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Blogger The Notorious R.O.B. writes on the beginnings of a 'web-centric' model for real estate.

Can you patent a "computer-implemented system for enabling borrowers to anonymously shop for loan packages offered by a plurality of lenders"?

Sure you can -- if you're willing to stick with it for six years. Ask Jeff Lazerson, the founder of Mortgage Grader Inc.. He's just been granted U.S. Patent 7,366,694 for "an improved way for borrowers to shop for financing" over the Internet, whether it's a mortgage, a car loan, a credit card or a line of credit.

From the patent:

"...the present invention may be regarded as a method for reducing predatory lending when a borrower seeks financing. Personal information is obtained and recorded regarding the reasons that the borrower wants to obtain the financing. Loan evaluation information is obtained and recorded. ... A credit grading is determined for the borrower based on pre-established and objective criteria, the personal information and the loan evaluation information. The credit grading is performed by an entity that is not loaning money to the borrower."

Jack Guttentag recently "kicked the tires" at MortgageGrader.com, agreeing that Lazerson's system eliminated "all possibility of opportunistic pricing." While the site didn't always find the cheapest loan, it was in the ballpark in the comparisons Guttentag ran with "Upfront Mortgage Lenders" -- Guttentag's definition of online lenders who provide the information borrowers ned to comparison shop. The Mortgage Professor found the large amount of data MortgageGrader.com users are required to enter "irksome," but noted that should also improve the site's accuracy and reduce the liklihood of an adjustment later in the process.

Lazerson tells Inman News the next step in the evolution of MortgageGrader.com will be to completely automate rate locks and loan approvals, eliminating the loan officer and origination fee altogether (folks using MortgageGrader.com today pay a flat fee of about one point, or $2,000 in broker and processing fees on a $200,000 loan). We've also written about a sister site, FairClosingCosts.com, which Lazerson says will allow consumers, real estate and mortgage professionals to shop for settlement services.

Stay tuned to Inman News for a look at mortgage search tools that let consumers see wholesale loan prices and fees charged by originators.

If you haven't joined the debate over HUD's proposed changes to the Real Estate Settlement Procedures Act (RESPA), you've got another month to dive into an issue that could transform the way real estate is bought and sold. At the request of the industry -- backed by a letter signed by 148 members of Congress -- HUD has extended the public comment period on its proposed changes to RESPA from May 13 to June 12 (see story).

On March 14, HUD proposed simplifying loan disclosures and creating incentives for packaging settlement services like title insurance with mortgage loans, which the department estimated could save consumers $8.35 billion a year.

The last time HUD tried to tinker with RESPA, there was such an uproar over packaging that HUD was forced to withdraw its plan. After holding industry roundtables and conducting extensive consumer testing of simplified disclosures, HUD came back almost four years later with a new plan that includes more subtle incentives for packaging (HUD is no longer promising there will be a "safe harbor" from prosecution under RESPA's anti-kickback provisions).

But those and other aspects of the proposed RESPA rule change (including lengthy scripts to be read at closing) have stirred up serious debate. To get a taste of where some people stand on the issues, check out the RESPA reform group in the Community section at Inman.com.

You'll see that some see HUD's proposal as an opportunity for settlement services providers like title agents who want to compete for business by offering consumers the best services and price -- as opposed to wooing industry professionals who can generate referrals for them, such as real estate brokers and builders. Supporters tend to agree with HUD's analysis that the rule changes will encourage homebuyers to shop around for settlement services, and there are already some Web sites cropping up to help them do just that (see story).

Some folks in this camp are worried that industry giants who like the way business is often conducted today -- between real estate professionals, instead of between settlement service providers and consumers -- will succeed in shooting down HUD's latest attempt at "RESPA reform."

But others fear the rule changes could slam the door shut on small, independent settlement services providers. Lenders, they say, will be more likely to make package deals for settlement services with big companies or steer homebuyers to affiliated businesses they have an ownership interest in. Instead of saving consumers money, some critics say, the rule changes will help bigger players boost profits at the expense of small, independent companies.

The American Land Title Association, which has drawn up a laundry list of issues its members have with HUD's proposal, helped organize the push for an extended comment period.

ALTA says its Web-based "action center" helped generate nearly 3,000 letters to members of Congress, asking that the public comment period to be extended by 60 days (which, with the November election fast approaching, might have left the issuance of a final rule up to the next administration).

The members of Congress who drafted the letter to HUD -- Representatives Ruben Hinojosa, D-Texas, and Judy Biggert, R-Ill. -- organized a similar campaign in 2004 that eventually resulted in HUD withdrawing its proposed rule change (a Hinojosa aide said at the time the goal was to allow for public comment, not to kill HUD's RESPA reform efforts).

Back in 2004, Hinojosa and Biggert convinced 226 lawmakers to sign a letter to the Office of Management and Budget, complaining that HUD had issued a final rule without an opportunity for additional public comment.

This time, 148 members of Congress signed a May 5 letter asking HUD to extend the comment period by 60 days. Democrats outnumbered Republicans 84 to 64, and prominent Democrats who signed the letter included Dennis Kucinich, Rahm Emanuel, Maxine Waters, Barbara Lee and Jesse Jackson Jr.

While HUD agreed to an extra 30 days of public comment (rather than the 60 requested), Deputy Secretary Roy Bernardi insists HUD remains committed to finalizing a rule before President Bush leaves office.

ALTA CEO Kurt Pfotenhauer said in a statement that while the group "would have preferred a 60-day extension, we will use the time allotted to conduct a more thorough review of the proposal and its impacts on the title industry in order to provide feedback to HUD that is meaningful and helpful."

After checking out the cool ways people are using the "Technology, Tools and Tidbits" group on the Community page of the new Inman site last week (see previous post), I decided it would be fun to create a new group on RESPA reform (OK, maybe not FUN -- nobody is quite that dorky -- but useful and informative, perhaps).

If you haven't been following RESPA reform, you might want to start keeping tabs. The proposed changes to the Real Estate Settlement Procedures Act -- if they ever see the light of day -- have the potential to change the way mortgages, title insurance and other settlement services are marketed to the consumer.

Drop by the new RESPA reform group, check out the links I've provided to get the discussion started, and join in.

When the market gets tough, many people look for ways to cut expenses so it's no surprise that tech videocaster extraordinaire Chris Pirillo presents the idea of conducting a real estate transaction without an agent in a recent episode.

Todd Carpenter, a mortgage industry insider and blogger at Lenderama, suggests a real estate agent should step in and debate the tips presented in the show.

Couple of issues here:

1. As Dustin Luther points out, the tech crowd approaches the real estate transaction differently -- they see it as an inefficient transaction that could be made more efficient through technology. (I actually think this feeling goes beyond the tech crowd.) And thus was born many sites like Zillow and Trulia. Ask any newer online real estate company what sparked its birth and you will inevitably hear a story along the lines of "When I bought my first house I thought it was an inefficient process and felt that more information needed to be available to me."

2. In the so-called information age where a lot of real estate info such as listings and valuations are readily available, younger consumers will need to understand more of the agent's value proposition beyond information gatekeeper. It may seem like we constantly go through this back and forth of consumers questioning whether they need an agent or not -- and some may be fine on their own -- but isn't that a symptom of folks not getting how an agent could help them? Or, this may even be based on subpar experiences with agents they've transacted with in the past.

So agents, here's your chance to explain the value to a group of young techies. Have at it.

Zillow and Expedia founder Richard Barton is the founder and chairman of the board for a new startup company that is based in the San Francisco Bay Area.

GlassDoor.com is "led by ex-Expedia and Microsoft executives (who) have a history of using new technology to rewire old industries."

And according to the Web site, these execs are "not saying too much about what we're working on right now, except that we think it's pretty unique and going to be a lot of fun to build." Company officials' pre-launch silence about Zillow seemed to generate a range of buzz, debate, worry and even anger among real estate industry professionals about that company's likely business model ... wondering if that will be the case here.

GlassDoor is the latest in a series of "Door" Web sites -- there's a neighbor/neighborhood site in private alpha at fatdoor.com (see previous post), and then there's HGTV-affiliated real estate search and information site FrontDoor.com (see recent news story).

By the name GlassDoor, can we assume that this new site has something to do with transparency?

UPDATE: According to this news item at Private Equity Hub on March 27, GlassDoor doesn't appear to have a real estate industry focus. GlassDoor is described as a "social networking company focused on employment conditions in the workplace." And the company has just raised $3 million in a Series B round of financing, led by Benchmark Capital.

If you subscribe to Seth Godin's "Be Remarkable" school of marketing, you might find this interesting: A real estate brokerage company in Colorado has branded itself around the idea of using bicycles to tour homes for sale. Pedal To Properties, based in Boulder, was founded in an effort to "combine health and home," according to the company's Web site.

Founder Matt Kolb says the biking service is optional and can be requested at any time.

Whether clients actually use the bike option seems not to be the point. Rather, the company has made itself stand out to health- or environment-conscious consumers and has conveyed one of its core values to these prospective clients by focusing the brand on it.

Pedal To Properties is offering licensing of its model to agents throughout the U.S.

(Hat tip to Territory RE Blog)

Back in May, InmanBlog directed readers to a book by Daniel Gross, "Pop! Why Bubbles Are Great for the Economy." 

Gross says that the benefits of new technologies or innovations that often drive bubbles outweigh the pain that's created when they collapse.

When that post ran, many mortgage lenders had gone bankrupt or were in deep trouble, but many observers did not appreciate the full extent to which problems in mortgage lending could threaten the financial system and the global economy itself.

If losses related to mortgage lending hit $400 billion, the leveraged nature of those losses could lead to a $2 trillion cutback in lending, triggering a "substantial recession," Goldman Sachs economist Jan Hatzius said last week.

So on the off chance that we now must look for the silver lining in a national or global recession, rather than a just a collapsing housing bubble, InmanBlog now directs you to "17 reasons America needs a recession" by MarketWatch's Paul Farrell.

Writing from Arroyo Grande -- wine and cattle country on California's Central Coast -- Farrell says a recession will "reverse the dollar's free fall and revive our global credibility," and "expose Wall Street's shadow-banking system."

There are 15 other "benefits of a recesssion." I'm guessing nobody who ever signed onto a risky neg-am mortgage loan ever imagined that they might someday help "trigger an internal recession in China," motivate Congress to "get serious about the coming Social Security/Medicare disaster" or "stop the privatiziation of our federal government to no-bid contractors and high-priced mercenary armies fighting our wars."

I don't know. I think Gross makes a lot of sense, but Farrell wants to take economist Joseph Schumpeter's concept of "creative destruction" -- that bulldozing obsolete firms makes way for new technologies and businesses -- and apply it to the entire economy. 

He's corralled a whole herd of prospective benefits into this column to make his case. But do we really have to go through a recession to "force Washington (D.C.) to get honest about how its going to pay for our wars" or make the "energy and auto industries ... get serious about emission standards and reducing oil dependency"? 

It does make you wonder, however, if there's an analogy for the real estate business. What innovation and new business models helped drive the housing boom, and which ones will survive? Is there an element of "creative destruction" to the downturn, or is it just plain old, destruction? 

LAS VEGAS -- Swapee.com, a marketplace for home owners who seek to simultaneously sell a home and purchase another home, launched this week during the National Association of Realtors conference.

"Many people are not buying homes today because they can’t sell theirs. This means that the majority of the buyers out there are also sellers and can’t purchase a property until their current property is sold," according to the Swapee Web site. "The concept is simple. With Swapee you now have an online match service of real estate. Real estate owners may now trade their property for others that fit their criteria."

Josh Call, a real estate broker in Gilbert, Ariz., who created the site, said that the site will enable real estate agents to place contingencies in sale contracts to simultaneously close on the same date. He also said that real estate agents participating in the deals have the potential to double their commission income by working in both the sale and purchase transaction in a property "swap."

When you hear "bubble market," do images of Miami condos pop into your head?

A real estate broker working with lenders to value foreclosed properties in Miami estimates that 70 percent of the condo sales in one 43-story, 643-unit building during the last year and a half may have been questionable, Reuters reports.

Glenn Theobald of the Miami-Dade Police Department is heading up a county mortgage fraud task force. He tells Reuters that properties that didn't sell when they were listed for $450,000 were pulled from the market and then closed for $800,000 or more.

Regardless of how many of the sales may have involved fraud, the Club at Brickell has the highest number of foreclosure proceedings among any single property in South Florida, the story said. Properties like these may be headed for the auction block.