Mortgage sites may conjure quotes, play up privacy fear

By Alex Veiga

Published: September 6, 2008

LOS ANGELES — Mortgage lenders have raised the bar on what it takes to qualify for a home loan the past couple of years, but shopping for a loan online has actually gotten a bit easier, if not necessarily less confusing.

Where mortgage-scouting Web sites traditionally required users to enter a swath of personal information to generate rate estimates, the newest sites offer users a way to comparison shop for a loan under the cozy blanket of anonymity.

This can help allay concerns over turning over too much personal information online or of being hounded for weeks by mortgage lenders soliciting your business.

The question is, do these rates hold up once real names, credit scores and other personal details come into the picture?

"My gut instinct is that there will be a wide disparity about what rates are quoted on these sites and what they actually end up with, and not necessarily due to the borrower,” said Robert Statnick, chairman of the California Mortgage Bankers Association. "All the sites may not collect all the data that's necessary to give an actual price quote.”

In fact, the lenders ultimately do collect the data they need to figure out what to charge for a loan, but these sites have made it possible to delay that step to give the prospective borrower enough time to shop incognito.

Web sites such as www.Zillow.com and www.MortgageMarvel.com have embraced this consumer-friendly concept in the past year, although that's where their similarities end.

Mortgage Marvel bills itself as the mortgage-shopping version of travel sites www.Orbitz.com or www.Expedia.com.

The site, which officially launched last spring, is operated by Milwaukee, Wis.,-based Mortgagebot LLC, a provider of online loan-origination technology for banks and other lenders.

Like the online travel sites, Mortgage Marvel lets users enter details on the kind of mortgage loan they need and the site gathers real-time rate and lender fee quotes directly from hundreds of lenders.

The site boasts that users don't need to punch in personal details to get real rates, not teaser rates used to bait visitors. But the catch is users must have a credit score of 720 or better.

Mortgage Marvel says it can make this claim because it's tapped directly into the 250 banks and credit unions' own automated loan pricing databases. (It gets a fee every time a user fills out an application with a lender on the site.)

The site requires users to enter only three pieces of information: the loan amount, the property's value and its ZIP code. Users can toss in a few more variables, including specifying whether they're looking to buy a condo or a detached home, whether they'd prefer a 30-year, fixed-interest rate loan or an adjustable rate mortgage.

The site then displays a list of any lenders offering quotes on the loan.

But there's where your anonymity ends. To find out whether you qualify for the rate, you must now fill out an application full of personal information with the lender.

"It's easy, reliable, accurate and fast — there's no bait-and-switch,” said Dan Welbaum, chief marketing officer for Mortgagebot.

Zillow's Mortgage Marketplace page also doesn't ask for identifying information. It only requires an e-mail address.

Instead, Zillow relies on the honor system, counting on users to fill in accurate information about their personal financial profile, such as their credit score — unlike sites that actually ask you for your Social Security number so they can run the credit check themselves — and their annual income, how much money they've saved, and so on.

Of course, Zillow users are also asked to enter how much money they're looking to finance, as well as preferences on their loan type.

The site broadcasts this information to its roster of participating mortgage brokers and lenders — more than 3,300 at last count — who then e-mail you with loan rate quotes.

Once you select a broker , you must submit a formal application with personal information.

Zillow says loan queries will garner six rate quotes, on average, with 97 percent of all queries receiving at least one rate quote.

With several brokers vying for a sale, it's not hard to imagine that some might have incentive to low-ball their quotes in hopes of luring in business.

Zillow, which makes its money by selling ads on the site, encourages participating mortgage brokers to "stick to your quote.”

Spencer Rascoff, chief financial officer for Seattle-based Zillow, said the company encourages consumers to give brokers ratings, much like the reputation rankings sellers rack up on auction giant eBay.com.

"All those (dubious) loan requests, they can be flagged by the community,” Rascoff said.

Zillow's forums buzz with user posts users discussing favorable and negative broker ratings. The site lists which brokers have amassed the highest positive ratings.

Since launching its mortgage search product in April, Zillow has reviewed hundreds of red flags and barred more than a dozen lenders for employing bait-and-switch tactics with their loan rates, Rascoff said.

That system has worked well on eBay, where a bad reputation can make it tough to unload even the most-prized tchotchkes.

Overall, being able to shop for loan rates without having to risk opening oneself to endless phone solicitations from lenders is a welcome relief.

But experts said not to stop shopping once you step away from the PC. You might be missing out on a better deal.

Comments