There’s about to be a new player in the mortgage space, one that boasts it can be a true digital “one-stop shop” for homebuyers, taking them all the way from finding a real estate agent to finding a house and getting a mortgage.
And while others claim they can do the same thing, this one brings a well-known name and built-in digital experience. Meet Redfin Mortgage.
That’s right; Redfin is getting into the mortgage lending business.
The company announced this week that it is launching Redfin Mortgage, adding a mortgage-lending operation into Redfin’s existing digital-focused real estate brokerage and title businesses.
The company says its “ultimate goal” is to have is an “entirely digital process, with better service, a faster closing and lower fees.”
According to Redfin, the company will start originating loans in the first half of 2017 in a select number of markets.
Initially, Redfin Mortgage will operate only in Texas, in the Austin, Dallas, Houston and San Antonio markets.
“Redfin Mortgage will put the customer first through a combination of technology and personal service,” said Redfin CEO Glenn Kelman. “This approach to mortgage is the same that has made us successful serving more than 75,000 customers buying and selling homes.”
Kelman also provided some details on how the company’s new mortgage business will work.
“We’ll meet customers through digital channels to lower customer acquisition costs,” Kelman said.
“We’ll hire our own mortgage advisers with incentives that reward service, not just sales, so customers get advice they can trust,” he continued. “We’ll track every aspect of the closing in a single system used by mortgage advisers, real estate agents, title experts and the customer so everyone works together on an on-time closing.”
In its announcement, Redfin said that it is hiring Jason Bateman, formerly the executive vice president of mortgage operations at BBVA Compass, to lead its mortgage operation.
Bateman, who brings more than 15 years of experience to the position, will run Redfin’s new mortgage business out of a new office in Dallas. Redfin’s software engineers in Seattle will also assist in the building and running of the digital portion of the mortgage business.
Bateman said that the abilty to have all aspects of the home-buying operation under one roof will make it much easier for all parties involved.
“When your real estate agent, title professional and lender work together, you win,” Bateman said.
“Lenders should spend their time determining which loan is right for a customer, not looking for new customers,” he continued.
“If an appraisal comes in low or an inspection turns up a problem, everyone should learn about it at the same time, without relying on telephone calls and email messages hours after the fact,” Bateman added. “Automating tasks that were once performed manually should not only lower costs, but reduce the possibility of errors that create lending risk. Our vision is the way I’d always imagined home lending should be.”
Redfin getting into the mortgage business comes right on the heels of another large real estate brokerage launching its own mortgage business.
In October of last year, RE/MAX launched Motto Mortgage, a mortgage brokerage franchise that the company plans to take nationwide.
And just like Motto Mortgage, Redfin Mortgage will likely bring questions of playing favorites or steering buyers to a Redfin Mortgage rather than a mortgage with another lender.
But Redfin said that its agents will continue the company’s “partnership” with “lenders of all stripes,” and will encourage customers to use the lender that offers the “best combination of service and rates.”
Interestingly, Redfin will be competing directly with lenders that are already listed on the company’s website. As with many other real estate websites, Redfin presents consumers with a list of mortgage lenders that they can use.
The lenders, of course, pay for the privilege of being listed on Redfin’s site.
But now, Redfin will be able to offer its own mortgage option directly to consumers.
According to Redfin, there will be “no incentives” for Redfin real estate agents to recommend a Redfin mortgage over another lender, but the company noted that because its mortgage business “depends on integration with its brokerage operation,” the company does not plan to offer refinances or loans to consumers who buy a home without using a Redfin agent.
According to Redfin, it has closed more than $40 billion in home sales through 2016, and now the company wants some of that mortgage business to stay in house.
Just how much of that mortgage business Redfin is able to acquire is an entirely different question.