Over here at the NREP, we’ve been saying for years that once a lender figures out how to completely process and approve a loan without any loan officer participation, there will be little need for loan officers from that point on. That day is coming. It might not happen in the next 5 or 10 years, but it is coming. Quicken Loans new Rocket Loan product is giving us a glimpse into that possibility.
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I guess I'm Generation X but I couldn't agree more. Not only is this the future for loan origination but SRE Matrix might be a wake up call for Realtors (me) to find their niche in the Millennial market. Every thing is shifting to access NOW and at a value. It's not that mortgage industry and real estate professionals will go the way of the dodo, but it will cull the ranks to those who can adapt to technology and change their $$ making strategy.
I wonder what the CFPB will have to say about this. If they bless this type of transaction, well then I guess lenders will no longer be responsible to have a meaningful conversation with their clients. I guess that getting a mortgage and buying a home really is no big deal anymore. Hell, why not just throw out all of the regulations also.
First thing I thought of was the CFPB…and their current relationship with Quicken. Be interesting to see when and how they react to this process. I can’t help but believe there will be glitches that will cause compliance issues. My guess is CFPB steps in when the volume is sufficient to maximize the amount of the fine.
They'll get the easy, cream of the crop deals, just like they do now. But when the buyer hits a brick wall with them, my phone will still ring with the cries for help! Millennials want easy but when they don't get the "yes" they want, then we are indispensable to them.
I'm not sure a Millennial would know what a "Wheelhouse" is…
Nice HairCut Frank! My clients told me the auction sites are trying to get rid of agents. Agents are working for 1% here in Florida and letting third party sites like Old Republic Management Services screw us out of money owed for Property Management and everything related from paying for service of notice to anything related to the listing. I could write a book about an experience with them.
If the smart listing agents and smart buyers agents rejects Quicken’s rocket pre-approvals for obvious reasons (zero communication, blown closings, etc…) then the only business that is left for Quicken rocket mortgage are refis. Furthermore, if you are a listing agent and you accept an offer that has a pre-approval from said program you are not working in the best interest of your client because there is no accountability from the mortgage machine that issued the pre-approval.
To a great degree Quicken already does this. That’s why I get pissed off, excuse my language, borrowers in my office when their loan blows up or they have to pay higher fees and nearly always higher rates. I love technology. But the quality of the person reviewing your potential loan and helping you choose your best option base on your INDIVIDUAL situation, not just today, but down the road, is invaluable. Will this work? Of course it will. Will it take the place of seasoned professionals? NO
Really!? Comparing an assembly line job that a machine took over, to a financial industries position? That is like saying the E-Trade concept will take over. Who in their right mind wants to place their retirement or lack thereof, in the hands of a sweat shop or a computer program? Same approach here. IMO, you are a complete loon if you prefer to get a Mortgage at a “drive through”.
And yes, LO’s need to make themselves have more value, but this new breed of LO’s seemingly are attracted to this behavior of, get paid 135bps -150bps sliding scale and the LO’s do nothing or very little with their file and have no clue what is going on, don’t know guidelines, and couldn’t answer a question on the processes either,……heck, some don’t even call the customer back to chase conditions or stay in contact. And then you also have the 50-100bps sweat shops that feed you leads like heroin because they can’t leave their office to network and create themselves their own book of business. There are very little true LO’s anymore that know guidelines themselves, that know their operating system, that can answer a question on their Borrower’s loan file, that communicate to the Borrower the whole way through themselves, etc, etc. And the funny thing about it is they actually brag about this: “I don’t do anything man. I just hand the loan in and they take it from there”. They don’t even realize that their laziness just validates their non-existence. There are still some companies out there that pay 200-250bps, that have just as good if not better rates than the others. And LO’s ask me, “How can you do that”. Answer is simple: “We expect you to be a Loan Officer and complete certain tasks and know your Craft. We expect you to be more than just Salesman.”
The laziness of today’s LO, and unwillingness to want to know their industry or processes simply puts them in a Salesman’s shoes. LO’s need to stop looking for who has the biggest freeway banner to work for and start relying on YOURSELF to market yourself. Do you have a product to sell or does your Employer with the huge marketing budget have a product to sell, which is why you only make 125bps?
Back to the main issue: I do loans for quite a few millennials. And yes, they are more apt to do your online applications, and E-Signing, but let’s not forget that a good percentage of millennials don’t have two nickels to rub together for a down payment, so it’s the parents or grandparents who sometimes are directing the transaction, and if you think that granny is going to be comfortable with a rocket loan, you are mistaken. Typically the Donors want to come in and meet me in person. They don’t want to meet a computer monitor, or your Processor or your LOA. They want to meet a true Mortgage Professional that will answer the 47 questions that are coming. Rocket Loan? SMH. Pathetic.
Really!? Comparing an assembly line job that a machine took over, to a financial industries position? That is like saying the E-Trade concept will take over. Who in their right mind wants to place their retirement or lack thereof, in the hands of a sweat shop or a computer program? Same approach here. IMO, you are a complete loon if you prefer to get a Mortgage at a “drive through”.
And yes, LO’s need to make themselves have more value, but this new breed of LO’s seemingly are attracted to this behavior of, get paid 135bps -150bps sliding scale and the LO’s do nothing or very little with their file and have no clue what is going on, don’t know guidelines, and couldn’t answer a question on the processes either,……heck, some don’t even call the customer back to chase conditions or stay in contact. And then you also have the 50-100bps sweat shops that feed you leads like heroin because they can’t leave their office to network and create themselves their own book of business. There are very little true LO’s anymore that know guidelines themselves, that know their operating system, that can answer a question on their Borrower’s loan file, that communicate to the Borrower the whole way through themselves, etc, etc. And the funny thing about it is they actually brag about this: “I don’t do anything man. I just hand the loan in and they take it from there”. They don’t even realize that their laziness just validates their non-existence. There are still some companies out there that pay 200-250bps, that have just as good if not better rates than the others. And LO’s ask me, “How can you do that”. Answer is simple: “We expect you to be a Loan Officer and complete certain tasks and know your Craft. We expect you to be more than just Salesman.”
The laziness of today’s LO, and unwillingness to want to know their industry or processes simply puts them in a Salesman’s shoes. LO’s need to stop looking for who has the biggest freeway banner to work for and start relying on YOURSELF to market yourself. Do you have a product to sell or does your Employer with the huge marketing budget have a product to sell, which is why you only make 125bps?
Back to the main issue: I do loans for quite a few millennials. And yes, they are more apt to do your online applications, and E-Signing, but let’s not forget that a good percentage of millennials don’t have two nickels to rub together for a down payment, so it’s the parents or grandparents who sometimes are directing the transaction, and if you think that granny is going to be comfortable with a rocket loan, you are mistaken. Typically the Donors want to come in and meet me in person. They don’t want to meet a computer monitor, or your Processor or your LOA. They want to meet a true Mortgage Professional that will answer the 47 questions that are coming. Rocket Loan? SMH. Pathetic.
What part of this don’t realtors and lenders understand? We used to only be able to book travel through a travel agent, now most people “do it themselves” via dozens and dozens of travel websites. Retirement planning and investing? This was only done through a licensed or registered stock broker, insurance agent or financial planner. Want a mortgage today? Shop on google! https://www.google.com/compare/mortgages Or get a Rocket Mortgage! As our hosts say in conclusion, this is inevitable! How are you going to compete? By offering knowledge and experience, professionalism and world class customer service! How can you do that? By sharing what you are working on “one bullet point at a time” on social media! Share your knowledge and experience (Educate don’t Sell) and you will become “top of mind” with your network!
What this won’t do like my preferred lenders is talk to the buyers and get to know them. They won’t find out that Joe and Jane could pay a 20% down payment, but have a baby coming and are worried about draining their savings account. While my lender will talk to them in depth to understand their situation and give them different options for their home mortgage that they can then choose from to best fit their needs while still getting a great rate. These millennials who want answers now, but often times want to be able to text their questions won’t be able to text the Quicken Machine on a Saturday afternoon at 1pm with a question while they can text my lender and get a response in no more than an hour. I do believe that this will get some business, but Quicken can’t beat my preferred lenders who take an interest in my clients and are almost always available 24/7. I had two clients in 2015 who started off with Quicken. Once they saw how difficult it was to talk to a Quicken rep, I had not problems switching them over to one of my lenders which in turn made my clients love me even more. 🙂
I have been doing this for 25 years. It is called a credit pull. At the end of the day. GIGO. The Rocket loan is a semantic marketing tool. Nothing more. Of course, prove me wrong. Follow the process. But I would not know how to do that short of applying myself.
Why aren’t Quicken loan people “seasoned professionals”? Because they do everything over the phone? When was the last time a Lender attended a signing? Often my local Lenders send borrowers to their websites for their on-line applications. How is that any different? I’m a fan of Quicken and this new “Rocket Loans”, is brilliant.
You need to have a sit down with your lenders or have a better handle of where your clients go for their financing. Can’t blame the lender if you let an inexperienced client pick their own lender.
This application will only get better and better with time…Lo's will work for companies like this and the kicker will be…if I were running this…It's Uber time!!…hire LO's for an area to handle the problems we think are insurmountable and they can't do with out us…We will be joining them…lol
Boy are your comments SO true Katherine Morrison!!
"Sorry, did not finish…hit enter too soon"…The problem I just stated I had, can be corrected, just like I am doing now to make a point…Any problems will still have to be addressed by someone, but do they have to be licensed? Can they be paid less, or more on volume…There will be less LO's needed…you can still get a regular cab in Vegas, cost more, drivers still want to run u around in circles…Uber, cost less, do the same job! I have been in the business for many years…everything keeps changing…The industry has been trying to do away with us for years…they won't get rid of all of us, but like the assembly line, they will need fewer and fewer live people. By the way, the picture is not me, my GF…lol
Because the primary responsibility of nearly every publicly owned corporation is to increase shareholder wealth at any cost, replacing service with a FAQs is high on the list of things to do. Imagine how much more profitable lenders would be if they didn't have to pay us.
Wells Fargo began to eliminate loan officers in 1994 when they asked us to use Realtor relationships to install a pre-qualification computer in broker offices. Twenty some years later, we're still originating with self-sourced referrals. Nice try Wells.
Computers can not replace LO compassion and urgency. FAQs can not address file specific questions. Software programs can not give an opinion about how to draft a LOX or what document will satisfactorily fulfil the underwriting condition. Digital AUS pre-approvals don't give the listing agent confidence to accept the deal.
That said, we also need to realize society places zero dollar value on our service. No matter how much the consumer loves us and appreciates our work, if they can save an eighth over 30 years (after we coach them on credit, secure the LOX, review verification docs, advise them on how to restructure debt, gather cash to close and the rest), few consumers are willing to spend thousands of more dollars over the life of loan so we get paid.
Yes, Realtors love us and value our service. They will refer us so they get real statuses and pre-approvals that stick … until they lose good will with borrowers who find a better price.
Even vanilla deals get rejected if improperly structured. I can't count the number of loans I closed after another lender rejected the applicant. More established and well qualified borrowers want personal attention too. They don't want to wade through website pages to answer a question, check a status or verify reciept of a document.
Post Dodd-Frank loopholes allowing branches, not LOs to collect what used to be called "Overage" will eventually fade away. Stupid grunt LOs obeying branch manager demands to over charge will be priced out of business. Companies with modern net-branches relying on over par pricing will close.
The key is to marry cost-saving technology to HUMAN service and industry expertise. Like many people do now with outsourced "customer service" calls, consumers will demand to work with an expert with whom they feel comfortable AND get the best rate.
Lenders will continue to try to replace us, agreed. But let's have some confidence in the power of consumer demand for human contact.
I had a job once where I was up for a promotion. I was young, 28, Master’s Degree. Didn’t get it. Went in to the boss looking for advice. He was a retired Army Colonel. He looked at me and said. ” Sal you know what your problem is? You think you are indispensable. Let me tell you how indispensable you are. Stick your hand in a bucket of water and the amount of impression you leave in that bucket is how indispensable you are” Never forgot those words. Nobody is indispensable. You bend or you break. You adapt or you lose. Its coming… Nothing you can do to stop it. Be a better agent and learn.
As a Real Estate Broker I've worked wih many Quicken loan customers. Trust me when I say 30% of
all quicken loan approvals that have talked with a "loan officer" are not worth the paper they are written on! And I'm sure this will be worse!
Hi Guys – your right that there will be like 5% of people who will be able to do this. The majority of clients my friends who work at the big banks as well as mortgage brokers in California tell me that every single client with the exception of a very few have credit issues, income challenges, divorce issues, clouded title, foreclosures or short sales, tax issues and well you know all the rest. Computers are great but millenials with 1.3 Trillion dollars of debt are not buying homes any time soon with the economy and job procurement not really good at this time. I mean when you have 37.5% unemployment in our country (US Labor Board Participation rate) paying 1.3 Trillion dollars in student loans back will nto be an easy task.
I'm just closing a transaction with buyers who were pleased with their Quicken loan rate … until they read the fine print and discovered that the rate was possible because hitherto undisclosed points had to be paid up front. They moved their loan to a full service bank. Unsophisticated buyers need to be extra cautious when there is no one on board to talk to about their loans.
Rocket Loan is not new. It is lipstick on what Quicken has had for years. The ten minute thing is new, but you know that will come with a ton of caveats. They are simply using an proprietary AUS with the data that the borrower entered. And as we all know that data is often wrong. So, yeah, they will get a qualified approval in ten minutes, but when it comes time to actually verify the data and approve the loan, things will get sticky. This looks more like lead generation for Millennials.
Absolutely right, however, with LO comp restrictions the professional cannot get paid what his/her time and expertise is worth so programs like these further dilute our pay.
Edgar Santiago , I know it's getting harder and harder for both Realtors and LO's to get fair pay for their work. Sad situation.
Sensationalist broadcasting, boys, and you know it! The good advice – be "indispensable." Better than that, be a proven, reliable, trusted pro. Millennials may not have enough experience to know how to make smart decisions – yet. A few of their boomer parents might, and the kids may not listen. Until they fall down a few financial escalators. Don't count on CFPB, the big banks, or expedient
young customers to hang with you, Realtor or LO. When you earn their trust, you'll be the Rocket!
Every deal is going to require the same amount of live human beings looking at real docs and making decisions. This "rocket" process is simply going to place underwriters in the LO box. The vast majority of deals are not like buying a hamburger. In fact, no one person is going to buy a home nearly as many times as a hamburger so these folks are not going to become proficient by simply clicking a damned mouse around a website for a few minutes. Further, with disclosure burdens being what they are today, if a millienial calls to ask a question about the meaning of even one doc, a human will have to answer and will have to be licensed to answer said question. I see huge backfire coming out of this. There is an old saying; the more things change, the more they stay the same. While it is true that millienials like to be think of themselves as the expert, they are only the expert until I am. Little does anyone know that you can't dump a box full of puzzle pieces on an underwriter's desk and say, "there you go, figure out…. real fast…. the millienial's clicking figer is drifting over toward a competitor site." And here's another thing… you're going to see people making multiple apps with different lenders…. 3 lenders who have done the work are not going to get the loan closed while one other lender does. Can you imagine the losses on underwriting labor coming out of this. It isn't going to work. The expectation set by this approach will backfire. Let the nose bleeds begin.
On a small percentage of transactions (I’d guess 10%) the borrower needs meaningful advice. Those clients are generally self-employed or facing an unusual life event. Those folks need an experienced LO. But the vast majority, who simply want a fixed rate quote for their purchase or refinance – do not need an LO.
Why do LO’s exist and make a lot of money per transaction? There is one big reason and one smaller reason. Big reason: customer acquisition. Plain and simple – you are paid to bring your firm the loan. Whether you are a genius about financing or a moron – if you can bring in borrowers – you provide value. That is 90% of the reason you earn what you earn. Lesser reason: you are a processor. You all know you spend a large amount of your time babysitting your loans to closing. You help call to get VOE’s. You contact title companies to clear title. You badger your underwriters.
But what happens when a company like Quicken spends a bazillion dollars on marketing and pulls your borrower away from you? What happens when their Rocket automates much of the stuff you (and your processors) spend their days chasing?
Answer – you will be forced to find something else to do for a living.
I love reading these posts. Anyone who thinks, a decade from now, that most (but not all) LO’s won’t be replaced by systems like this – is ignorant of history. If you really and truly think the $1,000 to $3,000 per loan you make isn’t going to be squeezed out by technology and marketing – then you are foolish and misguided.
In a few short years, the taxi cab industry has been decimated by Uber. AirBnB is doing the same to the lodging industry. Stock brokers used to think their fat salaries were guaranteed – until online trading destroyed them and made them obsolete. Librarians used to be a profession. Google put an end to that. One could go on and on. These guys are spot on. If you REALLY think your value is consultation and if you REALLY think clients will pay thousands of dollars for it – try putting out your shingle as a “mortgage consultant” who doesn’t get the borrower the loan – but rather provides sage advice. You’ll quickly find out that the borrower could care less about your advice. They want the money – not you. Once they can get the money without paying you – you’re toast.