A lot of people are giving Quicken Loans a hard time after their Super Bowl ad aired. Why? Because it seems like Quicken Loans forgot about the housing crisis a few years ago when everbody and their mother was getting a loan to buy a house when they really couldn't afford it. The Super Bowl ad starts like this:
"Here's what we were thinking: what if we did for mortgages what the internet did for buying music, and plane tickets and shoes?"
"If it could be that easy, wouldn't more people buy homes?"
But the Quicken Loans idea seems to forget when everyone thought that housing prices could never go down. And of course they did. Yes, when housing prices fell people couldn't no longer refinance their mortgages when those ARM interest rates rose.
Wait though, it turns out that these Rocket Mortgages by Quicken Loans aren't loans given out to just anyone who wants one. No, credit checks and income verifications are still done, they're just streamlined. Should Quicken Loans be attacked if they're just trying to help make it easier to get a mortgage through your smart phone?
Here's the Super Bowl ad for Quick Loans:
Check out the 2016 Super Bowl ad for Quicken Loans. The ad was created for Rocket Mortgage, which is to make getting a home mortgage faster and easier. Because more home ownership unleashes the power of America itself.
Instead, Quicken is betting that its competitive advantage against other lenders comes from making what has become an invasive mortgage-screening process a little less intimidating, and it’s rolling out a phone app to do it.
Lending standards tightened up in 2009. Loans with 3.5% down payments never went away (and Quicken has become the nation’s largest originator of such loans backed by the Federal Housing Administration as big banks left the program), but almost all loans today require borrowers to fully document their incomes in order to prove that their total debt is less than around 43% of their income. In other words, no “liar loans.”
Rather, Quicken’s research suggests there are many qualified homeowners that are sitting on the sidelines and “don’t want to get engaged because they’re afraid of the process,” Mr. Emerson says. “If we could give them an opportunity to interact with technology, understand the operation, maybe we could get some of these folks who qualify off the sidelines.”
So what makes Quicken’s “Rocket Mortgage” different? Borrowers can authorize Quicken to access their bank and other financial information directly, eliminating the need for sending pay stubs, bank statements and tax returns back and forth.
So while the Super Bowl ad seems to harken back to the days before the housing crisis, Quicken Loans is actually just moving mortgages to the computer and smart phone age, making it faster and easier to get a loan, but still with concern for someone's credit standing and how much they're actually making.
Perhpas the backlash against the ad is overblown. This ad isn't going to start another housing collapse or Great Recession.