Mortgage "SPAM" is the junk e-mail marketing approach of my industry, the mortgage lending business. As owner of AMC-TradeMark Financial it pains me to see the direction our competitors are taking with their marketing. The effect is an overall diminishing respect for mortgage professionals in addition to increased confusion of the general consumer. My purpose for writing this is to help explain why you are being "spammed" so that you understand what to do with these e-mails.
"Click Here to save over $200 per month on your mortgage"
To understand why you are bombarded with mortgage spam in your e-mail inbox, one must understand how the spammer makes money. Leads of interested consumers for a company's products are valuable. Even more so if you, the consumer, took the time to complete some data entry for more information. Thus there exists companies who gather information from on-line consumers with the sole intent of selling that information. These companies are called information brokers and they abound for all types of services and products. Get any e-mail for Viagra? Guess what, it isn't coming from Pfizer, the company who makes it. Instead, there is an information broker who is gathering your information to sell to someone interested in talking to you about selling you Viagra or other substitute products. Information brokers don't make a lot of money per response which is why they send out literally millions of emails.
In the most abusive use of spam, your response to any e-mail or pop-up could be used simply to collect data about you. Your response validates that your e-mail address, out of the thousands they sent their spam to, was received by a real person. Like ordering anything from a catalog guarantees you 10 times the number of catalogs you get in the mail, responding to e-mail SPAM guarantees more SPAM. Never provide personal information like social security numbers, middle initials, or driver's license numbers via an on-line method unless it is a company you recognize and trust.
While there are misleading information brokers, there are legitimate companies who advertise up-front that they are information brokers. The most recognizable in the mortgage industry is Lending Tree (http://www.lendingtree.com/) who solicits potential mortgage borrowers on-line and through other advertising like television. Their website states that they are not a lender but pass on your data to up to 4 mortgage lenders who will compete for your business. In reality, mortgage companies pay large sums to sign-up with Lending Tree and then they pay a fee per lead. Our company looked into it in 2001 and were told the initial sign-up cost was $15,000 and that lead costs were from $15 to $35 per lead. As a consumer, you are putting your trust in the information broker to pick qualified, reputable, lenders to forward your information. There is no published information by lending tree as to their selection criteria for adding lenders to their "exchange" as they call it. They do provide a scorecard based on feedback from consumers but again, there is no guaranty your application will be placed with a lender who has a high score.
But don't you save money when lenders compete for your business like Lending Tree promises?
In an article on consumerreports.org posted April 2004 concerning the benefit of using an on-line mortgage service like specifically Lendingtree.com or E-Loan, they summarize their findings with this,
"when we checked the Web sites of local [mortgage lenders] to find out what they offered, we discovered that it is possible to find rates in your own backyard that are lower than or comparable to those advertised on the major mortgage Web sites."
The truth is that lenders are already competing every day for your business. Small local companies like ours provide excellent interest rates and fees because we don't have the marketing budget or other fixed expenses a large lender has to pay for. We have to offer competitive rates and closing fees in order to earn your business.
Another concern we have is the lack of service you get from an on-line lender. Companies like E-Loan and Lending Tree focus too much emphasis on the beginning of the loan transaction. Other than the interest rate and the fees associated with taking out the loan, on-line information brokers can't help you find a lender who will give you great service. In fact, most complaints about mortgage lenders revolve around how the closing of the loan was handled. Lenders who provide mortgage documents for closing your loan on-time, with accurate information and the interest rates and fees you were told to expect should be as important as anything else. Always work with a lender who will guarantee your closing costs at the time you lock in the interest rate on your loan. If the lender won't lock in your closing costs, how can you be certain those costs won't change when you get to the title company to close on your loan?
So am I saying that the internet is a risky and inaccurate way of "shopping" for a mortgage loan? Far from it! One truth does remain...education prevents people from being taken advantage of. Follow these simple steps when using the internet to shop for anything including a mortgage loan.
1) Don't reply to e-mail solicitations under any circumstances. If you spent all day yesterday looking for a new baby crib and get an e-mail today advertising baby cribs just ignore it. There is a much greater chance you are being scammed then anything else. Any discount or promise made by someone in an unsolicited e-mail will be honored if you directly contact the company and ask for it. If the discount was legitimate in the first place it will be honored. Con-artists can copy logos and make very realistic looking e-mails. Don't trust something you didn't specifically ask for.
2) Don't trust everything you read....even on-line. Shopping the internet for a product is one thing because you order it, pay shipping and taxes and you know instantly if the cost for the item was the same as advertised. However, any pricing for a service or intangible product is only an estimate. It can never be more accurate then a generalization. Use the internet with caution and awareness that what you see isn't set in stone and while you can "shop" for a loan on-line you shouldn't buy without getting more information
3) Specifically regarding shopping for a mortgage, I encourage you to meet your loan officer in person. There is very little chance you would select your child's orthodontist for $5,000 of braces without meeting them in person. Remember, getting a QUICK rate quote is super but you want service from the rate quote through to the closing.
Good luck and happy shopping!
©2006 Ken Stampe
Ken Stampe is a Mortgage Loan Originator, Mortgage Author and Mortgage Loan Officer Instructor living in Dallas, TX. Ken provided his first client a mortgage loan in 1996 and writes about home buying and mortgages to help clients make smart home mortgage loan decisions. Contact by email Ken@MortgageLoanDallas.com
What resource do SMART home buyers use?... Mortgage Calculator Bank.com
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