System offers faster processing, convenience BORROWERS SHOP BY COMPUTER

March 05, 1995|By Adele Evans | Adele Evans,Special to The Sun

John and Judith Jankens had hunted for a mortgage before, so when they planned to move they relished the option of shopping and applying for a loan in front of a computer screen.

The couple, who live in a townhouse, went to Help-U-Sell Real Estate of Severna Park to look for a larger, detached home. With a few key strokes, a computer there listed a variety of loans and rates, crunched the Jankenses' financial information and processed a mortgage application. After 13 days, their one-year adjustable-rate mortgage was approved and they settled on their Pasadena home soon after.

"We'd bought before and it was stressful without the CLO," Mrs. Jankens said. "It's more organized now. He [their loan counselor] pulled up four or five places, and we didn't have to do the calls and the legwork."

The Jankenses used a device known as a CLO, for computerized loan origination -- a computer in a real estate office that offers buyers a list of loans and other information. Lenders send information on their loans to the computer, which can help

buyers compare the loans and submit an application. The buyer avoids the hassle of calling various lenders, the real estate brokerage makes a commission and the lender finds new business.

Such systems with information from a variety of lenders were introduced about 15 years ago but failed to catch on -- there are CLOs with data from only one lender in some real estate offices.

Many real estate agencies were uncomfortable with computers. Some agents preferred the traditional way of referring clients to a few outside lenders. Many lenders did not want to join, fearing they would be indistinguishable among dozens of other lenders.

And, besides, for many years a good portion of the mortgage business involved refinancings -- which generally do not involve referrals from real estate agents at all.

But the two largest makers of CLOs are planning a new marketing drive in Maryland and the rest of the country this year.

GHS Systems of Wayne, Pa., has systems in 70 offices in the country, including two in Maryland -- at Help-U-Sell in Severna Park and at Buyers' Advantage, a buyers' broker in Annapolis, both installed last fall. GHS plans to double the number of systems this year, said Matthew Broderick, executive vice president.

InfoTrust of Kennett Square, Pa., also plans a major push here. In April, six to seven "large user groups" representing 10,000 agents and 60 real estate offices in the Baltimore-Washington area will plug into InfoTrust's system, according to John Heck, executive vice president of sales and marketing. Mr. Heck refused to give the names of any of the agencies.

So will CLOs take off this time? And are they good for consumers?

Some in the real estate industry find such systems a poor substitute for lender representatives -- buyers, they say, will almost always want to shop around or sit down with a loan officer. And the rates offered may not be the best, some say.

Others, like Guy Cecala, editor and publisher of Inside Mortgage Finance, a trade publication, say that the systems have the potential to grab a sizable chunk -- though not the bulk -- of the mortgage market.

"It's too early to tell," said Ed Pascocello, vice president of Chapel Mortgage of Rancocas, N.J., which participates in the GHS system. "We saw it as a way to increase our business, but it hasn't done it yet."

Customers usually spend about an hour with a CLO, along with a licensed mortgage broker or real estate agent. The agent can pull up a screen of loan types, rates, points and lenders -- on the machine at Help-U-Sell, there are seven lenders listed.

The information can be sorted by type of loan, interest rate or lender. After the buyers target a few choices, the agent can produce tables showing monthly payments based on various down payments, a breakdown of principal and interest for each payment, and the time it will take to pay off the loan. Graphs can also be produced.

If the customer wants to apply, the mortgage broker can type an application, press a button and send it directly to the lender. Theinterest rate is locked in and pre-approval can occur within 24 hours.

At that point, the process becomes more traditional. Paperwork -- including W-2s, pay stubs, bank statements, and stock and bond records -- must be mailed to the lender. CLO users can pinpoint the status of their loan application through the system. Because the application goes directly to the lender, final approval takes only about three weeks, David McCullough of Help-U-Sell said.

A real estate agent can use the system for information, but only a mortgage broker can originate a loan.

The loans listed on the GHS system do not include origination fees, but the local agency can add one. At Help-U-Sell, Mr. McCullough charges buyers 1 point -- 1 percent of the loan amount -- with 10 percent of that fee going to GHS.

Lenders also pay GHS to participate -- $30 per loan application and 5 cents per day per loan program displayed on the screen.

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