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30-year mortgage rates hit 7-year high: 4.72%

By Jeff Lazerson

9/27/18

What I think: Last week I shared with you my top three consumer best list from the Digital Mortgage Conference that I recently attended in Las Vegas: Black Knights’ Servicing Digital, Spruces’ digital title and escrow platform and Opendoors’ home buying and selling system.

This week let’s focus on the pearls of wisdom spewed by industry experts.

First up was Anthony Hsieh, founder and CEO of Orange County-based Loan Depot. Hsieh believes that it’s not if, but when the likes of Amazon or Google get into the mortgage business. What happens then?

Most folks that I spoke with at the conference about Amazon, for example, believe its game over for today’s mortgage lenders when Amazon comes our way. Sure, there will still be jobs. But say goodbye to highly compensated mortgage loan originators and everyone else in the mortgage food chain.

I think that is about right. Here’s why: In my experience, 20 percent of my mortgage clients come to me and stick with me because they have some tricky issue in their credit package. They are afraid of getting turned down. So, they seek out a very competent mortgage loan originator and stick with him or her.

Another 30 percent of borrowers are relationship driven. They value and appreciate a mortgage professional who educates them, advises them, holds their hand and provides creative and competitive solutions for their situations.

The other 50 percent of borrowers are hard shoppers, looking for the best rate. Service levels, expert advice and the like don’t matter. They tax you, drain you and everyone else in their path to find the cheapest price. They assume everything else will fall in place.

So, Amazon will capture the hard rate shoppers and save them even more money. The relationship -driven borrower will be tempted to go to Amazon because Amazon is likely to provide the same great service levels it does now and the price savings that Amazon will provide might be too great to pass up. Only the credit challenged borrower won’t fit in at Amazon.

In another session, Bill Emerson, vice chairman of Quicken Loans, pointed out that before Dodd-Frank, a mortgage file had about 300 pages. Today, it’s 800 pages.

So, your aggravation with the mortgage process being worse is well founded.

Fannie Mae addressed that concern, claiming to have a product that shortens the loan approval process.

In a separate forum, Cindy Keith, Fannie Mae’s director of product management, touted Fannie Mae’s One Day Certainty, which I first reported on two years ago and again last year. One Day is supposed to speed up the loan approval process in a more convenient way for the consumer.

One Day requires you to allow your lender temporary, one-time access to your financial accounts so that Fannie can retrieve and validate your asset information.

I’ve said all along that’s a fool’s game no matter how secure Fannie claims it to be. We’ve done exactly one loan via One Day.

Fannie Mae would not respond to my requests as to how much loan volume Fannie is currently doing under One Day Certainty.

Best advice category: Consumers should be mindful who the king is in the mortgage process.

“Consumers should engage with lenders on the consumers’ terms, not the lenders,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae. “You should feel comfortable.”