There have been a lot of so-called mortgage disruptors entering the space of late, but this might be the biggest yet. Could Amazon Mortgage be in the works? One recent clue says yes.
Earlier this week, HousingWire noted that Amazon appears to be in the process of setting up a mortgage shop, and is apparently hiring talent from a nonbank in the top 10 HMDA lenders.
I believe that includes the likes of Quicken Loans, loanDepot, and Caliber Home Loans, though it’s unclear if any of their former employees are actually involved.
All the publication could say beyond that is Amazon is looking for someone to head up their “newly-formed mortgage lending division.”
A 1-Click Mortgage Sounds Kind of Nice, But…
- Amazon makes shopping really easy
- Allowing millions of customers to buy millions of items with one click
- But mortgages are a different beast
- Though the hope is technology will make them a lot easier and faster
If you use Amazon, which I’m going to assume you do, you’re probably familiar with how easy they make everything.
For example, you can setup 1-click ordering that allows you to purchase items you see on the site with a single click of the mouse.
Or you can use a Dash Button to quickly reorder an item you use on a regular basis. You can also get most items delivered to your door in two days, though getting a mortgage in two days is another story.
While home loans will inevitably never be this simple, Amazon does seem to have a knack for making things a little less painful.
Some of the disruptors like Better Mortgage, Rocket Mortgage, and SoFi are already making things easier by allowing loan documentation to be pulled direct from the source, instead of having to print it out and upload it.
I’m not sure how Amazon would innovate in this space, but I’m sure they’d think of a way to do things faster, and perhaps in a more productive fashion while maybe driving the price down.
It probably wouldn’t be good news for mortgage loan officers, who could stand to lose their jobs to automation.
Why Would Amazon Want to Offer Home Loans?
- If you’re wondering why Amazon would bother with mortgages
- It might be because they see a big opportunity to disrupt
- A very antiquated business model that hasn’t changed much in decades
- New lines of business are the only way to grow bigger
The next logical question is why? Why on earth would Amazon want to get into the loan origination game? Don’t they realize how chaotic and stressful this business is?
Well, maybe that’s exactly why. Maybe they see an opportunity to make something that hasn’t changed for a long, long time, better.
They recently announced plans to fix the healthcare system, an initiative partly driven by the fact that Amazon has some 840,000 employees to take care of.
Amazon also recently launched a generic line of medicine called “Basic Care” to compete with the likes of Advil and other household names in the space.
Maybe they want to make it easier for their near-million strong workforce to buy homes too, or refinance their existing mortgages.
It’s hard to say right now. The more likely reason is they might just want to be involved in everything.
After all, with a market cap of around $762 billion, it’s not very easy to grow without entering into new lines of business.
This might explain why Amazon bought Whole Foods and then launched an automated grocery store. Their latest acquisition was Ring, which makes those video doorbells.
They May Start with Basic Banking Services First
- Expect Amazon to offer checking accounts
- Before they offer mortgages to customers
- But after that they might aim to become a one-stop financial shop
- Much like what they are in the retail space today
HousingWire also mentioned that Amazon was planning to start by offering checking accounts, and then make their way into other offerings, like mortgages.
There’s already an Amazon credit card, though it’s a co-branded effort backed by Chase.
The checking account service sounds like a competitive move aimed at Walmart, which coincidentally launched a huge marketing campaign recently to tout its free home delivery service.
The ad campaign features colorful Walmart boxes and free 2-day shipping with no membership fee. So it’s clear that it’s game on.
At the moment, Walmart and Amazon employees can actually get a discount on their mortgages via a partnership with BBMC Mortgage.
BBMC offers a rate match guarantee and $1,000 off closing costs, and has loan options ranging from FHA loans to jumbo loans to USDA loans.
For the rest of us, the best we can do at the moment is buy mortgage books on Amazon. Stay tuned if and when that changes.
Amazon Buying loanDepot?
- The latest rumor related to Amazon’s impending mortgage move
- Is a buyout of mortgage lender loanDepot
- Though it didn’t seem to be based on any real truth
- But it’s been doing the rounds lately
If, and this is a big if at the moment, Amazon makes a foray into the wonderful world of home loans, they could do so via a takeover, similar to their Whole Foods purchase.
After all, it’s sometimes easier to just throw money at something than start a new venture from scratch.
One rumor that began circulating recently was a potential Amazon and loanDepot tie-up, though it didn’t seem to be based on any real truth.
Sure, sometimes whispers proceed a major announcement, and are often spot on. But in this case it sounds more like fantasy.
To squash the rumors, even loanDepot founder Anthony Hsieh took to LinkedIn (his favored social media platform) to say the following:
“Just talked to an industry titan that asked if we are under an agreement to sell to amazon. I responded how much was the deal for? Rumors are simply amazing and this one is a good one. mmca.”
For the record, mmca stands for “making mortgages cool again.” Other than that, it doesn’t sound like there’s much here.