There’s always something to howl about.

Mortgage Grader: Revolutionary or Just One More Marketing Widget?

Mortgage Grader is a consumer-operated, automated underwriting system. Jeff Lazerson, its founder, has been working on this idea for 3-4 years. It was released this summer.

Consumers enter information and are issued an approval. The mortgage grading engine mashes up various automated underwriting systems (FNMA Desktop Originator, proprietary sub-prime engines, etc.), searches out the best terms, and delivers the equivalent of a wholesale lending approval, with wholesale rates, to the consumer. The consumer then hires an approved mortgage broker to package the loan for a flat fee.

Have we heard this idea before? Jeff Corbett has been talking about a transparent underwriting and rate search engine for some time, now.

I know both Jeffs. I met Jeff Corbett last year and have known Jeff Lazerson, since 1997, when he was selling his book, “How to Make A Fortune In Loans Without Leaving Your Desk“. Both are veterans of the industry who have seen mortgage consumers get raked over the coals by originators.

Transparency is nothing new to the mortgage industry. Mortgage brokers have practiced transparency, by law, for years. Mortgage originators often teach customers how to lower their fees by accepting a higher interest rate in exchange for lender-paid yield spread premium– I’ve done that since the mid 90’s.

Transparency is the law for mortgage brokers. Flat fee loan originations are nothing new. Innovation Mortgage has been offering a flat fee model for 6 years now.

Is this the end of the full-service mortgage originator? Absolutely not. Technology, while useful, is the consumer’s worst enemy. Ten years ago, mortgage originators feared that Desktop Originator would eliminate their utility. It was the advancement of technology, however, that allowed for more innovative loan programs. The only way for these technology engines to work is if we revert back to the “good ol’ days” of two loan programs: 30 year fixed and 15 year fixed. Nobody really wants less choices.

Nothing beats the advice of a mortgage professional. We are the first experience many consumers have with financial planning. Two hours with one of us will help a consumer to better understand how to structure their liabilities, maximize their tax-advantaged retirement assets (and contributions), and determine a college savings plan for their children.

In a perfect Web 2.0 world, consumers will search for homes on Zillow, buy them through Redfin, and secure a loan through Mortgage Grader. People, however, are perfectly imperfect. They are both fearful and greedy, usually at the most inopportune times. The value of an experienced mortgage originator has never been more obvious than the last 90 days.

Nothing beats the value of good financial advice- not even the “perfect” piece of technology. At the end of the day, folks just want to buy a home, educate their kids, and have enough money for retirement- all while feeling that they aren’t “betting the ranch.

No website can deliver that.