Google Mortgage

August 27th, 2009 Categories: Mortgage News

Lots of buzz this morning (in my head at least) regarding the lawsuit Lending Tree has initiated versus Mortech, producer of mortgage rate pricing software, for apparently licensing their technology to Google for a service that will compete with Lending Tree…from Yahoo Finance:

LendingTree filed a lawsuit yesterday against Mortech, Inc., a technology provider, for violating its contract with LendingTree. According to the lawsuit, Mortech, whose technology helps automate lender offer pricing, violated its contractual covenants by partnering with Google to launch an online mortgage loan aggregator service similar to LendingTree.

So, apparently Google is going to enter the public mortgage quote comparison arena and soon, some sources indicate as early as next week.

Google Merchant Search (old news) looks to be the initial model.  Screen shot of UK Google Merchant Search provided by rustybrick on Flickr h/t to Search Engine Land

googlemerchantsearch

The screen shot shows some very basic mortgage search and comparison factors, using very limited data sets and range values.  Nothing all that sexy, mainly an advertising play for participating lenders not unlike the Bankrate’s of the world. Google has stated in response to the lawsuit (From the NYT):

We’re constantly looking for new ways to help people find what they are looking for on the Internet. As part of that effort, we are currently working on a small ad unit test that will run against a limited number of mortgage-related search queries in the U.S.

Meh.  Actions speak louder than spin.  As Lending Tree and Mortech go through their legal gymnastics, lets ponder the ramifications of the 1000 pound gorilla entering the room…

Google tends to enter sectors of business on the light side (see Google Base for real estate), choosing to keep things very simple (at first).  Nonetheless Google has the power to alter the way industries function, especially when it comes to information exchange and spook the hell out of the targeted sector along the way.  Real estate as a business and listing syndication propose far more complex issues and requires a relatively high level of human interaction (physical inspection of properties, local area knowledge, property is not a commodity etc) compared to mortgage rate quoting and pricing.  Mortgage rates are commodities whose price can be accurately be delivered to a consumer entering accurate information using some relatively simple algorithms and a database…something Google is pretty good at.

So, Google is looking to license some pretty robust rate pricing software, the type which mortgage brokers and bankers use and depend on in their day to day business.  Does Google offer indigenous rate pricing software to loan originators using their service?  It makes a ton of sense as it would increase the accuracy and thus the validity of the service.  How much control they allow loan originators over the mortgage pricing data being displayed to consumers is the big question in my mind.  I have my opinions…can you hear me in Mountain View?  Give me a call, I’d love to chat :)

It would seem that  Zillow Mortgage Marketplace (ZMM) would have the most heartburn over this news since the similarities are obvious.   ZMM is primarily a niche advertising/publishing/search platform that allows consumers to anonymously get mortgage quotes based on financial and credit risk factors from participating loan officers.  Approved pricing engines tie into ZMM’s API to generate automated quotes on behalf of the mortgage professional using one of these systems to automatically respond to consumers.  ZMM’s auto-quoting platform is mostly a convenience/efficiency perk for participating loan officers trying to deal with thousands of voyeuristic consumer rate quote requests.

Is there a benefit in hosting your own pricing engine over tying in APIs from third party services?  I think so.  Rather than being beholden to third party data aggregators and maintaining these multiple information pipes pulling from the essentially the same resources for hundreds of loan officers, why not streamline things even further and eliminate what is an unnecessary information middle man?  I’m marginally surprised ZMM hasn’t done this yet…who knows, maybe they will. Maybe they should. Yes, they should…like right now.

Lending Tree’s primary revenue stream comes from the origination of mortgages, something that wouldn’t appear to be in Google’s wheelhouse, yet as stated, Lending Tree is maintaining via the lawsuit against Mortech that Google will directly compete with them.

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This entry was posted on Thursday, August 27th, 2009 at 12:24 pm and is filed under Mortgage News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

  • Fabio
    I'm extremely surprised with your comment above regarding the fact that you think Zillow should host their own pricing engine and eliminate lenders API's from tying in to Zillow. Obviously you have no idea what Zillow's Mortgage Marketplace is about in the first place and you have no idea how pricing engines work.
    Zillow is not just about finding a rate quote... any robot can quote a rate, it's about finding a lender that you would like to work with as well. Lender reviews are posted from prior customers and lenders offer advice and relevant content.
    If Zillow were to host their own pricing engine, then where would lenders fit in? How would lenders quote rates? More importantly, Lenders are not all pulling quotes from essentially the same place. There are different types of lenders on Zillow including mortgage brokers, mortgage bankers, retail lenders, credit unions, savings and loan, your niche direct lenders, and so many more. Each lender has their own pricing margins which is extremely important when it comes to deciding what rate the lender can offer. In a highly competitive rate pricing environment like Zillow, those margins are crucial.
    Also, different types of lenders have different needs when it comes to the pricing engine that lender uses. A mortgage banker of 100+ loan officers will have different needs then a mortgage broker of 5 loan officers and different pricing engine technologies have different strengths and weaknesses and markets they focus on.
    The fact that Zillow allows the lenders pricing engine to integrate with Zillow makes perfect sense for the mortgage shopping experience that Zillow is trying to create. It's not just about rate at Zillow. If Zillow were to have only one pricing engine like Google, then Zillow's marketplace would fall apart.
  • Hey Fabio-

    I'm pretty well versed on ZMM and pricing engines...

    I agree that ZMM is more than rate quoting (regardless of how its primarily used) and appreciate their attention to consumer service by offering Lender reviews.

    Zillow offering their own integrateable pricing engine, instead of API's that speak to other pricing engines, could actually be quite beneficial to all parties...Lenders could either tie their raw feeds into the engine, Brokers/Bankers could have the feeds of the lenders they are approved with tie directly into the engine under their specific accounts, considering relative adjustments for volume and other such variables. Brokers, bankers, retail, wholesale, credit unions, etc etc etc adjustments and margins would all be considered and as accurate as the source of the data...and consumers would get to see raw wholesale mortgage information.

    By flipping rate and margin face-up, with no ability to manipulate the information, all parties would be forced to compete primarily on service.

    API's provide information that is only as good as the source (or Third Party Provider) they are pulling from. If you make the source of the data the institution that is providing the loan rather than a TPP, there is actually less margin for error or other potentially egregious activity...not to mention the information could be delivered in real time. Latent information delivery is a big problem in the mortgage industry and causes alot of unnecessary grief for the consumer and professional.

    A TPP (Brokers/Bankers/Lenders) could still effectively be represented, since it is through their relationships with lending institutions that they are granted access to rate and margin info they would be providing to and through a community like ZMM.

    Hope that clarifies my position a bit...thx for the comment.
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