Frank Mortgage with Don Scott | E264
Bringing transparency to mortgages.
On today's episode of the Fintech impact, Jason is going to talk to Don Scott, CEO of Frank Mortgage. It is a new company looking to take the bias out of shopping for a mortgage and make sure that consumers get the best rate possible. Don talks about the surprising piece of feedback that he has received post launching Frank Mortgage.
Episode Highlights
1.17: Frank Mortgage is an open transparent online mortgage marketplace where we grant the consumers a little more control over their mortgage process and say they can get in the traditional broker market and also empower them to be able to make their own decision without the heavy influence of an intermediary or pressure from the lender, says Don.
2.21: Don has been in the mortgage market for about 30 years. He started back in 1991 with a company called First Line Trust. Then he flipped over to the capital market side of the business and spent around 25 years working in capital markets where one of the main roles he played was running businesses that funded mortgage lenders.
3.26: When Don left banking, he sort of flipped around to that front end side of the market to see if he could find a way to use today's modern technology to deliver just that for the consumer, give them a fair shake and more sort of customer-focused customer first type of platform for them to get the best deal they can possibly find in the mortgage market.
4.30: The market has a flaw in the way it's set up. The brokers are supposed to represent the customer, but we are paid by the lenders so that can steer a bias into the process and bias because it's not necessarily the same compensation between lenders may not be identical, says Don.
5.44: Some of the brokers out there provide wonderful service for their customers. But there is this inherent flaw in the way that business is set up. So, customers often enter the process feeling very uncertain and not informed, and they often exit the process feeling the same way.
8.51: Features matter as much as rate does to a lot of customers. It's always not just a pure rate decision and we can help them understand all of that, but then they ultimately can make their own decisions, says Don.
10.05: There are different levels of consumer readiness for the mortgage process. So, if you start with the consumer who is just starting to try to figure out what their needs are and what they can maybe afford, they can come on to the company website at https://www.frankmortgage.com/ and they can go through our various tools and blog posts and mortgage glossary to educate themselves.
12.49: There is a customer adoption and acceptance that has to take place for this kind of product and ultimately where we get down the road is where we can ask the customer for less and go to direct source to get more information, says Don.
14.40: The lenders can give us the underwriting row and we are not asking them to do that. But what we can do is sort of provide value props of this model at least that frank mortgage is helping to clean up the bad data for lenders and bring down their overall cost, says Don.
15.04: The traditional broker model is so bad at times in the marketplace that we know some lenders that pay brokers a premium fee for a complete file which is kind of ridiculous, says Don.
17.00: Don explains how customers select products in the portal, how they move to the documentation stage and stages of approval with the lender.
21.40: As per Don what a broker should do is evaluate the customer's risk tolerance and then discuss the different product features that might be available to them, so they understand what the positives are, but also what the risks are.
23.25: Frank Mortgage is an online system it's got to be customer friendly and the more hurdles you make someone jump to get through a process obviously the more you are going to see drop off, says Don.
25.02: Don says that they often come across people who are reluctant to give them information, but once they have made the decision, to get into the application process, they find it that the customer is much more receptive to providing that level of information.
27.24: At the end of the day, incentives are often designed to control that person who is the bottleneck or is that person is going to write that business, says Jason.
28.06: Raising capital is a major challenge that Don had faced while launching Frank Mortgage.
29.36: As per Don there is a great opportunity to enhance the experience of consumers in the mortgage market and the feedback, they are getting consumers is confirming that it's very positive so far and they don't see the competitors that are in the marketplace.
3 Key Points
Don explains how the market has sort of turned into a Marcus. It's very focused on maximizing the outcomes from the brokers of the lenders and not so much for the customers.
There is a lot of data scrubbing and a lot of back and forth between the broker network and lenders, but it's of time and resources, and with a digitized process like this, you can simplify that and deliver a complete file 100% of the time that has some algorithmically driven underwriting, says Don.
Talking about feedbacks received from consumers Don says that they have heard in surveys that more and more consumers want to have online solutions for mortgages. So, they presented one to them and now Frank Mortgage is getting positive feedback about the experience.
Tweetable Quotes
"I have been around the mortgage market quite a long time, funded some of the medium and small sized lenders that are in the marketplace space know their businesses fairly well." - Don
"The mortgage market always seems like this very complex, mystical place for somebody who is unfamiliar with it and it doesn't need to be quite that mysterious with technology, with online services. You can present information to users that allow them to do their own browsing, which is the propensity of people today anyways, to go online and browse and do some searching themselves for some information. So, it's easier to demystify this marketplace by providing that information online so that's the value of technology right there in terms of financial literacy." - Don
"It's not the customer that's paying us and so our economic incentive isn't always aligned with the customers best outcome." - Don
Resources Mentioned
Facebook – Jason Pereira's Facebook
LinkedIn – Jason Pereira's LinkedIn
Woodgate.com – Sponsor