Editor’s note: Part 2 of a three-part series on new online lending tools takes a look at RateWindow and Mortgage Marvel. Read Part 1, "Borrowers get a crack at lending black box," and Part 3, "Mortgage Grader wants to slash loan fees."
The balance of power when shopping for a mortgage may be shifting to consumers as a new generation of Web-based mortgage shopping tools aims to give consumers more control.
New sites enable consumers to query the databases of hundreds of lenders, and compare loan guidelines, rates and fees for specific transactions without giving up personal information.
Part 1 of the series examined LendingArt.com, which provides access to wholesale loan prices. This part will focus on RateWindow and Mortgage Marvel.
If there’s a common theme of these new tools, it’s transparency and choice. Instead of delivering consumers to the doorsteps of a few lenders as leads, they give prospective borrowers many of the same capabilities a mortgage broker has — the ability to see the loan programs wholesale lenders are offering, determine whether they can qualify for them, and find out what they’ll pay.
RealEspace CEO Mark Warner said RateWindow returns information on loan programs and pricing that includes the originator’s fees. These fees may include yield spread premiums — rebates lenders pay on loans that carry higher interest rates.
Yield spread premiums can help home buyers pay for closing costs like title insurance and other settlement services. But they’ve gotten something of a bad name because not all originators are forthright in disclosing them to borrowers. Instead of crediting the rebates to the borrower’s closing costs, yield spread premiums are sometimes pocketed by the loan originator without the borrower’s knowledge, critics say.
Warner said that because RateWindow shows borrowers not only the "par rate" available to them but the lender’s actual cost of the interest rate, brokers won’t be able to pocket or manipulate yield spread premiums.
That could help borrowers shop around for a loan that best meets their needs. Some, for example, might want to accept a slightly higher interest rate to receive the yield spread premium that can be applied to their closing costs. Others may prefer to forgo the yield spread premium and pay a lower interest rate.
Warner said RateWindow has "the same capacity that NYLX has" to search for a wide variety of loan programs offered by wholesalers, although there’s a twist. Real estate agents or brokers choose the mortgage originator (or originators) they prefer to work with. The mortgage originator must agree to pay RateWindow $99 a month. When visitors to the real estate broker’s site run a loan query, they see only programs offered by lenders who work with the loan originator selected by the Realtor.
If Realtors don’t have a preferred mortgage originator — or can’t convince their loan broker to sign up for RateWindow — they can still use the widget to query RateWindow’s default lender, Primary Residential Mortgage Inc., a Salt Lake City, Utah-based "net branch" lender with 250 branches.
Like many loan shopping tools, RateWindow provides quotes only from wholesale lenders — meaning consumers won’t see offers from retail lenders like Bank of America that aren’t in the wholesale business. But Warner said the information provided by RateWindow — the par rate and yield spread premium — can be useful in comparing the best deal wholesalers are offering with products offered by retail lenders.
"What we’d encourage the consumer to do is say, here’s all the information, if you want to go out and do some shopping on your own, put this in your back pocket, and call a broker or retail shop, and say, ‘What can you do for me? Give me your best deal,’ " Warner said.
Another fringe benefit for Realtors who partner with RateWindow is the ability to send follow-up e-mails to visitors inviting them to check in again for the latest rates. The e-mail can be customized to include the Realtor’s picture along with listings and articles from their blog.
Mequon, Wis.-based Mortgagebot LLC has also created an API (application programming interface), which allows for easy integration of the company’s Mortgage Marvel loan search tool into almost any Web site.
The Mortgage Marvel API, which does not require consumers to enter personal information, extracts rate and fee data in real-time directly from the loan-product databases of hundreds of lenders. Users enter loan amount, property value, ZIP code and up to seven other optional data fields for more personalized quotes.
The Mortgage Marvel API is already up and running at two sites — BeatYouThere.com and OptHome.com — and under contract at two more. The API, which returns an XML data stream that can be custom-configured to match the appearance of a Web site, requires some integration.
A Web widget that can be installed by simply cutting and pasting some HTML code is scheduled for a July rollout, said Rick Allen, director of strategic initiatives at Mortgagebot LLC. The widget will return the top five results, with a link to Mortgage Marvel to see the expanded results, Allen said.
Up next: We’ll examine Mortgage Grader.
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