Mortgage Profit Margins Exposed?

Asaf Buchner | May 11, 2006, 10:49 AM

The WSJ has an article today about collaboration between Amerisave and a mortgage education site run by a former finance professor [subscription required]. According to the journal, the “Mortgage Professor” will expose the lender’s profit margins so that consumers can be sure that they are not being “ripped-off”. Not surprisingly, this is a very appealing proposition for consumers [clients should refer to Jupiter’s Mortgage Purchase Funnel report]. However, I am a little bit skeptical.

In an Amerisave micro-site the professor laments about the lack of transparency in the mortgage industry – consumers don’t know how much money the lender is making. However, as the site correctly points out, consumers are also in the dark as to the wholesale prices of automobiles. The Internet definitely created price transparency, but I am not sure lenders (or car dealers) will be quick to share their costs as well.

In addition, the journal reports that the parties did not agree on the compensation the professor will receive for each referral. I’m not doubting this guy’s integrity, but I feel that receiving compensation for referring leads makes this deal more of a lead generation agreement than a service for the consumer. In the name of transparency, I hope these fees will be displayed as well…