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America’s Force in Internet Lending

Quicken-Loans-in-Canada-Not-YetThe Internet isn’t some new fad. It’s been here for more than two decades and 9 out of 10 Canadians use it to research mortgages. You’d think Canada would have a dominant online lender by now, but we don’t.

In the U.S. they do. It’s called Quicken Loans.

Detroit-based and privately-held Quicken Loans (QL) is the #1 Internet lender in the U.S. and the fifth biggest retail lender.

Whereas Canada has few online lenders, Quicken Loans has literally thousands of competitors. Yet, very few come close to QL’s almost $30 billion in online mortgage originations. Fewer yet can match its well-oiled online sales machine and economies of scale.

William EmersonAnd that machine creates a lot of satisfied clients, as is evidenced by its #1 J.D. Powers ranking among U.S. residential lenders.

For a glimpse at the engine that powers Quicken Loans, we spoke with CEO Bill Emerson. We talked about the company’s online strategies, its legendary culture, and his views on Canadian expansion.


Quicken Loans has mastered e-lending, thanks to a one-of-a-kind business approach. “We have a direct-to-consumer model that leverages a technological centralized platform,” says Emerson. “That allows us to deliver a great client experience to anyone in the U.S. and give consumers the choice of how to interact with us.”

QL’s “secret sauce” has many ingredients. One of them is its website.

“A lot of the industry doesn’t focus on web sites,” Emerson adds. “We regularly poll our clients for feedback. We’ve built our site to be intuitive and provide a user-friendly path to apply, and we’re always working on it to try and make it better. A mortgage is a complicated transaction and your website has to be as simple as possible.”

The site serves up a lot of information, but it does so in an organized manner with very strategic headings and action words. Among other things, it lets people:

  • Research loan options
  • Get instant rate quotes
  • Utilize various calculators, and
  • Chat with a mortgage banker instantly for help.

On the matter of rates, Emerson says: “Price is the thing everybody leads with when they start interacting with a company.”

But it’s not everything, he adds. “What we find from clients is they want a trusted resource who knows the business and listens to them. We’ve never planned to be the lowest (rate) in town…but you have to be competitive on price.”

Fast service and a streamlined experience is what really sets Quicken Loans apart. “We make sure our turnaround times are significantly below the industry standard,” Emerson said. “In an industry where the average is 60-90 days, we typically take less than 29 days to close.”

Emerson adds, “Our mortgage bankers are well trained on how to interact with clients. QL employs a consistent follow up process; we have touch points all the way through the transaction to stay in contact.”

Mortgage-LendingHomeowners can interact with Quicken Loans via chat, phone, and email. They can even do things like upload documents directly on the web site.

A good front-end isn’t enough, however. QL also has a strong back office and customer management system. The heart of Quicken’s success is its process. It has streamlined virtually everything, right down to the specific number of “touch points” it makes with each client. Long-term client correspondence, calls, lead status and lead conversion are all tracked intimately. Client notes are available to multiple representatives via a common “dashboard.” That lets any mortgage banker assist any client.

On the IT side, the company’s developers push out hundreds of application or interface enhancements every week. Managers have real-time analytics that constantly monitor deal flow and can automatically route and prioritize leads based on pre-defined business logic.

A testimonial to its efficiencies came during QL’s business model shift that followed the credit crisis. Federal Housing Administration (FHA) loans were 2% of the market before the crisis, but became 35% of the market in short order. “Most of our competitors’ models were not scalable and didn’t leverage technology and process. We were able to quadruple our business in a five-month period without having to add to our headcount.” (Quicken added just 50 temporary staff to pull that off.)

“We’re able to adapt to a new market faster than anybody. We can literally roll out a new product in about a week…and we have a centralized program that allows us to train everybody at once.”

Other interesting parts of the Quicken Loans model:

  • Quicken Loans never charges prepayment penalties, even on 30-year fixed mortgages. (Albeit, American mortgages do entail higher closing costs and points—both of which are not typical here in Canada.)
  • QL charges a good-faith deposit, which it collects upfront with the application. It credits this deposit back to the client at closing. (If the application is declined, a refund is made less costs incurred.) That deposit is usually $400-$750 and allows the company to maintain sufficient closing ratios and cover its expenses of appraisal ordering, credit reports, rate hedging, and administrative processing.

Quicken Loans presently operates in no other country. That said, it has definitely considered a Canadian play, says Emerson. “Canada certainly does come up but we’d need to figure things out in the secondary market there.”

On the other hand, he says the U.S. is QL’s primary focus at the moment. “Right now we have only 3% market share (domestically). So, the opportunity to grow in the U.S. is large.”


Online-MortgagesQuicken Loans aside, e-lending continues to take the world by storm.

In the U.S., online mortgage application volume is expected to grow 157% through 2013, says Liberman Research Group. As of last year, mortgage-related searches on the Internet were up 43% annually (according to Experian), and up by 1/3 in the U.K. (according to Greenlight).

In the U.K. 61% of online banking-related searches are now for mortgages. In Australia, banking giant NAB has recently broken the Australian bank oligopoly by offering special rates exclusively to people who apply online.

All of this begs the question of when a Quicken Loans equivalent might emerge in Canada. We’ve had ING Direct and PC Financial of course—both direct-to-consumer banks. But, despite being highly reputable well-run lenders, neither has set the world on fire with cutting-edge consumer tools, rock-bottom rates, and a customer experience that’s truly unique or streamlined.

It’s only a matter of time before online mortgage originations take hold in Canada. So far, we’ve yet to see a visionary leader emerge.

Sidebar: Quicken did little of the high-risk lending (option ARMs, subprime, NINJA loans, etc.) that precipitated the mortgage crisis. When asked if products like option ARMs would ever return, Emerson told us: “I never say never. The world has a short memory sometimes, but I don’t think we’ll see them in the U.S. Some of that stuff has been legislated out. The regulatory environment has become hyper-aware of that kind of product.”

Rob McLister, CMT