Archive for December, 2006

“Your loan request has been approved” and other incredibly annoying mortgage junkmail.

December 22, 2006

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“Your loan request has been approved.

Thank you for your loan request, which we received yesterday, your refinance application has been accepted.  Bad credit OK, we are ready to give you $320,000 loan, after further review, our lenders have established the lowest monthly payments.  Approval process will take only 1 minute.  Please visit the confirmation link below and fill-out our short 30 second secure web-form.

http://www.ifyouclickthislinkyoumustbeanidiot.com”

Ok, I take it back, so you may not be an idiot to have clicked the link in the email, maybe you’re just curious . . . like me.  So, for the sake of my clients and blog readers (and curiosity), I went to a completely different computer in my house and typed in the link from one of my many “Accepting your application” emails.  Expecting the worse — assuming that my computer would immediately lock-up and blue-screen while a villainous laugh bellowed through the speakers — holding my breath as I cautiously hit the enter key, I was relieved that the link led to what appeared to be a mortgage company’s website.

I am sure that you have probably received an email with similar information — junk-mail by email, or spam email, sent out from some person or computer hoping to drive clicks and traffic to their website. 

From this apparent mortgage-company website, and many others like it, you can fill out a request for financing.  So what happens once you hit submit?  Well, that depends.  For a large number of sites, once the form is completed and the information sent, you are not a potential client, you are a sell-able lead.  Your lead information can be sold to one (or multiple) mortgage companies.  In most cases, the company with the website does not even offer or have the capacity to offer mortgage financing. 

This is the same original model (although much more dressed up) for LendingTree.  You fill out an online form for a request for financing, and you get multiple offers from different lenders.  LendingTree would (and I assume still does) charge lenders a hefty-fee to be part of their referral network.  And in the majority of cases (as far as I can tell from reading their website), they do not offer any kind of financing.  From their website, “LendingTree, LLC does not make loans or credit decisions in connection with loans, nor does LendingTree, LLC issue commitments or lock-in agreements.”  (To their credit, they do mention information about sometimes placing loans with an in-house wholly-owned subsidiary, licensed mortgage lender/broker – LendingTree Loans.)

So . . . assuming that you do not have millions of dollars in marketing money, but you want to establish a similar business model . . . what do you do?  You want people to fill out “requests for financing” so that you can sell that information and create a referral network, what do you do?  I guess you send out millions of emails telling people that their loans have been approved, that their refinance application has been accepted and that you are ready to give them $348,000 after a 1 minute conversation — hoping that a few click-happy consumers will fill something out (why someone would give intimately personal financial information through a junk-mail click is befuddling to me but I will resist the urge to go down that path), and then you sell that lead to a mortgage company for $9.  Well, if you were unscrupulous enough to send out millions of mortgage junk-mail, you’d probably sell the information to 10 or 20 mortgage companies and make $180.

So, the moral of the story . . . 

One, if you do click the links you find in mortgage junk email, never give out personal financial information.  Personal financial information should never be given online without first checking where that information is going to be sent (and to whom it will be sold).

Two, if you do click (which I did), try filing out the opt-out request (I mean, they already have your email address, right?).  To that point, I am shocked — I nervously filled out the opt-out request on the mortgage-lead generating site that I went to yesterday, and to my surprise, this morning I have NO offers or congratulatory emails!  We’ll see if it holds up . . . maybe the spammers are off today for the holidays.

Three, if you are lacking in your financing options, and you want personal, professional mortgage advice, ask your Realtor for a recommendation, call a friend or a co-worker for a recommendation, or ask your financial planner or insurance agent who they have used or recommend.  On the other hand, if you want to be bombarded with lots mortgage information and with phone calls and emails from people you don’t know, go to any one of the many mortgage-lead-generating websites fill out your information and hold on tight.  And in the words of a client of mine, who had already gone through the pre-qualification process with me and simply wanted to do some “checking-around” in her shopping for a mortgage to make sure that she was getting a great deal, you might also be saying . . . “Jeffrey, I accidentally called LendingTree.”

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A Christmas Eve closing.

December 13, 2006

Unfortunately, I can not take credit for this entry.  One of my friends in the business sent this to me, and it was just too good not to post for all to read. 

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A Chirstmas Eve Closing

‘Twas an hour before closing and the agents were tense,
to close Christmas Eve just didn’t make sense.
But the seller was booked on a 6 o’clock flight
and he warned “THERE WILL BE  A CLOSING TONIGHT!”

The agents agreed because business was dead,
and visions of commission checks danced in their heads.
  The loan was approved by the lender’s good grace,
Everyone knew ’twas a borderline case.

The buyer’s divorced, remarried again,
Divorced once more, and now were just friends. 
The loan package complete to the closer was carried,
With instructions to close before they remarried.

The title policy arrived via UPS,
From page One through Sixteen, a terrible MESS! 
An improper legal, 3 judgements, a lien,
But a few lines on page seven, looked pretty clean.

The title was cleared and the closing was set,
But to finish today was not a sure bet. 
The closer dashed in waiving her HUD, 
It was covered with whiteout, coffee and crud.

But down in the corner you barely could see,
that the buyer still owed a buck-thirty-three.
  So the closer extracted a bill from her compact,
And the agents agreed to the rest on the contract.

To add some interest, the seller revealed,
to everyone’s horror – the well wasn’t sealed.
  And, oh yes, he wanted to change the disclosure,
His mother just died of RADON EXPOSURE!

Everything else in his house was O.K.,
(his cracked floors and walls were always that way). 
About that time the buyer chimed in,
“We’d like to continue, but before we begin,
I noticed these papers – I’m likely to blame,
But I gave my agents the wrong legal name, 
And one more thing I had hoped to avoid,
Does it really matter if I’m self-employed?”

About this time the closer exploded. 
She pulled out a gun and said it was loaded. 
Everyone froze and sat there amazed,
She frothed at the mouth and her eyes were both glazed.

More rapid than eagles, her curses they came;
she bristled and spouted and called them BAD names. 
“THE CLOSING IS OFF, DO I MAKE MYSELF CLEAR? 
MERRY CHRISTMAS TO ALL — NOW, GET OUT OF HERE!”

— Author Unknown

“do you understand . . .”

December 8, 2006

It is interesting how consumers (have to) approach the mortgage process. 

I see my role in the process as one of providing advice.  I want to make sure that I help people get the type of mortgage financing that is best for them (based on their payment needs, qualifying issues, etc).  For obvious reasons, that process involves me giving them a lot of information and numbers as to their options.  And because loan programs and financing options are constantly changing, I try to take my clients through a short interview process to find out about their financial goals and objectives.  It is really just simple sales strategy . . . ask questions, listen to what the customer needs and wants, then present solutions to compliment those needs and satisfy the wants. 

Generally speaking, from a consumer’s vantage, there is a growing skepticism of mortgage brokers.  When you take that initial cynicism and add it to all of the ‘other voices’ in the mix of getting mortgage advice — well-meaning fathers, over-protective mothers, financial planners, talk-radio personalities, uncles-that-used-to-be-in-real-estate, neighbors who just got a so-and-so type loan, all the way down to the co-worker who claims he got ‘rooked’ into a terrible loan that has a high interest-rate with a big pre-payment penalty (which he blames mostly on the loan officer, forgetting to tell you that at the time he got the loan he had a 500 credit score – not good — no money to put down, and had recently had his car repossessed) — add all that noise to the mix of trying to get a mortgage, and at times, my advice becomes another voice in the crowd. 

I think some consumers have the perception that maybe mortgage brokers have some hidden agenda — like a car salesman (the analogy hurts, it does), in that I might make more commission if I sell a customer an adjustable rate mortgage instead of a 30 year fixed rate mortgage.  As if I were to say (slick hair and bad suit) “What can I do Mr. and Mrs. Smith to get you into a 1 month MTA-loan today?”  Some of the industry’s reputation is likely deserved (bad apples).  I spoke to a past client who had just received a phone call from a telemarketer trying to sell them on a 2nd mortgage.  He has great credit and a good equity position in the house and the telemarketer offered him a second mortgage at 12%!!  After he gasped and told her that the rate was terrible, she immediately changed her quote to 9.75% . . . a few comments later, down to 8.9%.  For perspective, he and I talked about a possible second mortgage at 7.25%.  All that to say, some of the skepticism (and maybe even the car-salesman analogy, ouch again) is probably justified.

Just so you know, from my perspective, I have no preference what type of loan someone chooses.  I make about the same commission regardless of the type of loan a client chooses. 

Being one of many “voices” in the crowd, I do my best to educate my clients, present all of their options and them let them choose the option that best suits what they need (and what they want).  Sometimes the whole situation makes me laugh.  I was speaking with a client about his options and mentioned the idea of an interest-only mortgage.  He was putting a sizeable downpayment on the property and was mainly getting the mortgage to pay some tax deductible mortgage interest — a great person to consider an interest-only option mortgage.  “No, not interested.  Not at all.  Not interested in any kind of adjustable rate mortgage.”  I can respect that (being conservative).  So I gave him a few highlights on an interest-only ARM and why it might be something for him to consider, but we quickly moved on to talk of 15 and 30 year fixed rate mortgages. 

The next day, the phone rings.  “Jeffrey, I talked with someone yesterday who says that I should consider an interest-only mortgage.  Do you offer those types of loans?”  ha.  You just have to smile and laugh a little.

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“Do you understand the words that are coming out of my mouth!?”

aside: did I just think (and post) that Chris Tucker thing out loud (in writing)?  Oops. 

So my advice . . . be open to advice.  The mortgage industry is constantly changing and new programs are constantly being added to the market — find out your options, ask a lot of questions, crunch the numbers and then do your homework.  Secondly, weigh your advice.  In other words, your parents, who have only been through the mortgage process three times in their entire lives, or your uncle who did mortgages 25 years ago, or your neighbor who just bought the latest mid-night infommercial real-estate DVD, may not be the best source of information when it comes to getting a mortgage.  Is it good to get their advice? sure (except for the neighbor, maybe); but to follow it?  Well  . . .  along with the counsel of your mortgage consultant/mortgage broker/loan officer/mortgage guy . . . that’s for you to decide.