A lot of people are giving Quicken Loans a hard time after
their Super Bowl ad aired. Why? Because it seems like Quicken
Loans forgot about the housing crisis a few years ago when
everbody and their mother was getting a loan to buy a house
when they really couldn't afford it. The Super Bowl ad starts
like this:
"Here's what we were thinking: what if we did for
mortgages what the internet did for buying music, and plane
tickets and shoes?"
"If it could be that easy, wouldn't more people buy homes?"
But the Quicken Loans idea seems to forget when everyone
thought that housing prices could never go down. And of course
they did. Yes, when housing prices fell people couldn't no
longer refinance their mortgages when those
ARM interest rates rose.
Wait though, it turns out that these Rocket Mortgages by
Quicken Loans aren't loans given out to just anyone who wants
one. No, credit checks and income verifications are still
done, they're just streamlined. Should Quicken Loans be
attacked if they're just trying to help make it easier to get
a mortgage through your smart phone?
Here's the Super Bowl ad for Quick Loans:
Check out the 2016 Super Bowl ad for Quicken Loans. The
ad was created for Rocket Mortgage, which is to make getting
a home mortgage faster and easier. Because more home
ownership unleashes the power of America itself.
It turns out that the Quicken Loans ad for Rocket Mortgage,
which seems like a terrible idea, isn't so bad afterall. Here,
the
WSJ explains what they're trying to do:
Instead, Quicken is betting that its competitive
advantage against other lenders comes from making what has
become an invasive mortgage-screening process a little less
intimidating, and it’s rolling out a phone app to do it.
Lending standards tightened up in 2009. Loans with 3.5%
down payments never went away (and Quicken has become the
nation’s largest originator of such loans backed by the
Federal Housing Administration as big banks left the
program), but almost all loans today require borrowers to
fully document their incomes in order to prove that their
total debt is less than around 43% of their income. In other
words, no “liar loans.”
Rather, Quicken’s research suggests there are many
qualified homeowners that are sitting on the sidelines and
“don’t want to get engaged because they’re afraid of the
process,” Mr. Emerson says. “If we could give them
an opportunity to interact with technology, understand the
operation, maybe we could get some of these folks who
qualify off the sidelines.”
So what makes Quicken’s “Rocket Mortgage” different?
Borrowers can authorize Quicken to access their bank and
other financial information directly, eliminating the need
for sending pay stubs, bank statements and tax returns back
and forth.
So while the Super Bowl ad seems to harken back to the days
before the housing crisis, Quicken Loans is actually just
moving mortgages to the computer and smart phone age, making
it faster and easier to get a loan, but still with concern for
someone's credit standing and how much they're actually
making.
Perhpas the backlash against the ad is overblown. This ad
isn't going to start another housing collapse or Great
Recession.