By Julavits, Robert
American Banker , Vol. 165, No. 149
IndyMac Bancorp is enlisting real estate agents as mortgage brokers in an online sales initiative that illustrates the importance of personal contact in an increasingly automated world but could also draw scrutiny from HUD.
Executives at the Pasadena, Calif., company say that online or offline, personal relationships guide sales -- especially in the complicated mortgage process -- and that realtors and mortgage brokers remain the biggest influence on borrowers.
"The advantage that realtors hold is that they control the consumer, and studies show that they direct a lot of the purchase market," said Michael W. Perry, vice chairman and chief executive officer of IndyMac. "I think partnering with real estate agents, which a lot of mortgage brokers are doing, is a smart move."
IndyMac set up its Web "business-to-realtor" channel in California in April. Though it only funded $4 million of loans in the second quarter, Mr. Perry expects to be funding $50 million a month by yearend. The service will expand to other states starting next year, he said.
"It makes a tremendous amount of sense," said Gary Gordon, an analyst at PaineWebber Inc. "If originating a loan is not much more than getting the borrower to fill out an application, the realtor can be effective" as an originator. "If there's one key party in the purchase of a home, that's it."
But David F. Broadbent, CEO of OnePipeline.com, which spent the last three and a half years and more than $10 million developing technology to let real estate professionals originate loans online, pointed to an inherent conflict of interest when a realtor or home builder who has a fiduciary relationship with the homebuyer shifts gears from assisting in homebuying or building to arranging a mortgage.
"They sort of have the customer captured in that relationship," Mr. Broadbent said. "And it is the concern of the regulatory bodies that you not use that relationship to inappropriately steer them to a mortgage product that may not be the best for them."
The most notable such agency is the Department of Housing and Urban Development. HUD enforces the Real Estate Settlement Procedures Act, which was enacted to protect consumers and closely guards the realtor-consumer relationship.
A HUD official said the department is investigating complaints that real estate agents are collecting origination fees for doing little more than referring homebuyers to certain lenders' Web sites.
Though he stressed that the Real Estate Settlement Procedures Act applies to the Internet, the official said HUD in early July began a six-month review to determine whether its regulations need clarification "in light of technological changes. …