San Francisco-based Sindeo is trying to bring the mortgage brokerage business into the future, creating a new online service that focuses on helping consumers navigate the often confusing mortgage process from start to finish.
A long-standing complaint about mortgage brokers is that they are often only concerned about the current transaction rather than looking at a client's total financial picture. But Sindeo is setting out to change that.
"We wanted to think about the end-to-end journey, and really thinking about the consumer and not necessarily the transaction," said Nick Stamos, the founder of Sindeo.
For example, for first-time homebuyers, "there really isn't a go-to place for a consumer to get educated and to learn and start planning and preparing for a mortgage years, if not months, in advance."
The goal, Stamos said, is to bring greater transparency to the mortgage shopping process.
"By coming to Sindeo, they're going to have all of the information they need, they're going to have access to all the different products and programs, they're going to have a great service experience in deciding and closing on the loan," he said.
Stamos said he was motivated to create Sindeo, which means "connect" in Greek, after applying for a home loan in 2010.
The experience "set off some triggers in my mind regarding why is it so difficult to go through and learn about, and then ultimately shop and then decide and close upon a mortgage," he said.
He argued that mortgage banking still lags behind other financial services sectors when it comes to using technology.
"When I started looking at mortgage in 2013-2014, it seemed very similar to the experience I had in 2010, which probably was very similar to the experience people had in 2000 or 1990, to be quite honest," he said. ""It just got me thinking that there probably is a better way for a consumer to go through that end-to-end journey and thinking about the most important financial decision many people make."
Whether Sindeo can be successful is unclear. One industry observer noted that consumers can already go many places online to get a mortgage loan.
The online application process "works well for easy mortgages," said Rick Sharga, executive vice president at Auction.com, who is familiar with Sindeo. "Where [mortgage] brokers have always added value is if there is something about the borrower, something about the asset, something about a particular loan type that requires a little more expertise. I think that is a harder thing to automate than it appears at first blush."
One significant change Sindeo has made is paying the mortgage sales staff called "mortgage advisors," not "loan officers" on a salary basis, with a bonus for customer satisfaction, rather than getting a cut of the loan. Such a structure removes any incentive for steering a consumer to a particular lender or product.
"We're taking all of that bias out of the equation," Stamos said.
Sindeo has also stripped its mortgage advisors of having to do the marketing and relationship building with referral sources that many loan officers typically perform. Instead, that role is filled by Ginger Wilcox, the chief industry officer, who recently joined Sindeo from Trulia. Sindeo is looking to keep the real estate agent just as informed about the transaction's progress as it does for the borrower.
The real estate agent acts as "project manager throughout the transaction," said Wilcox, and if consumer has bad experience, the person who ends up getting blamed is the real estate agent.
"So our goal is to provide agents with much greater visibility into the transaction, so that they can ultimately have the ability to see things that come up. Obviously there are lots of things that come up during the mortgage process and by streamlining, creating efficiencies, providing visibility to the real estate agent, you can help reduce the surprises that cause the deal to fall through," she said.
Wilcox added that Sindeo is looking to launch a set of tools for real estate agents in the first half of this year.
When asked if Sindeo is a mortgage banker or a mortgage broker, Stamos responded, "At the end of the day, we're the place the consumer should go to make the best decision on their mortgage."
Some lenders who buy loans from Sindeo agree that a more consumer-facing mortgage originator model is the future of the industry.
"As the end lender, I'd say the data integrity is superior, the transmission of documents, the flow of communication, the follow-up and the communication between Sindeo and Ethos is pristine," said Adam Carmel, the founder and president of Ethos Lending, a San Francisco-based wholesale lender. "The smoother and more transparent and the more efficient the process is upfront with the consumer, it always translates to a better experience all the throughout the mortgage supply chain.
Ethos is currently a conforming lender but is planning on coming out with non-qualified mortgage products, the first being a conforming-balance interest only loan (the company merged last April with former Consumer Financial Protection Bureau deputy director Raj Date's company Fenway Summer).
Carmel said Ethos is a technology-focused mortgage lender that is looking to reinvigorate the wholesale channel.
"Our mission is to bring the mortgage broker back," he said. "We really have strong convictions that on a local level, there is no one better to serve the needs of the consumer than the mortgage broker."
Sindeo is not the only technology-focused broker it is working with, but Sindeo has built its platform in an expeditious manner and its business is growing.
"We share a common vision, common goals," Carmel said.
Another wholesaler which purchases loans from Sindeo is Irvine, Calif.-based JMAC Lending. With any company that is technology-focused like Sindeo, "it makes our lives a whole lot easier, because you can streamline the whole process from processing through closing loans," said Travis Pham, its executive vice president.
"These days, technology is the key. It makes things easier, faster, makes things easier for the consumer for sure," he added.
Consumers are using technology themselves, but mostly for research about mortgage products. Companies like Ethos, JMAC and Sindeo are aimed at the next generation.
"The mortgage industry does seem ripe for there to be some transformation," Carmel said.
As part of that change, Sindeo sees this as an opportunity to create the next generation of originators, Stamos noted. The company wants to create a career path that makes the mortgage industry attractive to recent college graduates.
"This industry is ripe for change and improvement and we've assembled a leadership team from a variety of other places" that changed those industries. Now they are working on putting consumer in front and center of the process, Stamos said.
Sindeo recently closed a $5 million round of funding, which was proceeded by a $1.5 million seed round. Among the new investors is Renren, the largest real name social media networking site in China; its co-founder and COO James Liu joined the Sindeo board.
Another investor is Arkadi Kuhlmann, founder and CEO of ZenBanx and before that founder and CEO of ING Direct. He is also joining the Sindeo board.
At this time Sindeo is only licensed in California, but Stamos said it plans to operate in between 10 and 15 states by the end of 2015.
It is that end-to-end service philosophy that its management feels will be the biggest differentiator for Sindeo in the highly fragmented origination business.
"We're a mortgage marketplace that's providing technology and access to a lender network to help a consumer to make the best, informed decision and ultimately close on their loan with us," Stamos said. "The problem isn't that there aren't some good lenders that provide good programs, good service and good pricing. The problem is for you as a consumer to figure that out is very, very difficult. That is the bridge we're looking to provide."