hounded to death once their information gets out on the internet.  

Zillow allows them to 100% control the interaction by getting custom mortgage quotes by providing their scenario in a standard pre-qual format (their interface is pretty similar to a typical online prequalification form you’d see elsewhere - Zillowfied of course) minus their personal information.  Zillow has made it a bit more user-friendly by helping people estimate their credit scores through a series of questions and have also made the mortgage product choices easier by eliminating some of the more exotic programs from the quote options.

Once a consumer submits this anonymous quote lenders in the system can “bid” on the quote. They can quote rates, fees and terms that are submitted with a brief introductory paragraph from them as well as their picture and a link to their profile page.  The principal and interest payments are automatically calculated by Zillow based on the loan program, term and fees and the taxes and insurance are estimated based on property records (Zestimate?) so that there can’t be any manipulation of those numbers.  

Consumers are presented these quotes as they arrive and when they find one they like they can choose to contact the lender directly and share any additional information they choose to at that next step.  They are never bothered by unsolicited phone calls or emails.

The Originator Rating

In addition to the quotes that they receive that come packaged with an intro paragraph, easy-to-understand terms and pre-calculated payments the originators submitting the quote carry ratings with them of 0 to 5.  These ratings are calculated based on consumer feedback after dealing with the originator.  The ratings have nothing to do with fees or loan terms and everything to do with the process of working with that lender.  So if there were changes in the loan, or things seemed shady or uncertain consumers can rate that originator poorly, and vice-versa.

Loan originators who feel wrongly scored can rebut the poor score and all of it is kept with their profile to provide consumers the clear picture of who they are dealing with.  They can now determine whether they want to work with the person with the lowest rates and fees and a low rating, or pick someone with a higher rating that has higher fees.

I think this is a great step towards providing transparency for consumers and an easy-to-understand scoring system that allows them to make choices in a difficult decision-making environment.  Of course, Zillow will have to police the marketplace and eliminate offenders on both sides of the wall, ensuring that slanderous consumers don’t blackball innocent lenders and vice-versa; but the step is a positive one and one that should help consumers in their quest for an honest, straight-forward (non-blown) mortgage.

Originators get transparency too

In addition to the consumer getting multiple, anonymous offers the originators who are submitting the offer can see all of the other offers that the consumer has received and who has submitted those offers.  This is a great tool for originators to use as market intelligence - they now know who and what they are selling against.  They can talk intelligently about the universe of offers that the consumer has without having to sell without any information about what or who they are competing with.  I think this will be a big help in letting originators determine what customers they quote, how they quote and their overall strategy towards leveraging this platform.

The Code of Conduct

In addition to the upfront vetting that Zillow performs on originator-applicants Zillow has rolled out a Mortgage Marketplace “Code of Conduct” for all parties involved.  The code calls on consumers to be law-abiding, honest in their disclosure of income, credit and other material qualification criteria, and fair and reasonable in their rating of originators.  Originators are called on to be law-abiding, upfront, to stick to their original quotes as long as material facts don’t change from beginning to end, and to respect consumer’s in the marketplace regardless of what the consumer ultimately decides to do.

Zillow will of course play ombudsman in its sandbox and will bounce originators and consumers who use the marketplace in ways that Zillow deems unacceptable to a healthy environment.  This is at their sole discretion. 

Here are the highlights from the Zillow Code of Conduct, you can read the whole thing here:

Principles for Lenders

• Stand behind your quotes
  Don’t provide lowball loan quotes and teaser rates to intentionally draw in a borrower and then “readjust” your quote. We alert borrowers that the anonymous nature of Loan Quotes prevents an initial quote from being a binding Good Faith Estimate; however, we expect you to stand by your quote if the information provided by the borrower is accurate.
• Disclose all terms of the deal
  Be upfront and transparent with various rates and fees so that borrowers will regard you as a trusted lender. Do not hide details of the loan in fine print; our loan quote form is designed to easily identify these costs. Be ready to answer questions and walk borrowers through each step of the process. Helpful lenders will get good ratings on Zillow, leading to more business down the road.
• Obey the law
  Discrimination in mortgage lending is prohibited by the U.S. Department of Housing and Urban Development’s (HUD) Fair Housing Act and the Office of Fair Housing and Equal Opportunity actively enforces those provisions of the law. The Fair Housing Act makes it unlawful to engage in the following practices based on race, color, national origin, religion, sex, familial status or handicap (disability): 
  • Refuse to make a mortgage loan
  • Refuse to provide information regarding loans
  • Impose different terms or conditions on a loan, such as different interest rates, points, or fees
  • Discriminate in appraising property
  • Refuse to purchase a loan or set different terms or conditions for purchasing a loan
• No spamming
  If you have made contact with a borrower and things didn’t work out, please be professional and end your contact with that person. Do not add their contact information to your promotional lists or provide their contact information to others unless you specifically ask for the borrower’s permission first.

Principles for Borrowers

• Accuracy, accuracy, accuracy
  Be accurate when filling out mortgage loan requests, particularly when you estimate your credit score. Lenders will prepare quotes based on the information you provide. If you submit information that is not accurate, you will get loan quotes based on inaccurate information and the quote will likely need to be readjusted.
• Rate/review mindfully
  You may rate any lender you’ve contacted through Zillow Mortgage Marketplace. However, your rating for a lender with whom you’ve closed a loan carries more weight because you experienced the full extent of the lender’s service. So, please rate thoughtfully so that others can benefit from your feedback. 
  • If you contacted a lender, but did not close — Your rating should be based on how responsive a lender was in providing a quote and follow-through during the process; it should not be based on the quote received.
  • If you contacted a lender and closed a loan with them - Your rating should be based on how responsive a lender was in providing a quote, finding the right loan for you, the rate and terms for the quote and follow-through during the closing process.
• Report questionable or unscrupulous behavior
  While Lender Ratings is one of the most valuable tools you can use to rate the quality of a lender, we also want to know if you encounter any questionable practices by any lender. Contact Zillow Customer Support by e-mail at mortgagesupport AT zillow.com so that we can quickly respond if necessary. Also, if you feel you have been subject to discrimination, file a complaint with the U.S. Department of Housing and Urban Development (HUD).
• Be informed and responsible
  There are scores of tools at your fingertips to help you evaluate the loan offers you receive from various lenders. We have assembled many of these in our Help Center. Take advantage of these and weigh your options and long-term implications before signing up for particular loan. 

Will originators use it?

The first question that came to my mind is would a high-quality originator use this?  I can’t imagine a Brian Brady spending his days blindly filling out GFE’s to ghosts who may or may not work with him.  It is feasible that a consumer gets upwards of 20-30 offers on a quote or more (it’s not restricted).  What is going to make Brian Brady use his time for a small chance win when he has a million other strategies that will result in higher close rates?  Knowing Brian he will find a way to succeed with this platform, leverage administrative resources of find a way to leverage this marketplace; but what about those who are good but don’t want to fire shots in the dark?

I think that’s the big question to be answered as this marketplace evolves.  Are the consumers getting lower-quality originators because the good ones don’t want to play consumer roulette with GFEs?  It will be interesting to see how it plays out as the marketplace evolves. 

A big step in the right direction

The online “lead” model has been broken since its inception and has caused irreparable harm to not only countless consumers but to the image of the industry as a whole.  People who bought and sold private data across convoluted networks of lead brokers abused people’s trust that the lead form they completed would be a great offer from 1 of 4 lenders.  This clearly has not worked.  Zillow puts the power in the consumer’s hands.  Now they can shop from hundreds of offers at their discretion from behind the Zillow wall of privacy which is certainly a step in the right direction; now the question is - will the best in our industry use it?

What do you think?

Source [blownmortgage]

Share This

Filed under: Products and services, Competitive strategy, Google (GOOG)

Google Inc.’s (NASDAQ: GOOG) existing Google Docs web-based productivity product just became quite a bit smarter. Like it or not, that product just became a front-and-center competitor to Microsoft Corp.’s (NASDAQ: MSFT) Office software by becoming available to use without an internet connection.

Sounds like a minor event, but Microsoft’s Office productivity software suite brings in billions of dollars in revenue per quarter. It’s one of the company’s most lucrative software packages, and although there have been freely available alternatives for quite some time, Microsoft Office still reigns supreme for word processing and spreadsheets. One of Google’s big problems with most of its products centers around offline access. Customers need to have an active internet connection to work with virtually all of its web-based products.

Will Google’s word processing and spreadsheet programs start taking a larger bite out of Microsoft’s Office by offering workable access without an internet connection? For some customers, yes. Tyler Dikman with Cooltronics says this move “gives Google a larger pool of users to go after with more potential to increase their market share. And it sends a wake up call to Microsoft that Google Docs is not some experiment. This is something Google is investing a lot of time and money to make work.”

This may seem like a small step from Google Docs, but it’s aimed squarely at Microsoft. Whether Google can make inroads into the office software productivity market remains to be seen. However, its efforts just took a large leap.

Share This

Filed under: Bad news, Economic data, Federal Reserve, Recession

The Federal Reserve is indicating that more rate cuts are on the way as a recession has probably begun and the financial markets are still troubled. According to Bloomberg, Fed chairman Bernanke told “lawmakers that the central bank is “ready to respond to whatever situation evolves,” and cited “considerable stress” in markets.”

The rate cuts may do no good. Banks still appear to have a large number of troubled securities on their balance sheets. A huge write-off at UBS (NYSE:UBS) and forecasts of lower earnings at banks and brokerages for the first quarter are an indication that the pain for these firms could continue well into the year. Goldman Sachs (NYSE:GS) recently estimated that total write-downs at financial firms could hit $460 billion.

The reduction in interest rates by the Fed may also do nothing for the consumer. Banks are not passing on lower rates to customers in the form of better deals on mortgages and credit cards. Financial firms are also not improving rates for loaning to small businesses. Even with cheaper money available, banks do not want to take any more risks with homeowners or small businesses.

Fed rate cuts aren’t what they used to be.

Douglas A. McIntyre is an editor at 247wallst.com.

Read | Permalink | Email this | Comments

Via [bloggingstocks]

Share This

Filed under: Forecasts, Industry, AMR Corp (AMR), Recession

American Airlines parent AMR (NYSE: AMR) is freezing the hiring of management and support personnel. The move is a sign of distress at the carrier. It comes after Skybus, ATA, and Aloha Air have shut down.

According to The Dallas Morning News, a spokesman for AMR said, “I think it’s no secret that the entire industry, including us, has been struggling to contain costs, mainly the cost of fuel.” AMR may get an award for best understatement of the year.

According to the AMR 10-K, the company say it may be unable to raise money to retain sufficient liquidity. If fuel prices rise and passenger traffic drops due to the recession, that could become a real problem. AMR’s operating income of $965 million in 2007 was tiny compared to its revenue of over $22.9 billion. Interest expense was over $900 million. The company has long-term debt of $9.4 billion.

Given how many large airlines have been through Chapter 11 during that last decade, AMR is not immune. It may not get through the year without a reorganization.

Douglas A. McIntyre is an editor at 247wallst.com.

Permalink | Email this | Comments

Via [bloggingstocks]

Share This

A reader sent in a fascinating story from the L.A. Times (hat tip Exit) discussing the impact of the housing market on plastic surgery. If you’ve noticed recently that people are looking less like Hollywood stars and more like average folks, you can blame it on the disappearing equity. Here in Southern California […]
Related Posts:
■3 Things I Learned from Watching Property Ladder: Lack of Fundamental Analysis, Misunderstanding of Construction Time Lines, and Too Many Real Estate Books.
■Lords of Housing: Believing in the $22.5 Trillion Housing Market.
■Forecasting the Societal Impact of the Housing and Credit Crisis: Recession Trends and Psychological Changes Regarding Housing.
■The Menace of Mortgage Debts: Lessons from the Great Depression Series: Part IV: Where do we go After the Housing Crash?
■Real Homes of Genius: Today we Salute you Pasadena. $87,000 off in 2 Months for 937 Square Feet.

A reader sent in a fascinating story from the L.A. Times (hat tip Exit) discussing the impact of the housing market on plastic surgery. If you’ve noticed recently that people are looking less like Hollywood stars and more like average folks, you can blame it on the disappearing equity. Here in Southern California in places like Los Angeles and Orange County, plastic surgery is as common as dying your hair a new shade of blonde. As much as the government wants people to keep spending, they have no idea where people will put their money. Not only were people adding granite countertops to their kitchen but also placing a few headlights on their body:

“Afterward, in a carefree mood, the ladies would dine at a popular restaurant on the Sunset Strip.

No more. The sub-prime loan crisis, the housing slump and the general decline of the economy have claimed another covey of victims. Anthony is in the real estate business, and under current conditions, the cosmetic treatments — at $1,800 or more a pop — can no longer be squeezed into her budget. It’s the same with others in the group.

“We used to make appointments together,” Anthony said. “Then they started saying, ‘I can’t go next week.’ People didn’t have the money, but they were ashamed to tell you.”

“I would rather have Botox than go out to dinner, but it’s just gotten so bad,” said Anthony, 41, who is looking for a job since her career in the mortgage business went sour. She has not had the facial treatments in months.

And what’s been happening in Beverly Hills is apparently happening around the country. After years of steady growth, the cosmetic surgery business seems to be going through a rough patch.”

I’ve noticed the lack of people talking about home equity last year at a few parties. In 2005 and 2006 the main topic usually was how much someone’s home appreciated. This is no longer the case. It seems that many people are dealing in silence now. Looking at the above, Anthony shows us an interesting perspective of priorities. She would rather get Botox than go out to dinner. Unfortunately, since the mortgage business has fallen off a cliff here, she will no longer be able to get those wonderful injections of Botulinum Toxin Type A. My question to you folks out there is what other kind of career can someone take up in the current environment to afford routine plastic surgery or touch ups? The story goes on to tell us that business is sagging nationwide:

“Doctors don’t like to talk about it publicly, but plastic surgeons from the Southland to South Florida said some colleagues are struggling to stay in business.

A leading manufacturer of breast implants recently reported that surgeries declined toward the end of last year.”

Now we have another unfortunate victim of the sub-prime mess, plastic surgeons. It is amazing the unintended consequences of bubble mania. This bubble has literally burst on many fronts. Yet there is another important caveat to this entire story and once again it uncovers the façade of this entire debt economy:

“Beyond the economics, there is another dimension: Once largely confined to movie stars and rich socialites, cosmetic surgery has been democratized — thanks in part to the popularity of “makeover” television shows and decades of prosperity that have put such treatments within reach of large numbers of people.

Botox, breast enhancement and “body sculpting” have joined designer clothes, upscale cars, and kitchen and bathroom upgrades as common symbols of the good life and success.

“No one can have a practice built on the ultra-wealthy, because there aren’t enough of those people to go around,” said Dr. Robert Kotler, a Beverly Hills surgeon who specializes in the face. “The reality is that cosmetic surgery became popular when the middle class became enamored of it: flight attendants, professional people, businesswomen — people whose appearance is important to them.”

Another extension of the desire to have a “large” life is not only seen on all the home upgrade shows but also in the life of those that want to appear as if they live like a Hollywood star. The problem with lack of ethics and values is that people pushed the housing envelope to as far as they could whether legal or not.  The quote above gives us a perfect insight into the culture that not everyone is uber-wealthy not even in California even though they like to appear they are. That is why, if you’ve watched any cable show, you’ll see advertisements pumping plastic surgery on installment plans. It doesn’t strike me that an actor or actress would get plastic on 12 monthly payments. The gold rush in California didn’t make millions rich but selling Levi’s and pick axes to those chasing the dream did make many businesses prosperous.

Yet fear not. There is a silver lining with a declining dollar. Yes, everything around you costs more but thanks to your federal government’s mismanaging of the dollar, we now will deal with it by seeing more beautiful Europeans:

“In Los Angeles, a world capital for plastic surgery, doctors are hoping that globalization will provide a cushion. Some are looking to European patients, who can capitalize on the weak dollar and combine their plastic surgery with a Hollywood vacation.

“This is a mecca,” said Dr. Stuart Linder, who specializes in breast augmentation. “I have women flying in from all over the world because this is Beverly Hills.”

But Linder said his surgeries were off by about 5% in January and February. He has heard some doctors are off by 30% to 40%.”

Thanks Ben Bernanke for literally making the world a more beautiful place! There has been arguments floating around that a lower dollar is going to boost exports and help us balance our economy. Check out the major bump we’ve gotten by a falling dollar:

Don’t you feel better knowing that the U.S. Dollar index has now fallen over 21 percent in a little over 2 years? If you are feeling the pinch in your wallet there is a real reason for it. Take a look at the steady decline of the U.S. Dollar:

The story itself ends by the journalist trying to sock it to the reader and make us shed a tear:

“A tummy tuck and breast augmentation were supposed to deal with the problem, but now they’re on hold.

Her husband’s job with an engineering firm appears to be secure, but the four-bedroom home the family bought 2 1/2 years ago has lost value. On their street in a brand-new subdivision, four or five houses now sit empty.

“If we weren’t upside-down in the house, I probably would take the money out and have it done,” said Hollingsworth, but “I don’t want to make my family do without.

“I’ll have to see how long I can tolerate wearing a girdle.”

Taking money out of homes to get elective plastic surgery is definitely a new thing that this housing bubble has brought on. It is really a feat to think that we reached a point where people were simply slapping on a virtual ATM machine to the side of their homes and raiding their equity. By the way, you have to pay that equity back. That is why we have seen like this Real Home of Genius homes being taken back with larger mortgage balances than the initial purchase price. Whether it is new Mediterranean tile on your home or a new pair in your chest, the upgrade bonanza is coming to a screeching halt. Now, if you want to get these things done you may actually have to have some money saved up (at least the $600 rebate check can be a down payment for these procedures). So if people aren’t looking so hot you can add that to the list of things to blame the housing bubble on.

Did You Enjoy The Post? Subscribe to Dr. Housing Bubble’s Blog to get updated housing commentary, analysis, and information

Share This

Related Posts:
■3 Things I Learned from Watching Property Ladder: Lack of Fundamental Analysis, Misunderstanding of Construction Time Lines, and Too Many Real Estate Books.
■Lords of Housing: Believing in the $22.5 Trillion Housing Market.
■Forecasting the Societal Impact of the Housing and Credit Crisis: Recession Trends and Psychological Changes Regarding Housing.
■The Menace of Mortgage Debts: Lessons from the Great Depression Series: Part IV: Where do we go After the Housing Crash?
■Real Homes of Genius: Today we Salute you Pasadena. $87,000 off in 2 Months for 937 Square Feet.

Via [DrHousingBubble]

Share This

Filed under: Books

HarperCollins Publishers is establishing a new unit — it doesn’t have a name just yet — to be run by Hyperion founder Robert S. Miller.

There’s a twist: this imprint is looking to substitute profit-sharing with authors for advances and, even more interestingly, eliminate the practice of extending unlimited rights of return to retailers.

It remains to be seen whether they’ll get anywhere with that but if the publishing industry tightens up its liberal return policies, booksellers like Borders (NYSE: BGP), which is already in the outhouse, could find themselves in a world of hurt.

They’d have to take a hard look at their inventories and might have to stock less variety — which would make them less competitive with online booksellers and big-box retailers.

Still, I doubt that this will catch on. With booksellers struggling, publishers aren’t really in a position to extract more blood.

Read | Permalink | Email this | Comments

Via [bloggingstocks]

Share This

A new web site (and organization) has launched to help spread awareness about (and their disdain for) the state-sponsored bail out of the housing and mortgage industries currently underway.  Stop the Housing Bailout is encouraging citizens to contact their congressmen and women to urge them to cease using public funds to prop up the housing asset bubble and institutions that helped get us to this point (see Bear Stearns, et al.)

From the Stop the Housing Bailout Web site:

This site is dedicated to stopping the government’s planned bailout of the housing market.   A bailout requires responsible Americans to pay for the acts of greedy bankers, mortgage brokers, flippers, and over-extended homeowners. In other words, the government wants you to pay for the blunders of others who knew, or should have known, better.

The group asks the unanswered question: Why should responsible Americans be forced to pay for the mistakes of others?

It’s a great question to be asking.  I’d especially be asking it of the Bush administration and the Obama and Clinton camps who keep proposing multi-billion dollar bail out schemes.  They are both wrong for completely different reasons.  Bush keeps pumping cash at Wall Street, who already made a killing, and Obama and Clinton want to foist cash on the homeowners which will certainly come at the expense of higher taxes, reduced public funds for things like health care and education (you know, stuff that everyone needs).

So head on over and write your congress-person.  Ask them the unanswered question - and DEMAND answers now and at election-time.  Your future is riding on their decisions.

Source [blownmortgage]

Share This

Filed under: Management, Industry, Google (GOOG), Marketing and advertising

Google Inc.’s (NASDAQ: GOOG) Chief Information Officer Douglas Merrill is reportedly leaving the company to become the president of EMI’s digital section. Google confirmed Merrill leaving the company yesterday, while EMI confirmed the rumors today. According to Billboard, Merrill officially joins EMI on April 28 in the brand new position, but will be based at legendary Capitol Tower in Los Angeles. Much of the business for the fourth-largest record label is conducted in London, which may signal that EMI heavily courted Merrill.

At a time when the music industry is in flux, Merrill’s move from Google to EMI is inventive and should help the music company foster growth into a realm that all music companies have had trouble entering successfully: the digital world. Apart from limited success here and there, the music industry overall has not handled technology that makes many of their marketing and distributing schemes obsolete. The report that commented heavily on Merrill’s move noted how his experience at Google can help EMI form a strategy to compete on the Internet.

For Merrill, the report comments, “the move will require either a huge mental exercise or a near religious conversion.” The report also notes “it will be interesting to see what an executive from a company known for pushing the envelope on fair use can bring to an industry that has rabidly protected its copyrights.” That’s a nice sentiment, but any hopes that a quick or painless transition for EMI and Merrill seems impossible. Like the article says, “maybe he can help them use the Web to make money instead of trying to keep others from using it at EMI’s expense.”

Guy Hands, the chief at EMI, might be despised by some parties for taking a wrecking ball to expenses, but if this move does anything it should indicate that the Internet as a tool for growth is being taken seriously. At the same time, should it really take an Internet executive to reveal that vital piece of information? Either way, since the music industry is in flux, maybe this addition can add another level of change that will excite everyone involved.

Share This

Filed under: Politics, Presidential elections

Hillary Clinton appeared on Jim Cramer’s Mad Money recently, and faced some pretty tough questions about the economy, financial markets and regulation.

Senator Clinton shined. She came across as well-informed, and Cramer spent most of the interview agreeing with Ms. Clinton — impressive given that he also spent an entire interview giving attaboys to Ron Paul.

Senator Clinton was also impressive in her discussion of executive compensation where she lashed out at excessive compensation without banging the populist drum that gets many Democrats a bad rap. She explained that executives should be rewarded for creating great wealth for shareholders and that the “pay for pulse” compensation at many of these financial companies threatens to kill the goose that laid the golden egg.

Be sure to watch the video, regardless of what you think of Hillary: you’ll probably be impressed.

Permalink | Email this | Comments

Via [bloggingstocks]

Share This