After reading a recent blog, I was compelled to write about my own personal lending experience.
Following the military, I moved to a new town, bought a new home and started a new career as a loan originator. When I left the military, me and my wife purchased our home using a NO DOC loan because we both had no history of commission income. Thank God our credit scores were high enough!! (This will come into play later.)
About a year after we purchased our home, we decided it was time for some new furniture!! So we went through a local furniture store and financed everything through a 12-month same-as-cash plan. In order not to overburden our credit, we decided that we would split the financing - some on my credit and the rest on hers.
At the end of 12-months, we decided to go ahead and consolidate the remaining balance into a joint account. (This is where the fun begins) The company we financed through is VERY well known - along with their consumer financing they do mortgages as well.
The representative called me to make an appointment and to also offer me a "special" refinance deal to consolidate all of my debt. We of course being curious said, "Sure, we'll see what you are offering."
At our appointment, the representative made his pitch: refinance the current mortgage (which was an adjustable rate mortgage) and pay off our debt using the equity in our home. When we looked at the paperwork, he was offering another adjustable rate mortgage (not a 30 year fixed rate) and he was charging 3 points in origination, plus the rate was higher than what we had with the NO DOC loan. Of course the representative knew we were both originators, yet still presented his deal like it was the best thing since sliced white bread. A very good salesman he was!! Thank God we knew better....
To make a long story short, of course we did not take the deal! We eventually refinanced ourselves through our own mortgage company into a 30 year VA loan after we had enough time of commission history.
Now.... We can say that mortgage brokers are bad, and yes some are (and were). But this company rhymes with SMELLS ESCARGO. Now how many unknowing consumers took this deal just to get duped by a "brand name, household named" company??? These types of acts are across the lending spectrum with many MAJOR lenders. As a matter of fact, I worked for a local MAJOR bank for a span and there was a loan officer "on board" that did the same thing - well at least when she could get away with it.
So you can see, that regardless of where you go - I think it's really up to the individual that your working with that will either help you or scalp you.
Of course this can easily lead into a discussion about predatory lending practices or even the sub-prime meltdown. But the fact still remains, every company played a part in this - from banker to mortgage broker.
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