Homebuyers warm to online lenders

As a mortgage banker for Quicken Loans, James Bjorlie wants his customers to know they can reach him anytime. He takes their calls at all hours — day or night. He once even took a call from a client during his brother’s wedding.

“We’re connected on a very personal level with our clients,” Mr. Bjorlie said. “I give my clients my cellphone number. They don’t have to wait until I’m back in the office. That’s very reassuring for them just to know that I’m always accessible.”

It might be a nontraditional approach, but that’s the trend Quicken and other companies relatively new to the mortgage business hope to capitalize on.

The Detroit-based Quicken Loans Inc. calls itself a financial institution — not a bank because it doesn’t take deposits — and is one of many online lenders taking business away from traditional banks that have fallen under a cloud of public suspicion in the wake of the financial crisis.

In a recent study, Carlisle & Gallagher Consulting Group found that 80 percent of U.S. consumers would consider obtaining a mortgage from a lender that is not a bank. In fact, nearly half would consider a mortgage from PayPal, and 1 in 3 would do so with Wal-Mart, even though neither of those companies actually offers mortgages.

Study participants cite high costs, taxes and escrow as their top frustrations with homebuying. Fifty-six percent of consumers say one of the most painful parts of the mortgage process is slow execution. While 32 percent blamed their frustrations on lenders being difficult to communicate with, 31 percent said they were unable to track the status of their application, and 26 percent were concerned they were getting untrustworthy advice.

“Enter the new opportunity for nonbanks to provide some of these services,” said Doug Hautop, lending practice lead at Carlisle & Gallagher.

This doesn’t mean customers expect to go to the grocery store and pick up a mortgage along with eggs and laundry detergent.

“The response showed a willingness [to work with nonbanks], but we understand getting a mortgage is not as easy as buying flip-flops and a loaf of bread,” Mr. Hautop said.

While PayPal and Wal-Mart may not get into the mortgage business anytime soon, it’s good news for online lenders who already start out as something different.

“We’re much more accessible,” Quicken’s Mr. Bjorlie said. “We don’t keep 9-to-5 hours. If you call most mortgage lenders, you have to call them only when they’re available, but if you call us, we’re available 24/7.”

In addition to being more accessible, Mr. Bjorlie said online lenders are also more convenient.

“They can do all this from the comfort of their home,” Mr. Bjorlie said. “We’re online. So you don’t have to go to a branch office, you don’t have to take time out of your busy day to travel to us. It’s much more convenient.”

Meanwhile, 81 percent of customers said they were satisfied with their primary banks, but only 39 percent currently have mortgages with them.

“There’s an opportunity for banks to retain their customers,” Mr. Hautop said. “Banks should increase their intimacy with their customers. They need to understand them and proactively work with them.”

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