Issue Eight: The 800 pound Mortgage Gorilla?
Before we begin, a quick note on our recent issue about small business. The response we received for that one was overwhelmingly positive. Please, keep the feedback—good or bad—coming! And if you’re interested in sharing your thoughts in a future column, let us know. Email me at firstname.lastname@example.org.
So, in that spirit, we continue on with the small business theme.
Every few years—and usually when the getting’s good for market participants—we read or hear about the next 800-pound gorilla from another industry (Amazon, Zillow, Google, AirBNB, Microsoft…you get the point) with plans to enter and dominate the mortgage and real estate world. Usually, it doesn’t end up happening. Ours is a complex space with massive amounts of regulation, unusual market dynamics and other high barriers to entry. To put things in perspective, the “earth shattering” Rocket Mortgage Super Bowl commercial was four years ago.
This time, however, it may be different. That starts with the fact that some of the 800-pound gorillas are growing in our own backyard (such as Zillow). It’s no secret that many of the processes used in a typical home-buying or refinance transaction are cobbled together, dated and full of choke points. It’s also no secret that ours remains a labor-intensive industry. So it’s the worst-kept secret in the land that the mortgage and real estate industry is ripe for a technology takeover. We’ve heard about every theory under the sun: “Blockchain will make title insurance obsolete!” “AI will replace underwriters, L.O.s and more!”
Maybe. But certainly not today or tomorrow. The fact remains, however, that as an industry, we still haven’t given birth to the biggest or baddest technology envisioned by some. There’s still no “cradle-to-grave” model like we see in some other industries. Could an Amazon-like model, in which an enterprise controls the mortgage equivalent of its supply chain, work in the mortgage industry? Can Zillow reinvent what service providers do?
Some believe they can. Which would be a major threat to the many “mom-and-pop” providers, vendor or otherwise, who make our industry what it is today. You know what? I don’t think that model will ever thrive here. Yes, we have a lot to do before we’ve really made our process and model more consumer-friendly and efficient. Yes, there will be some major players who expand their footprint in innovative and unusual ways. But I still believe there’s a lot of room for the small guy.
In our next issue, I’ll tell you how we keep that tradition going…
Until Next Week,
P.S. As you can see, we are always looking for contributors! If you would like to be featured in an upcoming LodeStar report, please contact me at email@example.com