In the last three months, you may have seen advertisements from mortgage lender Quicken Loans encouraging online mortgage applicants to “Push Button, Get Mortgage.” Now, Internet shoppers can use a similar process offered by Quicken’s parent company, Rock Holdings, to “Push Button, Get Money.”
RocketLoans, announced by Rock Holdings on Feb. 2, aims to pre-approve borrowers for personal loans in less than 10 minutes, with funding expected in less than a day.
RocketLoans uses the same proprietary technology developed for Quicken’s Rocket Mortgage product, an online mortgage application launched in November that aims to pre-approve borrowers for mortgages in less than eight minutes.
“The launch of the RocketLoans’ platform, coming right on the heels of the very successful launch of Rocket Mortgage, has established Detroit as one of the nation’s fintech leaders, and an epicenter of financial innovation,” said Dan Gilbert, chairman and founder of Rock Holdings. “We have been able to leverage some of the best minds in both the mortgage and technology industries to create two distinct fintech breakthroughs that have, and will continue to revolutionize how people think about the process of securing mortgages and personal loans right here in downtown Detroit.”
RocketLoans mostly used for debt consolidation
Consumers can apply for loan offers up to $35,000 with interest rates ranging from 5.3 percent to under 25 percent. According to Todd Lunsford, CEO of RocketLoans and a veteran Quicken Loans executive, borrowers who apply for the loans average about 15 percent interest, and about 85 percent of them use the funds for debt consolidation.
Other borrowers use the loans for home improvement projects or to pay medical bills. The loans cannot be used to purchase homes. There is no penalty for early payoff.
“About a year ago, we assembled a team of folks to complement the needs of clients of Quicken Loans,” Lunsford said. “Until now, we didn’t have other loan products other than mortgages. The main catalyst for Rocket Mortgage was looking at the marketplace as a whole to determine what kind of product we could provide to folks who needed financing.”
RocketLoans has emphasized that despite the speed of the approval process, the company only offers loan options that each borrower qualifies for based on income, credit score and debt-to-income ratio.
A third-party, portal-to-portal verification process then uses 250 different data point checks to verify all aspects of the borrower’s credit profile, employment verification and asset verification.
“Although the RocketLoans technology will allow underwriting and funding with unprecedented speeds, there will be no erosion of quality,” Rock Holding stated in a news release announcing the product’s launch. “All loans are fully underwritten and clearly presented, without hidden fees or prepayment penalties.”
Critics fear history repeating, Quicken Loans says ‘no shortcuts’
The company’s statement challenged some of the backlash suffered by Quicken Loans in the wake of its Super Bowl 50 commercial for Rocket Mortgage, which featured the “Push Button, Get Mortgage” slogan.
Many media organizations and housing industry analysts criticized the ad for promoting the sort of laid-back conduct that contributed to the subprime mortgage crisis. The commercial was also lampooned by comedians and talk show hosts, as late-night funny man Conan O’Brien said he was worried that he may accidentally “butt dial” Quicken and unintentionally get approved for a mortgage.
Even the Consumer Financial Protection Bureau, in a rare, public, weekend appearance, took to Twitter to address the ad: “When it comes to #mortgages, take your time, ask questions and #knowbeforeyouowe,” the bureau posted.
“I think there is some confusion in the space because by saying we are making things easier for borrowers, it creates the perception that we’re taking shortcuts,” Lunsford said. “Those assumptions aren’t accurate. The reality is that the credit approval process, as far as who is eligible for a product, is no different than it is for someone who would walk into a bank to get a loan.”
Instead of a borrower having to collect a stack of documentation that may or may not be deemed acceptable for approval, “We have simplified the process by obtaining that documentation and proof on their behalf,” Lunsford said.
“We are looking for prime loan candidates. This is not a subprime product,” he said. “No one wants to originate loans that won’t be repaid. We do not present options to consumers if they cannot show they have the ability to repay a loan.”
RocketLoans is available in all states except Colorado, Iowa, New Jersey and Nevada. Rock Holding plans to roll out an “immediate funding feature” in March that will allow clients to receive funding for loans under $10,000 in minutes.
