Guest Post: Transparency in the mortgage industry

Do you have an adjustable-rate mortgage? If so, what's the margin on your ARM? What about the caps? Is there a pre-pay, and when is a pre-pay a good thing? These are all questions that many real estate industry professionals have a hard time understanding. Most borrowers are completely at a loss. Yet, when it comes to comparing loan programs for a variety of lending sources, knowing the correct answers can result in thousands of dollars saved over the life of a loan.

OfferAngel.com, a recently launched third-party Web site, seeks to provide an unbiased evaluation of competeing loan offerings. Rather than selling the borrowers' information to competing, lead-buying lenders, their system collects a fee from the borrower. Actually, part of the sysstem is free. The borrower completes a profile, then chooses any lender they want to participate. Lenders can then submit their offering for free, but are required to give detailed information on the parameters of the loan. For an aditional fee to the borrower, Offer Angel offers a custom report that explains the differences between the offering, and warns them when said offering does not meet the criteria the borrower originally requested.

Meg Burns, co-founder of Offer Angel explains the advantages of a third-party relationship. "Online quotes are a good place to start your research when deciding which lender you would like to apply with, but when you are actively shopping for a loan you need the terms of a real mortgage offer, not on an online quote generated by the lender's marketing department. OfferAngel.com is automated in that as many as 100 loan terms are passed to the borrower directly from the lender through our system. This information is based on a complete mortgage application and is provided by the loan officer that has spoken to the borrower and has structured a loan for their unique needs."

Offer Angel has also created the "Offer Challenge," which is a way for lenders to prove their competitiveness in the market. Once the loan officer has taken an application and provided a detailed offer to the borrower they can submit the parameters to Offer Angel. The borrower can then go out and ask other lenders to see if they can beat the deal, but each of those lenders will be required to offer a program that meets the parameters set up by the original loan officer. Even though the loan officer is opening up their prospect to additional competition, that competition has to play on a level playing field.

For a loan officer who overcharges their customers, Offer Angel holds little allure. But for a truly competitive LO, this could be a great way to prove themselves. It remains to be seen just how many loan officers will encourage their borrowers to take the "Pepsi Challenge," but transparency in the mortgage industry is gaining momentum. Look for companies like Offer Angel  to give growing leverage and clarity to borrowers.

--Todd Carpenter - lenderama

All rights reserved. This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this content without permission is a violation of federal copyright law.