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Why FinTech – Online Lenders Struggle with Purchase Deals
Home/Why FinTech – Online Lenders Struggle with Purchase Deals
Why FinTech – Online Lenders Struggle with Purchase DealsDaniel Dobbs2025-03-08T13:31:41-08:00
The mortgage industry is reeling.
With mortgage rates doubling in 2022, much of the mortgage industry is struggling for survival now that refi-mania is over, and lenders that relied exclusively on refis are done!
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Marginalized Agent Relationships
Fintech lenders have little or no “footprint” in the agent community. When did you last meet one of their reps at a caravan or board meeting? Never?
Agents are a wealth of information on all market conditions and shouldn’t be shy about their lender opinions or those of other third parties. Any agents referring buyers to a lender “with an in-house real estate agent staff are committing commission suicide”.
When a buyer gives you a prequal letter, Google that lender, as they may also have a real estate agent license OR an agent team in their office.
It’s been reported (legal disclaimer) that “some” FinTech MLOs are paid a bounty for switching buyers from their current agent to FinTech’s in-house agent. Hardly surprising?
The FinTech business model relies on advertising budgets; personal relationships are easily replaced with more billion-dollar Super Bowl commercials.
So, if you like your cable TV customer service model, you will love the FinTech model even more.
At best, “unaffiliated agents” and their buyers with pending transactions are considered a “one-off” by the FinTech business model. Just another “file in the queue.”
2) The Homebuying / Lending Process is Complicated. And Inextricably Linked!
Many Buyers write most offers outside of regular business hours.
It’s always challenging to get anyone (including clients) during weekends, after hours, and on holidays, but to local lenders, agents are a source of referrals for an entire career, so if you have the MLO’s cell number, you’ll get a response more often than not!
As the offer is being submitted, it is in everybody’s best interest for the buyer’s MLO to call the “listing agent” to review the file and explain the strength of the buyer’s application. That’s just old school.
So, if you like your cable TV customer service model, you’ll love the FinTech model even more.
3) Inexperienced – Unlicenced CS Reps in “Call Centers”
Buying a home is also buying a lifestyle. But lifestyles cost, and buyers’ final choices involve tradeoffs that are calculated, re-calculated, and re-calculated again—up to the last moment—as they weigh amenities, locations, and school districts.
An experienced agent with MLO as a financial “point person” and a (familiar) live voice on call can prevent a transaction from blowing up at the very last minute when tempers are short and deadlines are looming.
FinTech firms have substituted experienced, licensed (DRE and NMLS) MLOs with call centers (boiler rooms) outfitted with newbie salespeople, which most management considers “interchangeable cogs in a wheel.”
During refi-mania, this business model is very viable in a “purchase market”—not so much!
But, younger Millennials and Gen Z’ers with tech skills in the labor force have high career expectations, and boiler rooms are not high on the list.
4) Lending Apps Can’t Automate Everything
There are always surprises near COE, often too many for any FinTech apps to overcome. Until AI comes up with credible “mortgage-splaining” scenarios, MLOs’ jobs are pretty secure in the future.
The FinTech whizkids think they can eliminate the human element from real estate transactions, but neither agents nor MLOS are going anywhere—much to the surprise of the FinTech world.
Copywrite © August, 2018 Daniel Dobbs MHM Mortgage /// All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher, addressed “Attention: Daniel Dobbs, Author- VP-Broker Mutual Home Mortgage 265 S. Randolph #120 Brea, Ca. 92821 Cell: 949 250-3981 Dandobbs6@gmail.com NMLS #307631 BRE #00986886
