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Consumers Open to Wal-Mart and PayPal Mortgage Options

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One in three U.S. consumers would consider a mortgage loan from Wal-Mart, according to a new study released today.

The consumer mortgage study by Carlisle & Gallagher Consulting Group also found that nearly half of respondents would consider a mortgage from PayPal.

North Carolina-based Carlisle & Gallagher (CG) provides consulting services for some of the largest U.S. mortgage loan originators. The online study results were based on 618 consumer responses in September and asked about views on homeownership, changes in the mortgage industry, applications processes and alternative mortgage providers.

The survey found that 80 percent of American consumers would consider a mortgage loan from a non-bank. Although 70 percent of consumers would prefer to have their mortgage with one of their main banks, currently, only 39 percent of respondents current do.

While consumers satisfaction with primary banks ranked at 81 percent, survey respondents cites frustrations with the current process — one main drive towards alternative mortgage loan providers. The top three issues respondents have with their current home loan are high interest rates, high payments, taxes and escrow.

Over half, 56 percent, said slow execution was the most painful aspect of the process. 

Doug Hautop, Lending Practice Lead for CG, told loans.org that banks could increase the mortgage business “if they address the voice of the consumer.”

He said that “consumer attitude is driven by three things: price, service and trust,” and that institutions must focus on customer values rather than asset segmentation.  

Wal-mart Stores Inc. currently offers small business loans at its Sam’s Club locations, but it does not offer mortgages.

"Wal-Mart is committed to offering Americans affordable access to everyday money services and does not have plans to provide mortgages," a Sam's Club spokeswoman told loans.org.

PayPal Inc offers credit lines for customer purchases, but has not announced any plans to expand into the mortgage loan business.

While the two forecasted lenders do not currently provide mortgages, the survey was conducted to prepare for a potential shift from refinance back to new purchase mortgages.

“For banks the new normal of the industry includes risk and regulatory response,” Hautop said in an email. “CG wanted to make sure we were taking into consideration the consumer’s wants, needs and point of view and what needed to be changed in the industry — looking beyond today’s regulatory focus.”

A new department of lending can open up if lenders embrace the change. Hautop said banks must leverage investments in regulatory response designed to improve the customer experience and improve processes.

Fifty-three percent of consumers said that a mortgage loan is their most important, and most complex, investment. While the survey results connotate a shift, Hautop said that existing lenders and banks still have a lead in the field because “obtaining a mortgage is not as easy as buying flip flops and a load of bread.”

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