ONLINE MORTGAGE LENDING - REWARDS AND PITFALLS

By Gina Jackson, Senior Vice President
Cornerstone Mortgage Company

In this age of the internet, it would seem that anything can be accomplished with a point and a click including a mortgage loan.  It is not uncommon for mortgage loan prospects to visit a dot com lender web site for preliminary interest rate and loan information.  A recurring story told to us by several of our newest clients reveals some interesting trends on these web sites.  

• Difficulty in reaching a personal loan representative
   
• Lack of personal knowledge of the local market (appraiser, title company, realtor)
   
• Lengthy approval process (may take up to 4-6 weeks)
   
• Inability to commit or lock in interest rate until loan approval (Rates quoted on-line are often either out of date or significantly misleading)
   
• Limited knowledge of and consultation on available loan products  

On-line trends are the current hot topic in the mortgage industry.  Many of these companies are experiencing very low closure rates, with visitor-to-close rates as high as 400 hits for every one closed loan.  Many experts have estimated that as many as 80% of potential on-line transactions do not occur because of lack of personal interaction.  In a recent report ranking web site performance, Gomez Advisors, (a private company that tracks cyber locations), ranked mortgage companies dead last.

    On-line mortgage companies, with banks right behind them, are ranked poorly because they traditionally fall short in several areas including customer service, according to researchers.  When it comes to one of the most important and significant transactions in their lifetime, homeowners have decided that a public web site is no substitute for personal service.  Public perception is often translated into reality as is proving to be the case in this instance according to reports in the January and February issues of Secondary Marketing Executive Magazine.

      As a result of unsatisfactory on-line experiences, most mortgage consumers are choosing to close their loans with someone they can consult with on a personal basis.  A professional service provider who not only will counsel a client based on the product choices available in the market place but also will follow the loan process from application to closing.  This choice gives the consumer two important features: 1.  Someone to be held accountable for the transaction and 2.  A person with whom they can develop a personal relationship.

At Cornerstone we have embraced technology as a means of expediting the complex process of purchasing a home and minimizing time and paperwork for the applicant.

Our goal at Cornerstone is to obtain a “client for life,” based on professional personal service and the highest ethical standards in the industry.  We find that the internet is a useful tool, but only one component of several needed to be successful in today’s sophisticated lending environment.