Good Customer Stats
According to one study, nearly 30% of all Walmart shoppers have an annual income between $50,000 and $99,900. In addition, the study says, more than 20% of its customers were born between 1982 and 2002.
Demola says those Lenders One members with space in a Walmart may visit their customers and potential borrowers off-site, too.
“That depends on what the borrower wants,” he said. “There is nothing prohibiting them from meeting off-site, which is common for business.”
As for how mortgage originators affiliated with Lenders One for this program are compensated, Demola said, “That’s up to each individual member strategy/policies and applicable employment law in their states.”
Of course, that Lenders One is able to set up shop in Walmart prompts scrutiny. For example, what does one of the country’s most successful businesses get in return?
Demola provided his view of the relationship.
“Walmart is only leasing us space,” he said. “They’re the landlord, we’re the tenant. They’re not making any money on a per unit basis or anything like that. They are a complete landlord, and we’re paying them monthly (for the space).”
When asked if there was anything special or unique about the arrangement, Demola said, “One of the things they did to vet us was ask about how we can help create value for their customers, whether it’s on the cost side, the service side or on the education side.
“We’re going to give the Walmart customer the best deal we can give them for their particular situation,” he added. “We’re also going to educate them and given an exceptional level of customer service.”
And what does that mean?
“One of the things Walmart requested is homebuyer and credit education for their consumers,” Demola said. “So that’s part of what we’re doing. We’re working with them (Walmart consumers) to understand credit and the way credit reporting works, how to purchase a home, how to save for a home and how to maintain a home.
“This is boots on the ground, face-to-face, true personal relationships to help them get into homes,” he said.
But as Michael Moebs, who 40 years ago started Lake Forest, Ill.-based Moebs Services, a financial services consulting firm, and has worked with Walmart executives, sees it, there’s another reason the retail giant is interested in working with Lenders One.
“Walmart’s thrust has always been cost reduction,” Moebs said. “They’re cost-conscious and they want to bring this (the cost of a mortgage) down.”
When told about Moebs’s view on the Walmart arrangement, Demola demurred.
“I can name 15 different characteristics that affect pricing of a mortgage transaction, so it’s very hard to say specifically, yes, there’s going to be a cost advantage to a (Walmart) consumer. It may be. It may not be. I’ll tell you if go to Quicken, you’re not getting the best rate. But their service, their technology, their marketing and their advertising gets them some of their deals.
“I know I’m being a little cagey on it, but there’s a lot that goes into a mortgage transaction,” Demola continued. “So, while it’s about cost for Walmart’s regular products, mortgages do not necessarily fit into the same bucket as the hard goods they sell.”
But how will Lenders One measure success with Walmart?
“It’ll be based upon the number of mortgage applications and closings and, like any business, our members need to make money,” he said.
Demola did mention that consumers in some Walmart locations may need more help than at others, which has been explained to those companies making up the Lenders One cooperative.
“These may be higher touch transactions,” he said. “This is not someone calling in one time, giving an application and closing 30 days later.
“This could be three, four, five, six or 10 conversations (with the same person) over a six- or 12-month period,” he continued, “before someone is ready to pull the trigger and be mortgage-ready.”
Demola says they’ll need to know the consumer demographics of each Walmart store.
“Obviously, Orlando may be a little different than somewhere in the middle of Texas,” he said. “We’ll probably have some FHA and USDA loans come through the system.”
When asked if the contractual details with Walmart allowed the cooperative to only place Lenders One locations in their stores, Demola refused to answer the question, saying, “I’m not going to discuss any details on the deal.”
As to how the arrangement with Walmart and Lenders One came about, he said, “Walmart had an [request for proposal] out there and we were brought together by a third party,” which he wouldn’t disclose.
Walmart would not return phone calls and emails inquiring about its relationship with Lenders One.