Paul Knag

Blog being Mothballed

2010-06-03T00:35:00.004-05:00

I don't plan to continue to post here.

Anyone who is looking to get in touch with me can reach me via linkedin.

Google Backed Mortgages

2009-10-29T20:42:00.007-05:00

LeadCritic posted earlier today on the Comparison Ads announcement.

What I find interesting is this quote from the Google post:

AdWords uses a host of targeting and relevancy signals to determine the best ads for each query. However, sometimes a user's query doesn't provide enough information for us to confidently predict what they want. Take, for example, users who search for "mortgage." Do they want a new home loan or a refinance? Do they want a fixed rate or an adjustable rate loan? Comparison Ads improves the ad experience on Google.com by letting users specify exactly what they are looking for and helping them quickly compare relevant offers side by side.

Conventional wisdom has it that product-generic "head" keyword searches for terms like "mortgages", or "DVD Players" for that matter, indicate individuals who are early (if at all) in a buying process.

Conventional wisdom also has it that product specific "tail" keyword searches for terms like "30 year fixed rate refinance Texas", or "Samsung bdp-3600 dvd player" indicates a buyer who is more likely ready to transact. Thus, these keywords are usually more costly on a per-click basis within Adwords.

Search engine users Search, Find, Learn and then Search more specifically as they become more educated and intentional.

Comparison Ads will attempt to earn Google better $ than it currently does on these low-value generic keywords.

Google, with its own gigantic brand, and some new attention to privacy concerns, will launch a Product Ads offer on the Mortgage vertical which is no more sophisticated than a BankRate.com rate table. Will this accelerate this search, find, learn, search process, help users and earn Google more money than it has been?

ie. Can Google do it in a way that is materially better than what their Adwords advertisers are already doing?

Is it worth the hassle of state licensing, of policing lenders who offer unrealistic "bait and switch" pricing?

And the real question: Is it better to get a response phone call from a loan officer at 10:34pm (as I just did -- despite my note to "Call Tomorrow") when you know that Google was responsible for this call, and not LendingTree, LowerMyBills, BankRate and the rest of the Gang?

Yes, its probably better.

If so, perhaps they will soon stand behind the DVD Player I want to order online, the online college classes I want to sign-up for, the home security system I'm shopping for. I'd rather buy from Google. (ditto Bing, Ask...)

Google Mortgage Comparison Service

2009-08-27T19:37:00.002-05:00

I wrote about the idea of Google offering a direct to consumer mortgage comparison service over a year ago. Loads of media coverage on this.

9 years ago Microsoft beat similar drums, word around the industry was that Microsoft was going to automate the lending process putting all of us out of business. Ballmer got on a big call to announce it, and then, well, nothing. The effort bombed.

Actually, something good happened for me. Our team at American Home Mortgage/MortgageSelect circa 2001 was able to score a long term deal for the traffic that continued to flow from the abandoned/failed HomeAdvisor effort. Even more valuable than the traffic deal to us was the opportunity for all to learn more about the best approach at the time to internet loan originations.

Certainly there will be an entirely different future ahead for Google's service, but the focus should still be on what can be gained and learned. Zillow, now Google's efforts will improve the vertical. 9 years later, it is still only very small fraction of consumers who actually use the companies they find on the internet, to fund their home loans.

Troubled Mortgage CEO Rhetoric Gives Clues To Problems?

2009-07-15T18:21:00.003-05:00

An interesting study was reported by the Omaha World Herald. According to the article, a report published in the journal Corporate Reputation Review, concluded that word style in corporate communication to shareholders could classify corporate reputation as either low or high within an accuracy level of 81%.

The Corporate Reputation Review is associated with the Reputation Institute, a private company which provides consulting services to companies wishing to manage and measure their reputation.

Interestingly the report uses American Home Mortgage Investment Corp's CEO Michael Strauss as an example. The company (and my former employer), filed for bankruptcy protection in 2007. John Geppert, one of the report's authors, said that Strauss' letter used a word style which demonstrated little concreteness and a high degree of complexity, attributes associated with low-reputation firms.

I Ditched My IPhone

2009-05-08T19:37:00.004-05:00

I ditched my iPhone, in favor of a T-Mobile Blackberry 8900. The iphone is sleek toy and superior to the 8900 only its interface to play music and video. Still, I have 16Gigs of memory on my 8900 which will hold much more video for a lower price than the iPhone.

The major downside of the iphone became apparent to me after a few months of use, the very inferior email interface, the lock-in to AT&T service.

Anyone who makes a living based on response time to emailed contacts must agree, the blackberry is a far superior device.

Lenders Top of Mind: Obama, Loan Modifications, FHA, and Other Concerns for 2009

2009-01-25T19:35:00.007-05:00

5. Obama. Good or Bad For mortgage industry? According to a New York Times article today he plans to tighten regulation on mortgage brokers, although the article doesn't go into specifics.
4. Loan Modifications: Largely unregulated cottage industry could be a boon for helping unqualified refinance applicants find a different path to mortgage relief. Bad actors taking fees or deposits without providing benefit, present a challenge.
3. FHA. The FHA will continue to ascend as a safe haven and lender of choice for the industry. FHA limits will likely be increased again to 2008 levels
2. Wholesale Lending. With #1 wholesaler Chase out of the game, the options become even slimmer for mortgage brokers.
1. Home Values. Afraid to look at your 401(k) balance? Delete that automated Zillow Zestimate before opening it. Many believe that home values will continue to languish until 2010.

Fannie and Freddie: Foreclosures Suspended Until After Christmas

2008-11-20T17:14:00.000-05:00

Freddie Mac and Fannie Mae announced today that they will suspend foreclosure sales between November 26 and January 9. This effort to support their new streamlined modification programs announced on November 11 and scheduled to roll out on December 15.

CreditKarma.com is Cool

2008-10-15T16:33:00.000-05:00

At Finovate 2008 I had the chance to meet with Ken Lin, the CEO of Credit Karma.

The former E-Loan executive described his company as a consumer friendly alternative to the subscription based credit report offerings. CreditKarma lets consumers use totally free tools to

-Check credit score
-Compare credit score to others
-Simulate how certain actions may affect your credit score, like taking out a new loan
or paying down balances

CreditKarma runs on an advertising based business model. In addition to traditional display advertising running on the site, they feature what they call Karma Offers, or specific product offers that are tailored to your specific credit profile. The Offers are further vetted by a comment and voting mechanism, with popular and recommend offers naturally getting the most promotion.

I signed up myself, and enjoyed the ease and utility of the service it offers. Advertisers likely also are delighted by the targeted consumers that the Karma Offers product can deliver.

MoneyAisle Offers Real Time CD Rate Auction: Finovate 2008

2008-10-15T16:25:00.001-05:00

MoneyAisle was one of the most compelling presenters at the 2008 Finovate conference held in New York City yesterday. The company's offers consumers the ability to shop for the best CD rates via a reverse auction for the CD terms requested, conducted in real time. Banks, especially local and small banks, get to compete for a national audience of consumers looking to make time deposits, and pay only a fixed success fee to MoneyAisle. Consumers get exposure to many more banks than they would if they were to shop and compare at Bankrate.com, for example, but moreover, they don't have to shop and compare -- they simply get matched with the bank offering the highest rate and have 30 minutes to confirm the transaction with the bank directly.

New Bank/Rate Comparison Sites Hit The Web

2008-10-12T19:05:00.000-05:00

BankAround and MyBankTracker are two new Bank/Rate comparison websites that have recently been launched in the space almost completely dominated by Bankrate.com.

Both boast handsome interfaces for consumers to search and compare bank interest rates for multiple products, free of Bankrate's advertising clutter and rate table gauntlet that others have complained about.

The highlight for the would-be Bankrates, has been the 15 Million Dollar Sale of Bankaholic.com, a blog run by one person, to Bankrate.com.

Hope Now?

2008-09-28T19:30:00.000-05:00

HUD's website is promoting the October 1 launch of the Hope for Homeowners Program, which promises to expand the FHASecure program to more borrowers. The details are not clear from the site's overview, although it does say that to be eligible:

-Their mortgage must have originated on or before January 1, 2008;
-Their mortgage debt-to-income must be at least 31 percent;
-They cannot afford their current loan;
-They did not intentionally miss mortgage payments; and
-They do not own second homes.

FHFA Bailout of GSEs: More Money from Helicopters

2008-09-07T16:38:00.002-05:00

The Feds decision to bailout Fannie and Freddie is another win for those consumers struggling with their mortgage.

What happened:

The FHFA (Federal Housing Finance Agency - created by Congress in July as part of the Housing Bill) is the government agency which regulates Fannie Mae and Freddie Mac. It took "conservatorship" control of the companies today, in an effort to establish what Treasury Secretary Paulson referred to as a "time out" period, where markets can be stabilized and the structure of the secondary mortgage market, and the role of the government in this market, can be redefined in a way that makes more sense going forward.

Why it happened:

Mounting international concern about the financial ability of the Fannie and Freddie to meet their obligations, forced the government to step in to provide explicit and official support. It has been almost universally agreed that the agencies are too large to fail; their failure would cause a global financial crisis affecting everything "from family budgets, to home values, to savings for college and retirement. A failure would affect the ability of Americans to get home loans, auto loans, and other consumer credit and business finance. And a failure would be harmful to economic growth and job creation," said Treasury Secretary Paulson.

What it means to consumers:

-Rates and feeds may drop. The FHFA's mission is not to deliver a return to shareholders, but to stabilize the markets. This means making mortgages more affordable.

-It could help stabilize home values. More affordable mortgages means more incentive for potential buyers to jump in, and less homeowners forced to sell at fire-sale prices.

- More troubled homeowners will get help. The government does not want to foreclose on your FNMA or FHLMC mortgage, and will likely open more avenues for forebearance or modification of existing troubled mortgage loans (those with very high Loan-to-Value ratios, and/or those which have adjusted to a much higher interest rate).

- You'll pay for it in your taxes. Whether or not this government action will help you directly, there is in the short term most certainly a price tag that will be borne by taxes. The logic is that this cost is justified since the problem now not isolated to those who took out "bad" mortgages and the firms which issued them, but is affecting all aspects of our economy, as described above by Paulson.

Tree.com Launches, Plans New Verticals

2008-08-21T10:15:00.000-05:00

Today marks the first day of public trading for Tree.com the independent spin off of the LendingTree, RealEstate.com, HomeLoanCenter, GetSmart, Domania, iNest real estate and mortgage leads conglomerate from its former parent IAC. I've long been a Doug Lebda fan, and am excited about the idea that he has again hands-on responsibility here. According to today's American Banker, Lebda plans to weather tough times in the mortgage and real estate sector by expanding its student loans, auto and insurance.

IndyMac Done; BankRate Down

2008-07-07T23:27:00.001-05:00

Indymac reported today that it is out of the mortgage lending business, and - reading between the lines - out of business. The sad part of the story are the thousands of very capable people, many of whom are ex-colleagues and friends of mine from American Home Mortgage, whose jobs are being cut - again. Word on the street has it that the many retail folks will be teaming up with a new suitor.

Bankrate is finally showing that it is not invulnerable, downgrading its 2008 profit outlook.

Myth of Multi-Tasking

2008-06-23T06:35:00.000-05:00

This article, published in The New Atlantis, discusses a subject of personal interest to me, multi-tasking. It's not a difficult read at all, but I challenge all to read the short piece entirely from start to finish without checking email, watching TV, or cognitively multi-tasking in some way. For me, it was difficult! I'm grateful for another reminder of the overwhelming evidence demonstrating that multi-tasked or distracted work is greatly reduced in quality and productivity versus the work we product when fully engaged and focused.

So as a result, top 3 things I'll do today to enhance my focus and limit my distractions:

1. Limit email checking to once per hour (Far more than the 2x Day that Tim Ferriss recommends, but a big improvement over the 5-6x an hour that I can accomplish, unfettered.)
2. Schedule news/RSS reading to a specific time, 2x Day once in am, once in pm.
3. Prohibit cognitive multi-media and personal distractions from the work area (background podcasts, TV broadcasts, talkative co-workers, kids, spouses).

Not easy tasks for me to enforce!

More on Google Merchant Search

2008-05-31T22:44:00.000-05:00

I searched for a secured loan tonight on Google.co.uk and gained access to Google Merchant Search where I was able to apply for a secured loan, selecting the amount of 100,000GBP as the amount.

Next I landed on a list of lenders and was able to refine terms of my request and select a lender.

After selecting terms and choosing a lender, I entered my contact information.

Finally, I received the below confirmation email:

Google Merchant Search to me
show details 11:43 PM (11 minutes ago) Reply

Dear Paul Knag,

Thank you for submitting your quote request to Google Merchant Search.
You asked to be contacted by Chase Zengo. Your details are below.

Name: Paul Knag
Phone Number: 845-XXX-XXXX
Contact Time: Any time
---------------------
Loan amount: £100000
Loan period: 5 years
Credit profile: Good
Are you currently paying a mortgage? Yes

A Google operator will call you to connect you to Chase Zengo. If
we're unable to reach you, we will leave a message with Chase Zengo's
freephone number for you to call.

If you are not the intended recipient of this email, or if you wish to
cancel this request, please notify us by replying to this email and
quoting reference ID 9573016.

Sincerely,
The Google Merchant Search Team

Google's privacy policy for the product is located here

Google Launches Own Mortgage Lead Generation Effort

2008-05-30T20:14:00.001-05:00

First spotted today by search engine bloggers here, here and here Google is testing a new product (in the UK), called Google Merchant Search, which seems to offer lead generation for financial services directly. The system blends a varation of the click to call product they have previously tested, with a comparison rate-table offering most similar to Bankrate.com. Interestingly it does not include (but clearly could include) the qualification form approach of traditional mortgage lead generation, as practiced by companies like Nextag or LendingTree.

The click to call program works a little differently than expected by offering consumers a contact-me form, utilizing Google's technology to connect a call between lender and consumer not immediately, but seemly at a later time when the lender is prepared, yet anonymously, without passing on caller-id info to the lender.

Blue Chip Expert Spam

2008-05-29T11:44:00.001-05:00

Over the past 30 days I have receive many emails from present and past colleagues and friends inviting me to join a recruitment website calle "Blue Chip Expert" The Email reads as follows:

Hi Paul,

I just joined Blue Chip Expert and wanted to invite you to join as well.

Blue Chip Expert is an invitation-only career site focused on professionals with excellent qualifications. It's confidential, completely free to join and use, and only takes a few minutes to join.

Also, every time a person you invite is hired you earn a referral fee which you can either keep or direct to your favorite non-profit. Referral fees can really add up as they are paid on three levels of referral for ten years.

There's a lot more to it - check it out at:

http://www.bluechipexpert.com/invite?code=1234

Best as always,

This, in my opinion is one of the worst perversions of "social" web technology. It is a recruitment website which enables members to earn commissions on recruitment fees earned when someone they recommended to the website takes a job.

It presents itself as an exclusive, membership only site, when in reality it is a social network marketing scheme.

Count me out, and please don't send me any more form invitations.

LendingTree Affiliate Program

2008-05-09T19:18:00.002-05:00

Word is out that the LendingTree affiliate program has been resurrected.

Kathleen Heck Finds The Humor At Work

2008-05-07T13:30:00.000-05:00

Kathleen Heck gave me my first job in the mortgage business, as a Loan Officer for PNC Mortgage in Wayne, NJ back in 1995. She was also my colleague at American Home Mortgage for several years until our untimely end in August of 2007. Not only was she open minded enough to give a long-haired 23 year old me a job over 10 years ago, she continues to be an inspiration to me and undoubtedly many others like me who have been fortunate enough to be associated with her in business.

Her new book, After the Beep lets anyone interested share in her fun-loving point of view. Taken, evidently from actual voicemails, memos, emails, IVRs and other communication instruments of corporate life, Heck humorously fictionalizes the content, but anyone who has worked in the corporate workplace will instantly recognize their authenticity. Awkward HR memorandums, slapstick voicemail misunderstandings, and my personal favorite, a letter from a drunk mortgage CEO announcing the demise of his company, rife with misspelled words.

Perfect for a plane ride, it is a short and hilarious read. Reading it got me upset about all the fun I've been missing since I left corporate life...Not! Funny memories, thanks Kathleen.

Buy After the Beep at Amazon.com

580 Minimum FICO: FHA Reform, So What?

2008-05-05T08:38:00.002-05:00

The House Financial Services Committe, chaired by Barney Frank (D, MA) approved the FHA Housing Stabilization and Homeownership Retention Act of 2008. A full House vote on the bill is expected next week. Much has been covered about the contents of the bill. In an attempt to help "at risk" homeowners, it roughly extends the authority of FHA insurable loans to about double what it is today.

The real question is, so what? Regardless of the Democrat's plans for government mortgage rescue, the secondary market is having none of it, and the very borrowers who are intended to be helped, are being eschewed by investors wary of poor quality(wasn't FHA the OLD subprime?)as subprime focused originators nationwide rapidly transform themselves into newfangled FHA shops.

Since April 1, finding any end investor to purchase FHA insured loans with FICOs under 580 is a fool's errand, regardless of the current or potentially expanded FHA underwriting guidelines (which allow, under certain circumstances, approvals for sub 580 FICOs).

Found a solution to this problem? Let us know!

Negative Equity or Affordable Payments

2008-04-30T20:38:00.000-05:00

The Financial Times reports on a proposal today by Sheila Blair, the FDIC chief. Interestingly the proposal is to use a first lien position 5 year interest free government loan to offset the principal balance of the first mortgage.

In return for the reduced principal balance, lenders would agree to reduce payments in line with the borrower's income level.

At the heart of the issue is the question: Which is the more pressing issue that is fueling foreclosure: Negative equity or affordable payments?

I think Blair is on the right track to focus on payments. It is the combination of negative equity AND adjusting payments which presents an impossible situation to borrowers: they are unable to refinance due to the lack of equity, and cannot afford the new payment. Fix the payment problem, and people will stay in their homes.

The proposal by the OTS to enable an FHA refinance program for people with negative equity using negative equity certificates is probably more problematic, as it may prove difficult to get lien holder agreement, especially when their is more than one outstanding lien on the property.

Sparkroom: Mortgage Lead Performance Optimization

2008-03-17T10:23:00.002-05:00

I think all mortgage outfits spending money on interent leads intend to be analytics driven organizations. But the distractions of an independent sales culture, of multiple origination channels, of substandard lead managment technology, are obstacles for many despite best intentions.

Enter Sparkroom, a new Lead Peformance Optimization company. (Full disclosure: I've known Ed Powell, one of the co-founders since his days at LendingTree).

They've been hanging around lead generation conferences, and quietly poking around. Now they are ready to join the conversation.

I'm looking forward to hearing more from them! Shared analytics and transparent conversations about what works and what doesn't are a boon for this industry.

Unlimited Free Mortgage Leads from Zillow

2008-03-15T13:06:00.001-05:00

Jumping onto the speculation bandwagon, I'll bet that Zillow's new mortgage offering will not include:

-Access to customer name and contact information
-A process that will significantly reduce or prevent "bait-and-switch" scenarios

What I hope, is that Zillow -- in the spirit of Doc Searls' push towards user controlled relationships with vendors -- will enable consumers to share their virtual "mortgage folder". (A concept which Bill Rice has promoted).

Local, Zillow approved lenders will then be able to view the mortgage folders a scenario description submitted by a user and begin a conversation, and potentially earn a relationship and a transaction. Hopefully, this will provide Zillow users a better mortgage shopping experience than, say, walking into one's bank branch, or completing a LendingTree.com application.

Whether or not this is the path Zillow ultimately takes, the idea of a user controlled vendor management in financial services is an emerging trend worth following.

- Wesabe, although it does not allow users to actually propose transactions to vendors, enables at least users to control their financial data and analyize it.

- Mint takes user contributed financial data and proposes appropriate financial products and services that should meet or exceed the existing terms the consumer is getting.

All take a fair to moderate bit of effort by the user. With a user profile/product match process as complex as it is with mortgage financing, perhaps the complexity is still too great to translate meaningfully into a social network in a way that will ultimately improve the quality of customer/mortgage vendor transactions.

LeadsCon

2008-03-12T21:54:00.001-05:00

I will be speaking on a panel entitled Lessons from the Mortgage Market, at LeadsCon. LeadsCon is a 3 day conference to be held at the Palms, Las Vegas April 2-4, and is focused on the online lead generation and customer acquisition business. Hope to see you there.