Do You Trust Me?

I was talking to a friend the other day – a former mortgage guy and a general disruptive force in the industry. He’s got a small obsession with bringing transparency and openness to the mortgage industry, especially as it relates to interest rates and the various ways mortgage brokers are paid: origination fees, other up front fees, yield spread premiums, etcetera.

Now, in both the real estate and mortgage industries, there’s a decent amount of distrust between consumers and lenders, between clients and real estate agents. Historically, there’s been some amazingly dishonest people who have generally brought down the overall reputation of agents and lenders. Also, agents and lenders have a reputation for the hard sell, for pestering and annoying and pushing a sales message beyond what is appropriate.

(We’re not all like that. I promise.)

Anyway. We were talking about people shopping for agents and lenders online. I’d say 90% of my home buyers contact me without having talked to a lender first, or even really thought much about talking to a lender and getting pre-approved for a home loan. In my experience, that’s because people don’t know they need a pre-approval that early on in the game. He contests that people don’t get the pre-approval because they don’t trust the lenders either.

I say people don’t get the pre-approval because of a lack of knowledge about this process that most only go through very few times in their lives. He says it’s a trust issue.

What say you?