Quicken Loans CEO on winning in the market, spring demand

The chief executive of one of America’s largest mortgage lenders is predicting an easier time for homebuyers this spring compared to a year ago.

Jay Farner told CNBC’s ‘Squawk Box’ that both purchase and refinance mortgage demand is increasing and he noted that the expectations between what sellers are asking for their homes and what buyers will pay is “very tight right now” making a more normalized market.

He said he expects a lot of transactions this spring with sales turning pretty quickly.

Talking about the weakness in demand in some markets including the west coast, Farner said that those areas are likely just “taking a breather” and highlighted strong demand in the Midwest currently following a lag.

Non-bank impact on the mortgage market

The mortgage firm leader was interviewed by regular host Rebecca Quick who was joined by Quicken Loan’s founder and chairman Dan Gilbert.

Gilbert asked his firm’s CEO about the impact of non-bank and ‘shadow-banking’ lenders on the mortgage market, noting a fall in Q1 2019 mortgage volume at JPMorgan to $15 billion from $18 billion a year earlier.

Farner said that the issue is not about bank/non-bank but about quality of loan, lenders’ balance sheets and assets, and the right technology for servicers. He said the companies that are doing those things properly are supporting the economy, while those that are not should be kept in check with regulation.

Expanding on the use of technology in mortgage originations, Farner said that the centralized business model of Quicken Loans has been a positive for the firm’s originations.

Tech vs. people
However, while the internet is a key channel for the lender, Farner said that client experience is vital and talked of the importance of Quicken Loan’s team of around 17,000 who are always ready to communicate with clients.

“I think it’s the combination of great team members and technology that separates us,” he said.

Gilbert added that, in the case of Quicken’s Rocket Mortgage the use of technology has not only increased the speed and convenience of the mortgage application process, it has improved security.

“Less fraud, more honesty, more clarity,” are among the benefits of the process. He added that the system uses a sophisticated verification algorithm to ensure accuracy.