The Rise Of Native News in The Mortgage Industry

Recently an article was sent to me about VA mortgages. The body of the article was sent and then a link if I wanted to dig further. ?I was absolutely shocked that the publication that this article was linked to had written such a article so I did some digging and then reflected and my end opinion may shock you.

When you click the link it looks like news but when you really take a deep peek you see that it is sponsored content.? Sponsored content is a fancy word for AD pretending to be news.?"native news." We have seen them in women’s magazine for years.? The outrageous claims such as “this dry brush helped me lose 15 pounds.” And then there is article about how the dry brush is magical and it links to nonsense studies of 12 people. I expect this at this point in women’s magazines and know to look past them but in a mortgage publication?

So what in this ad was so shocking to me?? It was a divisive article that claimed all retail lenders were ripping off veterans and that that brokers was where they would get the best deal. It gave the illusion that if you worked with a broker you would save $13K (as that is the average) and that with a broker you get a better deal no matter what.

Everyone who actually does and prices loans on the daily and competes knows there is not one segment of lending that has the best pricing consistently.? It is always a combination of the company, whether retail or wholesale, and mortgage loan officers pay. ?To imply that every retail lender charges more than every broker is a misrepresentation.? It depends on the loan officer and the company.? They reference a study backed by UWM (the nations largest wholesale lender).?A study which analyzed HMDA data and concluded that ON AVERAGE veterans did benefit from a broker. Key is on average. The devil is in the details. The study looked at all the retail lenders and lumped them together vs all the brokers.? All retail lenders do not price the same just as all brokers do not price the same. Let me be clear however, if you lump them all together then YES retail is higher than brokers.? Let me explain why and why I am shining a light on this so we can push change within the industry to benefit veterans as a whole.

Do I think there are SOME retail lenders ripping off veterans?? Yes, I do.? There are a few huge ones that spring to mind as absolute predators when it comes to rate and fees.? These are some of the largest companies in the VA lending space which makes retail lenders overall look horrific if we are lumped in and averaged with them.? It does not matter how low I price if my retail competitors who dominate the space are charging veterans 150bps-200bps ?more then everyone else.? ?

So why is this happening?? It is simple.? People trust brands and names.? Lenders with military words or affiliations in the title often feel more trusted to veterans and they do not shop the rate and fee. There are companies that have been doing targeted advertising to veterans for decades who are established as a go to brand even though they have higher rates and fees. The reason people go to them is they know the name and then they don't shop them. I also see within the industry loan officers and lending organizations who pad government pricing because they know it is a segment that shops lenders less.? I think it is appalling and it is something I have been talking about for years on my youtube channel and why I will not retire until veterans are known as the most aggressive rate shoppers. ??

Should Veterans Just Use a Broker? No, veterans need to shop rate and fee from a variety of lenders. Banks, retail lenders and brokers. Shopping is the way to get the best deal. There are banks that rip off veterans and retail lenders and brokers that rip off veterans.? There are also retail lenders that offer tremendous deals to veterans as well as banks and brokers.? Ultimately it depends on WHO you are working with. WHO is the loan officer and what are they offering you.? ALWAYS VERIFY THEN TRUST.?

Takeaways for the industry:?

1) The "brokers are better" pitch is now squarely pointed at VA and retail lenders. I welcome it and hope it rattles the industry. I am happy to compete every day whether it is against a broker, a bank or another retail lender. I hope it pressures some of the lenders overcharging veterans to lower their margins and give Veterans a better deal.

2) Ads dressed up as articles are known as native advertising.? The goal of native advertising is to make it difficult for consumers to identify the content as an advertisement.? I do not believe native advertising is something we should encourage or allow in the mortgage industry.? Consumers have a difficult enough time understanding the process, how it works and who to trust. Ultimately the industry should be working towards education and empowering buyers and homeowners and not confusing or misleading them. I see native advertising as something the CFPB and FTC will ultimately look at because when it comes to money there is no place for it.