I am sure that there are lots and lots of blogs out there about ".Com Lenders", so if no one reads this one it is OK, but I just wanted to share a recent experience I had with a Borrower. I got a call from one of the Realtors that I call on, and she wanted me to call one of her family members, because she was concerned about how they were going about getting pre-qualified for a loan. It seems that these young family members had decided to try to purchase a house and had not talked to her first about it. They had the right idea about getting pre-qualified and seeing what they could afford, but unfortunately they watch a little too much TV.
Like most young couples they still have a lot of lessons to learn in life. One of them is, talk to your elders before you make major decisions in your life, especially if those elders are in a related business to what you want to do. It seems that they had heard one of those ad's that tell you to call them because they will get you the 4 best quotes for a mortgage, have the banks compete for your business. It sounded good, they went online and gave ALL their personal information, and then the phone calls started. They got a few more calls then the 4 they were expecting, and they started to get concerned. That is when they talked to the person that they should have talked to first in the first place. Hearing what they had done this Realtor told them about the hazards of the ".com lenders", and told them that she was going to have me call them.
I did and as is always my practice, I want to look at the Credit Report, before I did any thing else. I asked their permission to run their credit, and ran the report. Knowing what they had done, I quickly looked at the number of inquiries. They had their credit run 16 times in a three day period. That means that at least 16 lenders had their personal information. Information that if it were to fall into the wrong hands, could have some very bad consequences.
It is mind boggling to me how this day and age of identity theft, people still so easily give that information. Hopefully they have learned a lesson, but how many people are exposing themselves to the same thing daily? Hopefully safe guards will be put into place in the near future to protect against this sort of things. But until then the best advice I can give is, protect your personal information, and stay away from the ".com lenders."
McCue Mortgage is a Connecticut based Mortgage Co., that specializes in first time homebuyers. However, we are equipped to service all homebuyer with many loan programs.
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I worked with a couple who were selling their home and buying another. I helped them with the mortgage for their new home and had a commitment letter issued in 5 days with the only condition being that they needed to sell their own home to close on the next property.
Their buyer worked with a .com lender and after 3 weeks pulled the application and went with another local lender who took 3 weeks to approve the loan.
Six weeks vs 5 days. My clients were fit to be tied. The buyers of their house pulled away from the internet lender due to the rate changing from what was quoted originally.
This situation caused way to much stress for my homebuyers
The only thing worse than .com lenders are the buyers who use their cousin in California ...or New York, Washington or anywhere else besides the state you live in. Cousin Vinnie and .com lenders are always a problem. You could probably do a whole series of stories on it.
I agree Phil, but then 5 days is the norm with McCue. It helps when the Loan Officers and Underwriters know what they are doing.
Linda I just lost a loan this week for a Borrower that I had Pre-Approved two weeks ago. Their Attorney friend advised them to use the .com that he has done business with, so of course they did what the friend suggested. The Realtor is pulling her hair out over this, and keeps on calling me. Lets see what could go wrong, does not close on time, money not there when it is suppose to. I am sure you can name many more than I can.
I disagree. .com lenders offer a great value proposition. If you have a lot of money for downpayment, know that your debt ratio is well within the guidelines, and want a 15 year fixed rate mortgage.
Well, that covers about 4% of the population today.
Brian you missed you calling, maybe you should be on "jokes.com" :>
I know, George; I'm the resident wise-ass.
Let me clarify this. Online mortage companies do have value, just like discount stock brokerages.
I would use an online mortgage brokerage but I have 12 years experience. They do provide a good value proposition for borrowers who:
1- are well organized and have all the documents they ned.
2- Are "pests' and will call the company daily for status updates.
3- Understand a bit about lending guidelines
You were right the first time Brian, that is maybe 4% of the Borrowers.
"Mortgage George"
I know I am late...I told you this was an excellent Blog.
Ahhhh! The woman's gift again. Why you even have a coveted gold star.
I am so happy for you. Keep up the excellent work!
TLW "The Lovely Wife"...Kum La Ka Lakka...ROAR!
TLW, what is a "gold star"?
"Mortgage George"
At the bottom of your post there is a little gold star.
Here on AR that is "The RainGods" seal approval on your post.
These gold stars are mean you have done well and the "RainGods" approve of your post!
It is a very good thing. Leave this post just like this for tomorrow it will give others a chance to learn more about "predatory .com lenders'.
Follow the link to translation of Active Rain Speak and get ready to laugh. See :>
TLW "The Lovely Wife"...Kum La Ka Lakka...ROAR!
Time for me to get to bed. I will see you in the AM. Goodnight. Sorry I was late!
Thank you for letting me know what it was, I didn't notice it. Now that I see it I am bowing down before "RainGods".
Have a great night.
"RainGods" if you are reading this, thank you for the star, my first one.
We haven't had the experience of .com mortgages. We usually use mortgage brokers or bankers with whom we have a relationship. It's a little scarey giving all that information online and not knowing who is on the other end in our opinions.
Jay and Linnea Hanley
.com lenders are a great source for a second or third opinion. I close plenty of out state loans each month and give my customers great deals.
One of my client had talked to a certain and well know on TV loan Center and they had good credit. Untill the loan ceter farmed out their loan to several bank. EACH of then pulled credit lowering their score.
A gold star means that we chose to "Feature" your post. That means it will appear on the front page of the site and the blog dashboard, well until more posts move it down the list. Basically it means we thought your post was deserving of a little extra attention.
Congrats on your first star by the way :)
Ohh, I'm a buyer's agent, so I understand just how scary .com can be. Linda, I agree with you that "that guy the buyer knows" can be even scarier than the .coms, but the one who scares me the worst is the ONE lender out of twenty who will put folks into pre-approval vs. the "you'll never believe the application I turned down today!" highlight reel at the reputable sub-prime lender convention. Brady, I think you know the file I'm talking about. Lions and tigers and lenders, oh, my!
I worked for a company that bought leads from the company you described and several others.
More often than not the people I called were shocked they were being called so many times - and didn't have the faintest idea of how their info got out!
It's sad that people are surprised by this - what did they expect?
I'm sure there are some good online mortgages, but relocation is the biggest part of my business, and I have had constant problems with them. They NEVER have been even close to getting a correct HUD.
Canton Real Estate
Good post George. I think there should be some clarification though. .com businesses from miles away where you have never heard of them but on tv before is one thing, but local companies that happen to have an online presence and the ability to "apply online" hold much more credability.
Scott
PS. Congrats on getting your first gold star! Putting together quality blogs on AR is what it's all about :)
Scott
.com lenders generally speaking seem to be less familiar with the requirements for specific states - often leading to situations where they may put the Buyer in potential breach for failing to meet timelines specified in contract.
With the ability to fun loans in over 40 states my company gives us the exact guidelines when dealing with a specific state. Some states are wet states or attorney states.
My husband tried to work with a bank on line but did better with a local bank.
Thank you Matt, for selecitng this blog, and for the explanation. I am still trying to learn my way around here.
Angela, that was a very expensive lesson to learn.
Rob, I still can't get over how easily people give this personal info without giving thought to the consequences.
I would be interested in hearing the story Michele.
Tha is amazing Marc, they give the info and then are surprised when the calls start coming in.
Jennifer, I have been told that by a lot of Realtors, hopefully the word will get around more and more.
I agree Scott, but those are not the .coms I am talking about.
Suzanne, people don't seem to realize what you said, and they also fail to realize is that, a lot of these .com lenders can not do some of the special loan programs available in some state, because they have to be an approved vender list.
If not a better deal, at least a more reliable deal Christine.
Thank you all for your comnent, and I look forward to reading some of you blogs.
This is a great post. And I'm glad to feel backed up when I talk with prospective buyers. One of the fist things I do is ask them to get pre-approved for the loan -- from a qualified vendor. I warn them about the risks of .com lenders -- but from the experiences I've heard about.
A big issue that I've heard about .com lenders is that the "promised" rate is conviently no longer available -- only hours before the buyers are expected to close, but they do qualify for "this new" rate. With only hours to decide either take a higher rate or lose the house, what do most buyers do? Take the higher rate -- a classic bate and switch.
I have heard these stories second-hand and never experienced them personally. Have to admit that I haven't worked with any .com lendors.
Thanks for adding more "fuel to my fire".
Toby
Toby, I have heard the same story from Realtors that I turst to be telling me the truth. This just happen to be one that I was able to see first hand.
George- If the credit report was pulled 16 times, how did that impact their credit scores ?
Excellent post - I have been warning my clients about the dangers of .com lenders and now have some extra fuel. Gracias!
Lauren, not having seen their Credit Report before this, I am not sure how much an impact it had. However, Credit Bureaus are supposed to assign a subscriber code to each type of business which lets them know who is pulling the credit. The theory behind this is that if a person is having their credit pulled by several Mortgage Companies within a short period of days, they are to assume that they are shopping around and not buying multiple houses. Therefore these multiple hits are supposed to be "Bundled" into one hit. That is what is supposed to happen, but there is no way of checking if that is what actually happens unless you know the credit score before these multiple hits.
My biggest concern with what happened to these young kids, was not the effect that it might of had on their credit, though that is a concern, but the number of people with all their personal info. Who knows whose hands it could fall into? Are these secured sites? How do they discard the info after they are through with it? That is my biggest concern.
Glad I could help Carl.
Sorry for being so late to the party on this one George. I tried to break my AR addiction. As you can see, it didn't work.
Anyhow, back to the issue from your posts and what I can remember in your comments...
.coms like the incident you described are "lead farms" and sell and resell information over and over again (which is why there were more than 4 phone calls to that borrower.) Regarding the situation, despite there being 16 credit pulls, as long as they were all pulled for the purposes of a mortgage, only one counted against them, that is to allow rate shopping.
Your point about ID theft and now 16 lenders have their information is a great topic. The more people who have it, the more likely they are to have their information lost.
Brian is right in that .coms have a purpose. If you want cheap, and you have the items Brian described, then they are OK, but you will not necessarily get the best mortgage for your situation, but it likely will be the cheapest (at least in service).
I would rather have a tooth extracted without the benefit of novacane than go through any additional .com loans. It's bad enough that there is no licensing , testing or certications in order to be a lender, but putting someone on the other end of a phone who was working at Home Depot last week, scares me to death!!
The last .com lender transaction I had, the appraiser did not show up until 10:00am on the morning of the closing. The papers were not released until 3:30pm for a 4:00 closing. Not a good way to do business.
Having griped and said that, I work with three different and outstanding loan officers who all have more than 15 years in the business. They are located nearby, have great products and thoroughly professional services.
I understand that .com lending will increase its' presence and share of loans in the future as more people use the Internet for more things. As long as I can, I prefer the personal contact and doing business with people who still remember what the word "accountable" means. Not some case number monitored by someone who doesn't really care if your loan closes or not.
Great deal on "cheap service" I like that Robert.
Dave, I am going to have to copy/paste your comment on your .com experience. That is a great one to share with my Realtors when the .com questions come up.