Will Brent Bring Down Zillow Mortgage?

I like Zillow Mortgage Marketplace.  I really do. 

I can't say I like the Mortgage people who are there right now.

Here comes a RANT....

Case in Point: 

Here's a wonderful piece of  trash.  This was a quote request where the Walnut Creek homeowner was looking for a real rate quote on a 30 yr. fixed mortgage.

This bucket of loan officer scum (not harsh enough) used the platform to spam this homeowner on one of the biggest scams going right now. 

The Home Ownership Accelerator. (click to read all about the program)

or if you like a little outside reading, here's 100,000 pages on the topic

Let's look a little deeper into his profile...

As Borat would say, "very nice!"

Brent is a Quote Farmer.  

He's a Scammer, a Spammer, a Liar and Cheat.  He and so many others like him, are the reason my industry holds such a poor image in the public eye today.

Chances are he has hired people to blast out as many un-quotes a day as possible.

Brent isn't alone.  Right now, Zillow is crawling with Bait and Switch Artists.

Some look like they are a single person (like Brent) but are in fact a corporation.  If enough people complain about Brent, they just replace Brent with John.  When John is retired they have Pete, and so on.

I know I'm being harsh on Brent.  I'm pissed as hell (pardon my language) that Zillow is going to allow Brent and the others to continue.  And they will. 

They believe it's up to the consumer to decipher the difference.  In the end, Zillow will be just fine.  Just like bad sellers on eBay haven't brought down that system.

Ok, I'm done Ranting.  Back to work.

Liar Loans? How about Liar Quotes?

You've heard about Liar Loans.  They've made the headlines in all the mainstream media. 

A Liar Loan is one where either the loan officer, the borrower, or both falsified their income and assets on the application. 

"I flip burgers at McD's  and pull in $10,000 a month"   <= Liar Loan!

Last night at exactly 9:00 PM  Zillow went live on a promising new program.

Zillow Mortgage Marketplace

It's a wonderful idea.  Here's how it works.

You the borrower, fill out a simple form.  You put in the pertinent loan factors that fit you.

That information is then posted anonymously to a page that I (a Registered Lender) can see.  I can then create a quote.  If my quote sounds good - you have the ability to contact me and take it to the next step.  All in all that's wonderful.

Here's a problem.  My quote is blindly based on the information you entered. 

Garbage in - Garbage out. 

The very first quote from last night was a prime example.

Starting at the top...

• Credit Score - Your score is crucial to a proper quote.  One digit off can mean the difference between a loan and a decline.  You better hope that when I pull your credit (that'll only happen after a loan application) that your score is the same as what you entered, or better.
• Loan to Value - This happens to be a refi.  Is the payoff correct?  Do you have a PrePay?  Where did that value come from?  Is that something you are hoping your home appraises for?  Is that what the home across the street sold for last summer?  Loan to Value is crucial.  Two things determine your actual loan to value - the Payoff Demand from your lender and the Appraised Value from the Appraiser.
• Debt to Income Ratio - Another critical calculation, just as critical as Loan to Value.  Two things determine DTI, Your actual income as computed by the underwriter and the actual monthly debts, also computed by the underwriter.  DTI is also forward looking.  When this refinance happens your new loan payment goes into the ratio - not your old loan payment.  Zillow can't figure this into the equation.  As an side, his Debt Ratio shows as ZERO because he did not enter his other debts (like his present mortgage) or assets.

• Purpose of the loan - You know that the loan for the home you live in is cheaper than the loan for an rental property right?  So does he.  He's saying this is for his Primary Residence on one portion and then he says he's going to rent this out on another.  Does this open the door for mortgage fraud?   I'd hate to find out.
• Debts and Assets:  Both of these are very important to an underwriter.  there are different programs and different rates depending on the Debt Ratio and the number of months in Reserves you have.  What kind of reserves are they?  Underwriters count various assets classes differently.    Liquid - non liquid.  Fully vested? 

This isn't a bash on Zillow.  I think the idea is great.  That's why I'm involved.  My only warning to all those who read this is that Zillow can't ask all the right questions.  What they have so far is awesome.  When the borrower gives us (the Mortgage Professional) incomplete or inaccurate data to work with we can only do our best. 

If I were to quote this loan (and I didn't), I'd want to make sure I had the right answers or at least play it somewhat safe.  That's just me.

Somebody is going to quote this guy based on his information and filling out the blanks with the best possible answers to create the best possible quote.  That's the quote this guy is going to answer because to him it looks the best.  Only when the loan officer starts digging deeper will the truth come out.    Garbage in - Garbage out.

Now Zillow has a feedback rating system (think eBay) that'll offer some guidance down the road for borrowers on who to trust and who to not.   How many borrowers need to be burned before that starts showing up?

To Recap... 

Zillow:  Good for you!  Way to go!  Awesome!

Borrowers:  Be careful.  You've been warned!

Zillow Loves Me

Ok, so the truth may be closer to...

Zillow liked something I wrote and decided to feature it.

LINK

Diane Tuman wrote that,

"I spend a lot of time in the Real Estate Guide, editing content, organizing content, and "redirecting" spam when I see it. Lots of similarly-themed titles flow one after another, involving mortgages, title insurance, buying homes, selling homes, staging- you name it. However, one headline that popped out at me amid the usual subjects was: Puddles and Pools. Puddles? Pools? How do puddles and pools go together? The imagery was driving me nuts, especially since I kept thinking of a puddle of water on my kitchen floor or a pool of water in my basement!

I soon discovered that Puddles and Pools had nothing to do with H2O, but was a creatively-written article by Mike Mueller of Patagonia Finance (Concord, CA) about how mortgage rates are determined. For my very limited mathematical brain, it made total sense: "Pools" represents trillions of dollars of mortgage money that moves slowly and steadily through the biz by the giants of the industry (Fannie Mae, Freddie Mac and Ginnie Mae), while "puddles" represents smaller amounts of money - although perhaps millions or billions of dollars - that is controlled by large insurance companies, investment funds and pension funds. For each of these areas, the money needs to keep moving and is the source in serving both conventional loans and jumbo loans.

This is only part of the article, which explains what makes mortgage rates go up and down. Other factors include mortgage-backed securities and supply and demand. So when you wonder what drives mortgage rates up and down, think about puddles and pools of money and the image that water needs to keep moving."

I am honored to have something I've written featured in such a prominent website such as Zillow.

It's very true that the general public has no idea why rates go up or down.

I talk to loan officers and real estate agents everyday who don't have the slightest clue.

I thought by using the metaphor for the two bodies of water I could better convey the differences.

I think I may have been right.

My original article can be read here: http://www.patagoniafinance.com/2007/06/of-puddles-and-pools.html