Peter Gallagher, Princeton Mortgage Wholesale
Back on March 8th of this year, HousingWire first reported that Amazon (yes, THAT Amazon) was looking to hire an individual to lead their newly-formed mortgage division. Previously, it was assumed that the online shopping giant would start with offering checking programs, and then possibly move into debt-based products after establishing themselves. But it seems they’re priming themselves to take the leap as we speak.
Yesterday at the MBA annual convention, representatives from Quicken Loans and loanDepot discussed the possibility of Amazon buying-out to break into the mortgage industry. And while the company that is valued at more than $800 Billion dollars may be making plans to jump in to the loan business, the representatives at the convention stated it’s probably too early for a company such as Amazon or Google to make an entrance. Most reasons centered around the chaos of rising rates and changing regulations.
However, with the trend of digital demand and shifting consumer expectations, huge companies like Amazon and Google have the potential to take away much of the ‘pain’ that consumers experience during the mortgage process. These larger companies have taken huge steps in industries like managing big data, artificial intelligence, and engineering. Those steps could be used to ease the process for both consumer AND lender, creating a more seamless process. And with the number of digital applications expected to significantly rise over the next few years, limiting the pain and making mortgage transactions a smooth process is becoming more and more desired by the day.
So… what’s the big hold-up? If these big companies entering the mortgage industry will have such an impact, what are they waiting for? The key word: REGULATION. Mortgage regulations are not to be taken lightly; when you factor in all the other industries Amazon and Google have their hands in, the last thing they’d want are their other projects being affected by taking on another one as large as a mortgage company. However, we’ve had the pleasure of watching Amazon break into market after market in ways that were previously unimaginable. They’ve created several different business models that have them not only competing in different sectors of business and services but dominating them.
I think once Amazon figures out how to keep their other projects safe from possible complications with mortgage regulations, they will pounce on the market. And they won’t do it a minute sooner. They will be positive of their business model by figuring out how they can aggressively generate profits while keeping their other interests and projects safe and separate from mortgage regulation. And then we’ll sit back and watch.
One thing is for sure: maintaining meaningful business relationships is going to be crucial for everyone moving forward.
Until next week,
Peter