Wall Street Comes to Mortgage Leads

ROOT Markets recently announced the launch of ROOT Exchange, a marketplace where mortgage leads can be bought and sold based on asking and bid prices. The company says it “combines the direct response capabilities of the Internet with the transparency and integrity of a commodities market.”

CEO Seth Goldstein told MortgageDaily.com that the New York-based company’s roots are in advertising and Wall Street. “It’s part and parcel of what we do,” he said. “Our vision is around creating finance contracts around the business; it’s a superior business model, allowing buyers and sellers to opt-in.”

Lew Ranieri, “the father of mortgage-backed securities,” joined the financial marketplace company as an investor and executive chairman earlier this year, as reported by MortgageDaily.com.

Goldstein said the concept would build liquidity in the market. “And we’re bringing publishers like the New York Times and Forbes into the world of lead generation for the first time.”

Although ROOT claims to be “the first marketplace for consumer leads,” Los Angeles-based LeadPoint says it has offered a similar mortgage lead exchange platform since 2004.

The Loan Page CEO Kevin Akeroyd told MortgageDaily.com in an e-mailed statement that it currently partners with ROOT but is seeking to also partner with LeadPoint, a “larger, more established competitor.”

Akeroyd said the lead exchange concept definitely has a place in the mortgage industry as it allows buyers to “spot” buy on the exchanges and provides aggregators with another avenue for lead distribution — albeit a narrow one.

“Most large buyers are not going to rely on exchanges as their core bread and butter, but will happily buy on the margin and cherry pick on lead type or price or both,” Akeroyd said.

Cityloans.com founder AJ Martin told MortgageDaily.com he would not be comfortable using a lead exchange program because of the undetermined destination of the lead. “My consumer’s information could end up with a lead broker or a mortgage broker/lender that doesn’t provide a pleasant, professional experience for my consumers and that would reflect negatively on my product.”

Additionally, Martin said he has some minor concerns surrounding the business model and Section 8 RESPA regulations. “RESPA expects a uniform pricing for similar services therefore charging more for a $700,000 lead than for a $100,000 lead may not be RESPA compliant.”