Marriage of mortgage, realty services continues

Countrywide Home Loans, a top-three mortgage originator with designs on the top spot, has announced separate joint ventures with nine different real estate brokerages in 2004. Most recently, Countrywide announced it had lined up with Coldwell Banker Wachholz & Company in Montana to form Granite Peak Mortgage Services. The mortgage services venture will work closely with Coldwell Banker Wachholz & Company Realtors to develop personalized financing options from among more than 130 loan programs, the company said. All told, the lender has 15 similar arrangements around the country and about 35 more in the works.

The joint ventures are intended to reach home buyers at the point of sale and offer "one-stop" home buying – from agency through to mortgage and settlement services. "A lot of these companies are the top Realtors in their markets. They are large companies with sterling reputations. Those are the type of companies we're looking for," John Stewart, Countrywide's EVP of strategic business development, told Mortgage Banking.

Real estate agents want mortgage partners to be local, Stewart believes. "They're so customer-driven, and the agent ends up playing such an active role in the whole settlement service process, that it's critical you have a local market presence and resources dedicated to the relationship," Stewart says. "We're not a bank with a limited product set, and we're not processing loans in another time zone."

Wells Fargo, another top-three originator, pioneered the concept of joint ventures with realty firms, and many other top mortgage banks are doing the same thing. GMAC Mortgage and Bank of America are part of the new trend, too.

What's in it for agents? A 1999 National Association of REALTORS® study found that 58 percent of home buyers were interested in one-stop buying. That ballooned to 82 percent who would "strongly or somewhat consider" one-stop buying and mortgage service in a 2002 survey by Harris Interactive Inc., Rochester, New York, in conjunction with Murray Consulting Inc., Littleton, Colorado.

It's not just the biggies among mortgage lenders branching out into brokerage and agency. Lawrence, Kan.-based Security Federal Mortgage Realty recently debuted after years as Security Federal Mortgage. "It is all about one-stop shopping," company president Joe Voth says. "People are looking for anything that allows them to spend more of their free time doing what they want. Our free time has become a very precious commodity."

Voth obtained real estate and insurance licenses for the company and three of its 12 employees. Now the company can serve homebuyers by showing homes, approving mortgages and even selling home insurance. "You can come in and sit at one desk and get the loan and the house and the insurance in one fell swoop," Voth said.

It's a little different for banks. Federal regulations have been proposed that would allow banks to enter the real estate brokerage and agency industry, but NAR has fought them vigorously. The joint ventures formed by Countrywide and others are intended to get around existing regulations as well as RESPA, which prohibits referral fees from mortgage providers to agents.

Concerns have been raised about consumers getting mortgages from the same people who showed the homes. To the extent that agents are advocates for the homebuyer, a joint venture points to the possibility the best interests of the mortgage originator will be first and foremost. Consumers might also lose the opportunity to get the best loan for them.

But consumer preference for one-stop shopping is something that can't be ignored. The same Harris Interactive poll that found 82 percent of home shopping willing to consider one-stop shopping found that consumer satisfaction with the real estate transaction rose the more the services were consolidated.