Seattle-based brokerage Redfin surprised the mortgage world Thursday, announcing they will begin offering home loans as early as later this year.
Redfin CEO Glenn Kelman said they want to offer customers a wholly-digital homebuying experience from the very beginning of the process to closing.
“Redfin Mortgage will put the customer first through a combination of technology and personal service,” Kelman said. “This approach to mortgage is the same that has made us successful serving more than 75,000 customers buying and selling homes. We’ll meet customers through digital channels to lower customer acquisition costs. We’ll hire our own mortgage advisers with incentives that reward service, not just sales, so customers get advice they can trust. We’ll track every aspect of the closing in a single system used by mortgage advisers, real estate agents, title experts and the customer so everyone works together on an on-time closing.”
The mortgage side of the Redfin operation will be run out of a new Dallas-based office led by Jason Bateman, formerly executive vice president of mortgage operations at BBVA Compass.
Ali Kramer, Senior Manager of Public Relations at Redfin, said their brokerage is operating at such a sufficient scale that it made sense to move into mortgages.
“The Redfin mission has always been to redefine real estate in the consumer’s favor,” Kramer said. “Offering home loans is a next step in that mission.”
She said Redfin is “building a comprehensive compliance function and leveraging industry leading technology” to make sure they follow all laws and regulations and avoid conflicts of interest between the brokerage and mortgage sides.
“According to the federal Real Estate Settlement Procedures Act (RESPA) realtors, lenders and settlement agents are forbidden from paying each other for business,” Kramer said. “We have no intention to require any customers to use our services and we do not compensate anyone for referrals to other divisions. Moreover, Redfin’s business model is to give commission to our agents, and now lenders, based on customer satisfaction and any incentives beyond that would go against our company values.”
Kramer said Redfin’s advocacy for customers, technological advantage and focus on value will set Redfin Mortgage apart from its competitors.
“Technology will create efficiency, efficiency will create value, which will be passed along in low prices,” she said. “Value will also come from the fact that we don't have to pay to attract our customers since we are already serving people who use our Redfin brokerage business.”
Kramer said at launch, Redfin Mortgage will only serve Redfin brokerage customers.