The Company

MortgageBot

Q1 ’01 volume: $69 million
W57 N14280 Doerr Way
Suite 2W
Cedarburg, WI  53012
(877) 408-8845
www.mortgagebot.com

 

MortgageBot was spun off from parent Marshall & Ilsley (Milwaukee, WI; $26.1 billion) on April 1, 2001. The privately held company added several new investors including GE Mortgage, a division of GE Capital (Stamford, CT; $370 billion), and Bank One (Chicago, IL; $269 billion). Scott Happ, a 17-year veteran of M&I founded MortgageBot and is its CEO.

Mortgagebot.com claims to be the first to offer true online approvals of first and second mortgages in 1998. Our records show Bank of Montreal was first in North America in Feb. 1997, but it’s entirely possible MortgageBot was first in the U.S.

Direct sales at www.MortgageBot.com  only amounted to $69 million during the entire quarter (Q1 2001), just a single week’s worth of production at E*Trade Mortgage. It appears that MortgageBot is more proof-of-concept than an online mortgage player.

table 1

Gomez Scores: MortgageBot vs. IndyMac

Spring 2001

Category	Score	Rank	IndyMac Score
Ease of Use	7.44	5	8.81
Customer Confidence	5.99	1	4.95
On-Site Resources	4.56	12	5.88
Relationship Services	7.31	3	8.35
Composite Scores
Overall	6.26	3	6.59
Rate Hunter	6.65	3	7.02
One-Stop Home Buyer	3.23	13	6.51
Novice Home Buyer	5.37	4	5.95

Source: Gomez Advisors, 5/01

 

B2B Ambitions

 

True to its software company heritage, MortgageBot began actively licensing its mortgage platform to other banks and lenders in Dec. 1999. The company currently claims more than 50 clients (table 2, next page.)

Apparently, MortgageBot’s strategy is to keep licensing costs affordable, even for small mortgage brokers. The company charges an initial licensing fee of no more than $5,000 and monthly subscription fees of $1,500 to $2,500. The company hopes that its clients can break even with just one closed loan per month. There is also a $100-per-loan transaction fee after the first 15 to 20 loans each month.¹

¹Source of pricing information, link on MortgageBot.com to an article in Mortgage Technology, 4/01

 

table 2

MortgageBot Client List (partial)*

AAA Financial Services

American Chartered Bank

American Mortgage

Baylake Bank

Central Bancompany

Century South Bank

Citizens Bank

Community Bank

everbank.com

Far East National Bank

Fastloan.com

First Virginia Banks

Florida Banks

Gold Banc

GreenPoint Mortgage

Greater Atlantic Mortgage

Independent Financial Network

InvestorsBank

Landmark Credit Union

Lightning Mortgage

Meridian Residential

M&I Bank (part owners)

OneLoanSource.com

Ozaukee Bank

Sandy Spring National Bank

Signature Bank

South Financial Group

Sterling Financial

Universal

Wintrust

 

Source: company, 5/01

*The company claims more than 50 clients; these 30 are listed on their Web site

 

table 3

MortgageBot’s Best of the Web 2001 Features

Feature	Description
Loan status area and demo	Here’s what we’ve been looking for from an online mortgage lender since we first took a long look at the sector in early 1997: a Web-based area where applicants can keep close tabs on the progress of their mortgage application. While MortgageBot is not the first to put this feature on the Web, its particular design is superb; the lender has also elected to showcase it with a demo, something every lender should do.
Guarantees	Like the other top mortgage lenders, MortgageBot puts its service guarantees and customer promises front-and-center with a bold graphic that is more tongue-in-cheek, than in-your-face, although it might turn off some visitors; however it strikes you, it is certainly noticeable We like it.
Customer satisfaction survey results	Like E*Trade Mortgage, MortgageBot posts the results of its customer service survey on the Web. Although it’s not updated in real time like E*Trade’s, it’s only a few months old and includes customer comments along with scores. It’s difficult to compare one survey against another, but it appears that MortgageBot scores somewhat higher than E*Trade Mortgage.

 

Loan Status, General Info: MortgageBot offers an outstanding Loan Status function divided into six areas. Every bank should develop something similar.

 

 

Loan Status, Loan Terms: At every step of the way you see the name and contact info for your loan advisor.

 

Loan Status, Important Dates: Summarizes and explains the sequence of events in the loan process including the date each activity began and when information was received.

 

 

Loan Status, Your Appraisal Includes a summary of the appraised value and a copy of the actual appraisal in PDF (link at bottom of the screen).

 

 

 

Loan Status, Needed from You

Lists any outstanding items needed from the borrower.

 

 

Loan Status, The Loan Closing Demystifies the closing process with clear instructions.

 

 

 

The top online lenders are writing surprisingly straightforward and effective guarantees. MortgageBot’s over-the-top graphic hammers its key messages home:

• lowest rate
• speedy approval
• great service

 

All backed up with a $500 guarantee. MortgageBot’s guarantees and service promises.

Like E*Trade Mortgage, MortgageBot posts the results of its satisfaction survey online. The company isn’t quite as brave as E*Trade Mortgage, which posts real-time survey results. MortgageBot’s results are a few months old; in mid-May it showed results from Q4 2000 responses. Satisfaction surveys are sent to each customer after their loan closes. The company does not disclose its response rate.

 

If you post customer satisfaction scores for the world to see, the scores have a tremendous marketing value. So you can toss out the conventional market-research wisdom of using a 5-point scale to give consumers more choices across the top three categories. MortgageBot cleverly uses a 4-point scale with Excellent, Good, Fair, and Poor as choices; figuring, correctly, that most users will choose Excellent or Good, especially when the third category is called Fair, which has somewhat negative connotations. But from the results, it appears that MortgageBot doesn’t have to worry about low scores: its good/excellent combined scores were very high, ranging from a high of 98% on service quality to a low of 90% for its Web site. In addition, 93% liked the closing experience, 96% were satisfied with the overall experience, and an exceptionally high 94% would likely recommend the lender to others (see table 4, right). MortgageBot also includes selected customer comments at the bottom of the survey, a nice touch.
 

table 4

Customer Service Scores

Attribute	Excellent	Good	Fair	Poor
Service from loan advisor	76	22	2	0
Web site rating	49	41	6	4
Loan closing experience	67	26	7	0
Overall experience	67	29	2	2
Referral potential:			Yes	No
Would recommend to others			94%	6%

Source: MortgageBot Web, 5/15/01

 

Everbank is running MortgageBot’s platform. On the surface, it’s almost identical. However, some functions are not available, such as the customer satisfaction survey results. And the guarantees are different, for example Everbank offers a $300 guarantee compared to $500 at MortgageBot.