Microsoft Enters Home Mortgage Business
Microsoft Corp., long known as a software developer and manufacturer, has decided to become involved in what for most people is the most expensive hardware purchase they'll ever make: a home.
The software giant announced today the formation of HomeAdvisor Technologies Inc., a new company that Microsoft claims will revolutionize the way homes are bought and sold, as well as shave weeks off the typical mortgage-closing process.
Steve Ballmer, president and CEO of Microsoft, also said that customers could save "up to $2,000 over the life of a mortgage" as a result of the lower rates and reduced closing costs provided through HomeAdvisor Technologies.
Ballmer announced the creation of the new company - which he described as "more of an IT (information technology) company than a direct lender" - in a press conference held in front of more than 100 of the country's leading real estate brokers, and the top executives of the companies which have invested in HomeAdvisors Technologies, Inc.
Ballmer said that the formation of HomeAdvisors Technologies, Inc. grew out of HomeAdvisor.com, and was the latest step in fulfilling Microsoft's vision, through the Microsoft Network (MSN), of creating the "Everyday Web," which includes "…building strategic partnerships to deliver the strongest services, information, and marketplaces for all MSN customers."
Although no set percentages were announced, Microsoft will, eventually, hold a minority interest in Home Technologies Inc., according to Bryan Mistele, head of HomeAdvisors Inc.
Additional partners with a vested interest in home financing were also been announced: Chase.com; Chase Capital Partners; GMAC-Residential Funding Corp.; Norwest Mortgage, (a Wells Fargo company); and, Bank of America. In addition, Freddie Mac (the quasi- federal mortgage investor) is said to have provided "significant technology contributions" to Home Advisor, and also has a financial (but not equity) interest in the new company.
Freddie Mac is one of the country's largest investors in residential mortgages, while Chase, GMAC-RFC, Norwest Mortgage, and Bank of America, represent more than $400 billion dollars in mortgage originations each year, according the Microsoft.
Microsoft says that HomeAdvisor will have strong ties back to its industry partners and parent companies in the form of commercial agreements for technology sharing and distribution through online and offline channels. A Microsoft spokesperson confirmed to Newsbytes that funding sources would only be among those companies which were members of HomeAdvisor's lending platform, but that membership - at an undisclosed fee - would be open to all, and not restricted to just equity investors in HomeAdvisor.
In addition, HomeAdvisor Technologies also announced today that it has acquired Tuttle Decision Systems, Inc., a mortgage technology company that enables HomeAdvisor's loan platform to provide risk- based, lockable loan rates from multiple lenders "more cost- effectively than those available anywhere else."
According to HomeAdvisor, the acquisition of Tuttle Decision Systems and its Electronic Services Platform will enable HomeAdvisor to link data capture, decision-making and underwriting engines, and third- party service providers to mortgage pricing in the secondary loan market. Tuttle's technology is claimed to link more than 800 mortgage banks, leading to funding more than $26.5 billion in mortgages last year.
In referring to the companies involved with, and within, HomeAdvisors, Ballmer said, "HomeAdvisor Technologies makes buying a home easier and more affordable, thanks to groundbreaking new technologies and some incredible partners."
The new company will consist of three divisions, each with distinct goals. Together, HomeAdvisor says that these three groups will form the nation's leading consumer and business-to-business real estate and mortgage e-commerce company.
The Transaction Platform Division will combine Microsoft technology with electronic loan decision making and processing software for credit, underwriting and property valuation to automate all aspects of the mortgage and real estate transaction. This platform will be developed and maintained by HomeAdvisor Technologies and distributed by the company's partners to banks, lenders, and real estate professionals.
A separate Productivity Tools Division will be established to provide real estate professionals with "tools essential for expanding their businesses profitably and better serving their customers while enabling industry professionals to fully utilize customized versions of the products developed by the Transaction Platform Division," according to Microsoft.
Mistele said that the goal of HomeAdvisor is to simplify the currently complex process of getting a mortgage, which, according to Ballmer, is essentially a business-to-business-to-consumer transaction.
The HomeAdvisor.com Web site will be the MSN's exclusive channel for home, real estate and mortgage decisions. Ballmer said it will help consumers with every aspect of buying, financing, moving into, maintaining, improving, and selling their home. This site will also offer the HomeAdvisor loan platform and plans to provide other new content offerings.
The availability to consumers of the HomeAdvisor loan platform on the HomeAdvisor Web site will occur in about a month, and there will be no usage fee. In the event a consumer wished to lock-in a rate the fee would be $75.
The HomeAdvisor Web site is located at http://www.homeadvisor.com.
Reported by Newsbytes.com, http://www.newsbytes.com.