E*Trade Mortgage has a more pleasing overall appearance than IndyMac, but
it doesn’t do as much to boost applicant confidence in the process and
company. However, the new E*Trade branding provides a much-needed
credibility boost.
(Ed. Note: The company and Web site was relaunched
as E*Trade Mortgage on June 18. Our evaluation is of the previous
LoansDirect product and Web site design. Many of the core features remain
unchanged.)
The Company
|
E*Trade Mortgage
$1.5 billion originated (Feb. 1 to May 31, 2001)
division of E*Trade
3,778 employees
4500 Bohannon Drive
Menlo Park, CA 94025
Phone: (650) 331-6000
http://mortgage.etrade.com
|
E*Trade Mortgage is on the verge of becoming a major player in the
mortgage industry, the first pure-play to gain such a strong foothold.
The company was originally launched in 1983 as Tricor Mortgage and
renamed LoansDirect in 1999. When it was acquired by E*Trade on Feb.
1, it was already a major online player with a number 2 ranking on Gomez and
one of the highest online loan volumes . E*Trade has originated nearly $1.5
billion in loans in the four months since it took over the former
LoansDirect (Feb. 1 through May 31), with another $546 million locked in the
pipeline. May volume totaled $494 million alone.
It appears E*Trade Mortgage may be on track to become the largest direct
originator of online retail mortgages. In Q1 2001, it ranked behind
Countrywide, LendingTree, and MortgageIT on Inside Mortgage Technology’s
list of top originators. However, Countrywide includes telephone
originations in its total, so its true Internet total may be less than
E*Trade Mortgage’s. And if its rapid growth continues, E*Trade Mortgage
could outpace MortgageIT and LendingTree in 2001.
table 1
Gomez Scores: E*Trade Mortgage vs. IndyMac
Spring 2001
|
Category |
Score |
Rank |
IndyMac Score |
| Ease of Use |
7.92 |
2 |
8.81 |
| Customer Confidence |
5.69 |
2 |
4.95 |
| On-Site Resources |
5.73 |
7 |
5.88 |
| Relationship Services |
7.70 |
2 |
8.35 |
| Composite Scores
|
| Overall |
6.55 |
2 |
6.59 |
| Rate Hunter |
6.82 |
2 |
7.02 |
| One-Stop Home Buyer |
3.28 |
12 |
6.51 |
| Novice Home Buyer |
5.56 |
3 |
5.95 |
Source: Gomez Advisors, 5/01 Note: called LoansDirect on the scorecard.
Catching IndyMac
Even though IndyMac has the number one ranking on Gomez, E*Trade Mortgage’s
score is so close, a mere 4 basis points lower (6.55 vs. 6.59), that
statistically the two companies are tied for first. E*Trade Mortgage has
been gradually closing the gap during the past three scorecards. In Fall
2000, it scored 22 basis points less than IndyMac (6.58 vs. 6.36). The gap
fell to 8 basis points in Winter 2000 (6.52 vs. 6.44).
E*Trade Mortgage trails primarily because of its Ease-of-Use
score, a full point behind IndyMac (see table 1, previous page). If the
mortgage unit can maintain its customer focus in the aftermath of the
merger, it could overtake IndyMac in the next scorecard, especially with its
tighter integration to E*Trade and E*Trade Bank.
table 2
E*Trade Mortgage’s Best of the Web 2001 Features
Source: Online Banking Report, 5/01
E*Trade Mortgage Satisfaction Guarantee
1. No Obligation, No Application Deposits. At LoansDirect there is
never an up-front fee to apply, and if you are ever dissatisfied with our
service or our rates, you may cancel without any cancellations fees or
obligation.
2. Guaranteed Low Rates and Fees. We are the lender, saving
you middleman commissions and add-ons. If we can’t beat a competitor’s rate
and fees, we’ll give you $500 at time of close even if you close with
someone else.
3. Guaranteed On Time Closing. Work with an experienced online
lender. We have performed thousands of loans online. Don’t rely on an
“Internet start up” and lose sleep over closing deadlines. LoansDirect
guarantees that your loan will close on time or we’ll pay you $500.
4. Guaranteed Fees. Once you are locked in and approved,
LoansDirect guarantees that our Total Value Price quoted to you at the
beginning of the loan process will not change at time of close. No more
worries about how accurate a Good Faith Estimate is.
5. Our $100 Call Back Guarantee. LoansDirect guarantees you
will receive a call from a loan representative within 60 minutes of
submitting a completed online loan application during our regular
business hours, or we will pay you $100 at the time of closing! This is
one more way LoansDirect guarantees you will receive the service you
deserve.
Source: Company Web site, 5/01
Like IndyMac, E*Trade Mortgage also provides up-to-date
competitive rates and fees. One big difference, it doesn’t show its own
price for comparison, leaving that somewhat difficult task to the borrower.
My Loan Team is another superb touch. The innovative approach includes
a private Loan Consultant (salesperson), Loan Coordinator (takes it through
closing) and Loan Manager (the supervisor you can contact if there are
problems).
Seen in this demo, E*Trade includes pictures, phone number, email
addresses, and whether each staff member is currently in the office.
A brave feature from E*Trade Mortgage. Within 24 hours of the
close of each loan, an email customer satisfaction survey is sent to all
borrowers. The answers are automatically posted to this public Web area in
real time. Although direct comparisons are difficult, E*Trade’s appears to
score lower than MortgageBot, which also posts its scores to the Web. For
example, 67% of MortgageBot users rated the overall experience Excellent,
compared to only 43% at E*Trade. The scores are also shown in graphical
format lower on the page.
E*Trade offers a useful and fast home value report from HomeGain. Any
user (you don’t even have to register) can type in a street address and in
less than 30 seconds have a full valuation derived from the home’s assessed
value, most recent sales price, sales date, year built, number of bedrooms
and baths, and home and lot size. User’s can change the data reported, e.g.,
add a bedroom and get a new estimated valuation. Finally, the service
provides a list and map of other home sales in the neighborhood.
List of comparable sales in the neighborhood.

Map of comparable sales.
E*Trade’s Neighborhood Report provides census data by zip code
compared to state and national totals. There was a small error in our
report, which compared our Seattle neighborhood to New York state instead of
Washington.
Report choices:
- Demographics Report
- Risk Assessment Report
- Income Assets and Debt Report
- Lifestyles Report
- Cost of Living Report
- Single Area Summary Report
After clicking on the DirectConnect button in the upper right corner,
a screen pops up with four choices for immediate contact: Direct Messaging
(aka online chat), Internet Voice with no need for a second line (provided
by Centrecom), toll free voice, or email with promise of immediate
response.
The company offers two application choices: Express
Application, which covers only basic info and then moves the rest of the
process to the phone; and Online Instant Approval, which is a
complete mortgage application evaluated in real-time.
Express Application (page 1): Input form, page 1 of 2. Users
can switch to the full application at any time and all information is saved
from previous screens.
Express Application (page 2): Input form, page 2 of 2.
Express Application (page 3): Loan Choice. Note
the “Low Cost Promotional Rate,” a no-points, $995 fee product (see next
screenshot) that happened to be a very low-priced mortgage the day we
stopped by. Users can also select from the usual laundry list of fixed and
adjustable products, all with clearly stated APR, points and monthly
payments. Guaranteed closing costs are one-click away (second column from
the right).
Express Application (page 3b): E*Trade does a great job making
burdensome fee information affordable and understandable. On this $100,000
loan application it charged a flat $995 guaranteed for all lender fees
including credit report, appraisal, etc. They also listed an ESTIMATED $450
for other third party fees including escrow agent and title insurance; and
below this table, another ESTIMATED $600 for prepaid interest.
Express Application (page 4): Review and Submit triggers a
credit report and a call from a sales rep to finish the application.
Full Application (page 1 of 6): Users may switch to
the Express Application at any time and your information is saved.
Full Application : Users may navigate to any section of
the application prior to completing an earlier section.
Full Application (page 4): Pop-up help is adjacent to most
questions. There are also calculators located by each numerical question to
assist in answering.