THE INTERNET PHENOMENON IS A TESTIMONY TO IMPATIENCE AND HIGH LABOR COSTS. * Impatience, because as consumers we want to model different travel routes and airfares and carriers without suffering the ire of a testy travel agent. We want to look at mortgage rates and the price for books, movies and homes without disappointing a live person when we say, "Thanks for your help, but no, I'm going to buy from your faceless competitor." * High labor costs also drive Internet growth because U.S. wage rates and competitive pressures on profit margins do not permit the level of "live" customer service that we want. So we self-serve with cheap computers at home and scalable software at Amazon.com or Orbitz, where the development cost can be divided over millions of users--if your Internet venture is successful. * The mortgage business is both different and the same. Borrowers are impatient, and good live customer service is unaffordable. But you cannot do a complete transaction online. First, let us sketch out the online mortgage dream--and it remains a dream here in the first quarter of 2004. * In this dream, lenders will offer rich self-service content on their Web sites, including "for-sale" listings. The National Association of Realtors[R] (NAR), Washington, D.C, will navigate between the rocky shoals of restraint of trade and NAR member desire to limit public access to multiple listing service (MLS) information. Consumer access will win. In 2005, all lenders will have "for-sale" listings on their sites. All lenders will have home price data (comps from our company, of course) as well as robust automated valuation models (AVM) to guide borrowers in making offers on homes. After this rich content weds the borrower to a lender, the application process begins.
The prospective borrower enters his or her Social Security number (SSN) and the target property address. That should be enough to ferret out all the property, collateral and personal credit data required. With an SSN and a property address, the lender should be able to display loan options that are tailored to the applicant's demographics and economics. Pick one, and the back office goes to work, calculating collateral value from three AVMs, pulling the bank records and integrating the credit score. With the applicant's credit profile and the collateral picture done, the lender can then make a decision.
What a fascinating fantasy. Now back to reality.
The Internet remains in its infancy today...