Zillow.com has entered the mortgage arena with the launch of an online marketplace allowing consumers to request quotes on purchase, refinance and home-equity loans.
First launched in February 2006 as a Web-based, home-valuation tool that provides automated value estimates based on past sales data and algorithms, Zillow’s services have since expanded to include a real estate wiki and educational articles, a networking platform that allows real estate discussions between site users, and searches of active for-sale property listings, among other features.
The foray into the mortgage realm provides consumers with the opportunity to anonymously view mortgage professionals’ rate quotes for a variety of loan types while protecting consumers’ privacy.
The platform serves as an intermediary to guard consumers’ contact information and other personal details from mortgage industry professionals while passing along some information to serve as the basis for a rate quote. Consumers decide if and when they want to reach out to participants in the Mortgage Marketplace platform.
Consumers can enter information about the type of loan they are seeking, as well as details about the location and type of property they are seeking, their credit score, assets, monthly debts and other details
Zillow requires mortgage professionals who wish to participate in the platform to pay a one-time registration fee of $25, and Zillow works with a third-party company to confirm the employment, license and complaint status of the mortgage professionals.
Zillow does not charge any per-lead fees, and consumers can access the platform at no charge. The platform features a rating system that the company hopes will keep mortgage participants honest, as consumers can issue negative ratings and comments about participants if they have a negative experience. The system also allows mortgage industry participants to respond to and rebut ratings and comments by consumers.
Spencer Rascoff, chief financial officer and vice president of marketing at Zillow.com, said the platform is designed to protect consumers’ privacy while providing more accuracy and transparency in quoted loan rates.
"It’s truly an open marketplace," Rascoff said, and quotes by mortgage professionals are available for all site users to see. "The only thing that’s hidden is the (borrower’s) identity."
Consumers who receive the rate quotes can sort this information by date created, lender rating, monthly payment, annual percentage rate and lender fees. And consumers can decide when to close their query to participants’ rate quotes.
(Join an online discussion about the new Zillow mortgage tools at the Inman Community page.)
Rhonda Porter, a loan officer and author of the MortgagePorter.com blog site, said the platform is unique in that it "really puts the consumers first by protecting their privacy — their information is not going to be resold as other Internet-operated lenders do."
Porter said she was invited to review the Zillow mortgage platform and believes it could be a good source of free leads.
She said that while many consumers may use the site in an effort to find the lowest rate, the ratings system will also be helpful for determining which loan originators have a solid reputation.
"Many consumers have almost become gamblers with their interest rates — it’s almost like a game to them on getting the lowest rate, rather than choosing a loan originator by expertise," she said. "Rate is not the only factor. You might have a loan originator who is offering the lowest rate but who has the lowest reputation."
She added, "I would say that any Internet-savvy loan originator would ultimately be interested in this. It is basically protecting the consumer from the lender until the consumer decides to proceed."
What is important to remember about any rate quotes, Porter said, is that rates can and do change frequently, and a rate quote that is fresh and current today may be outdated by the next day or even sooner.
Just as the automated home-value estimates provided at Zillow.com are not formal appraisals of property value, the rate quotes through the Zillow platform are not valid as good-faith estimates, which are professional estimates that reflect a rate that the consumer would actually be able to get if they locked in a loan at that moment.
The platform, accessible through a new "Mortgage" tab at the Zillow site, does appear to be more consumer-focused than some alternatives, she said.
Other mortgage sites that allow consumers to seek rate quotes on mortgages include LendingTree.com, a mortgage portal with a network of about 280 lenders, and MortgageMarvel.com, which advertises participation by about 250 lenders.
Jillayne Schlicke, a consultant in Washington state who is co-executive director for the Ethical Lending Foundation, a group that seeks to raise ethical standards for the mortgage industry, said she does see some potential pitfalls with the Zillow platform, and she would like to see the company set the bar higher for its acceptance of mortgage professionals.
One way to do this would be to require that participants in the platform have more experience and supply Zillow with information about past good faith estimates and HUD forms related to loan originations, she said.
Schlicke said she worries that loan originators — particularly inexperienced loan originators who are approved to participate in the platform — may provide lowball bids on rates as a bait-and-switch tactic to draw more calls from consumers.
"If the consumer is only shopping on the lowest rates or the lowest fees, it’s very easy to lowball a system by quoting the lowest rates or the lowest fees. I see that it’s very easy to cheat the system by just lowballing," she said.
Some experienced loan originators may also choose to join the system, though she said the most experienced loan originators may not have the time to participate in such a platform and may already have built up a steady stream of business on their own.
"I think it’s going to attract a mix — good loan originators and then some loan originators who have never met a Realtor who they liked, nor do they ever want to interact with a Realtor," she said, noting that Zillow may receive complaints from mortgage professionals against other lending professionals who are using the platform.
"The real challenge for Zillow is: How do you manage the conduct complaints between the loan originators?" she said.
Rascoff countered that the ratings system is intended to help police the site, as participants who receive poor ratings run the risk of having a poor reputation and could be removed from the system altogether. "That’s exactly why we have the reputation system."
He said he believes that mortgage professionals will flock to the system as a free source of leads — Zillow is already one of the most popular consumer real estate destinations on the Web, after all, and thousands of mortgage and real estate professionals have been using other features at the site. An estimated 125,000 mortgage industry professionals visit Zillow each month, according to the company’s data.
About 300 lenders so far have submitted to the verification process to participate in the mortgage platform, Rascoff said last week.
Schlicke said Zillow’s mortgage platform is "something profound" that she would have expected to see from a trade association rather than a corporation, and she would recommend that members of her own ethical lending organization give it a try.
Rich Barton, Zillow CEO and co-founder, said in a statement that loan shoppers "tell us they want real quotes — not just teaser rates — when doing their research online, and they want to control who and when they contact by shopping anonymously until they are ready to talk. There is an obvious need for a transparent, free marketplace."
A challenge for the company, Rascoff said, is in educating consumers to associate the Zillow site with more than just home valuations.
What’s your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.