High-tech offerings from firms such as LendingTree LLC, Bankrate Inc. and Quicken Loans Inc. are rapidly injecting self-service into the process of obtaining personal home and car loans, although local experts note that the more complicated process of securing commercial financing means face-to-face contact with bankers isn’t going away anytime soon.
LendingTree Chairman and CEO Doug Lebda said the North Carolina-based company’s website is evolving into the loan equivalent of consumer travel booking sites. Visitors can compare interest rates and other terms on home and auto loans, in a format that has lenders competing for their business, and the firm has introduced ZIP code-based comparison and lender contact tools used on mobile devices.
It will eventually have Web and mobile offerings letting users share and compare customer service experiences along with loan rates.
Lebda said LendingTree, which has facilitated more than 25 million loan requests and $185 billion in closed loan transactions since its 1996 inception, already has services that streamline the transmission and completion of loan documents, saving time and delivery expenses. Industrywide, he said the technology has reached the point where consumers can obtain loans without meeting in person with a banker, although many will need the help of an attorney to finalize documents.
“This is one of the biggest financial moves that people are going to make in their lives,” said Lebda. “Many people say they prefer to have more face-to-face contact in the process, but we also see our services as a way for people to enhance their negotiating position when they do go face to face with a lender.”
Detroit-based Quicken Loans, parent of One Reverse Mortgage LLC in San Diego, earlier this year rolled out MyQL Mobile, an app that lets users apply for a home loan on their iPhone, iPad or iPod Touch, guiding them from the initial application process through the closing.
Greg McBride, senior financial analyst with the consumer rate comparison site Bankrate.com, operated by Florida-based Bankrate Inc., said that company has also been adding mobile offerings. In coming years, he said the technologies will see increasing use, including among smaller lending institutions, as tech-savvy consumers seek the best deals.
“Personal finance has gone from being a spectator sport to a participant sport,” McBride said.
Consumer preference for technology that speeds the loan process has been on the rise over the past three years.
The Online Option
A November 2010 national study by consumer research firm J.D. Power and Associates found that the average home mortgage approval timeframe, from application to approval, rose from 20 days in 2009 to 27.5 days in 2010.
One apparent result, J.D. Power noted, was that the proportion of consumers who go online to start the mortgage application process rose from 14 percent in 2009 to 20 percent in 2010. By comparison, the number who said they met first with a loan officer or mortgage broker fell, going from 57 percent to 50 percent.
While technology proliferates in consumer lending, local bankers say the personal element will be slower to fade in the area of commercial lending.
Matt Bonaccorso, executive vice president and chief credit officer at Pacific Trust Bank in Chula Vista, said the company makes applications and other materials available online for prospective home mortgage customers, and also uses online services and other technology that speeds the processing of documents.
On the commercial lending side, however, there are too many variables impacting property loan decisions, beyond interest rates, to be addressed in simple interactive applications. Banks must research a host of factors.
“Something happening with another property in someone’s portfolio could have an impact on the property that we are looking at making a loan on,” Bonaccorso said.
At La Jolla-based Regents Bank, Deputy Chief Credit Officer Dan Grenci said technologies such as spreadsheet and analytics software and online services have significantly sped up the decision-making process on commercial loans.
However, for smaller institutions competing against much larger national firms, personalized service has come to be a more crucial factor.
“The technologies have helped bring us into the 21st century, but it’s still a business where you have to build relationships and be familiar with the industry your customer is in, and what his game plan is,” Grenci said. “We don’t compete just on price.”