Quicken Loans Seeks More Technology Partnerships with Banks

Now that Quicken Loans has licensed its loan origination platform to JPMorgan Chase (JPM), the Detroit online lender is looking to grow profits by selling its mortgage technology to more banks.

JPMorgan Chase executives sought out Quicken after seeing that it had topped J.D. Power and Associates' customer satisfaction rankings for the past three years, and the two companies sealed their partnership in January.

Late last year, Quicken also teamed up with Charles Schwab Bank through a co-branding agreement that lets Schwab offer home loans to its customers through Quicken.

Quicken, the largest nonbank originator, more than doubled its lending volume last year to $70 billion, a 133% jump from 2011, due primarily to the surge in mortgage refinancing. The refi boom will eventually abate, and the online lender says is looking to make up for that slowdown by offering its mortgage technology to banks that don't want the hassle of processing or underwriting home loans.

"Chase is the first big test and now we're hopeful that this may become another business line," says Jay Farner, Quicken's president and chief marketing officer. "Because we're not a bank, we're not really a competitor."

Quicken's loan platform offers several benefits to a large bank like JPMorgan Chase including imaging and workflow automation, faster underwriting and the ability to prioritize loans as they are processed, Farner says.

Quicken closes loans in 30 days or less compared to the industry average of between 60 to 90 days. The faster closing times can be attributed to its proprietary technology and to the way in which Quicken breaks down jobs in mortgage processing into areas of specializations.

For example, it's not uncommon for a Quicken employee to work only on collecting written verifications of employment from borrowers. That amount of specialization allows multiple people to work on the same loan at the same time, speeding up the process, Farner says.

"As opposed to a first-in, first-out system, or even worse, where the loan officer is screaming at the processor working on the loan, our system constantly prioritizes the loan origination process so it makes sure that the right person is working on the right loan at the right time," Farner says.

Doug Lebda, chairman and chief executive at Lending Tree.com, a mortgage lead generator and unit of Tree.com, says he expects online mortgage lending to explode in the next few years.

"The consumer is about to benefit from technology being far enough along where we can make the online experience much better than the offline experience," he says. "Quicken is very good at providing service and technology at a significant scale."

In addition to licensing and co-branding, Quicken offers what it calls an "extended retail plug-in," that allows loan officers at small community banks and credit unions to take a mortgage application at a retail branch while the processing, underwriting and closing is all done behind-the-scenes by Quicken.

Quicken also is working on a new tool that that would allow potential homebuyers and real estate agents to track the progress of a loan as it gets funded. The company already has a portal where customers can track their loans, but third-parties such as agents do not yet have access, Farner says.