Lenders Keep Details on the Internet Sketchy for a Reason
Most single-lender Web sites provide sketchy coverage of mortgage types and don’t price many important market niches.
Why is the coverage of products and market niches so incomplete? Some lenders don’t have the technology to provide more complete coverage. The technology is readily available in the market, however.
A second reason is that most lenders (like other merchants) do not like being price shopped. They prefer to so dazzle consumers with their sites, special features and blurbs about the service they provide, that shoppers click on a “Submit Application” button without looking anywhere else. They realize that shoppers expect to see some prices on their Web sites but prefer to limit their scope.
Lenders prefer to give personalized quotes on the telephone. They know that a Web-based quote will be compared with others, whereas on the phone they may be able to land a customer before comparisons are made.
As with other merchants, lenders want to put their best foot forward. The lowest rates and points apply to the standard set of “plain vanilla” features that are assumed in the absence of information to the contrary.
Web sites that allow borrowers to deviate from the standard features by indicating, for example, that they are purchasing as an investment rather than for occupancy, or can’t document their income, or have weak credit, will quote higher prices. The last thing a lender wants is to have shoppers comparing their adjusted high prices against unadjusted lower ones on other sites.
Another reason Web sites limit the scope of their niche pricing is that the further such pricing is pushed, the more questions must be asked of borrowers. It is widely believed that borrowers on the Web have short attention spans and little patience; that they don’t understand why so much information is needed and may suspect the motives for asking; and that long questionnaires will cause them to click off and go to a site that doesn’t ask as much from them.
Unfortunately, there is considerable truth in this. One site I have watched over the years at one time asked more questions (and provided more complete pricing) than it does now. Finding that their long questionnaire discouraged shoppers, they shortened it and found that they had more success. I find the quality of the site has deteriorated.
Lenders make a mistake in designing sites that are too simplistic. Consumers become disenchanted when they discover that the prices they see on the site don’t apply to them. Over time, furthermore, more shoppers will become better educated and seek out the sites that offer more information.
But the principal argument against dumbing-down a site in order to appeal to more consumers is that it isn’t necessary. A well-designed site can provide the information that sophisticated shoppers seek, without losing the rest. The trick is to integrate the collection of information from shoppers and the provision of information on prices back to shoppers so that anyone can see how their answers to the site’s questions affect prices.
Here are the sites reviewed in this series and their rankings:
1)www.indymac.com
2)www.eloan.com
3)www.citimortgage.com
4)www.wamuhomeloans.com
5)www.mortgagebot.com
6)www.infoloan.com
7)www.mortgage.com
8)mortgage.etrade.com
9)greenpointmortgage.com
10)firstunion.com
11)quickenloans.quicken.com
12)countrywide.com
13)www.charteronedirect.com
14)www.regionsmortgage.com
For more details, the point system used and the complete breakdown of scores are shown on my Web site.
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Jack Guttentag is a syndicated columnist and professor of finance emeritus at the Wharton School of the University of Pennsylvania. Questions or comments can be left at www.mtgprofessor.com. Distributed by Inman News Features.
