Applying for a mortgage online - be careful

Real Estate Technology with Content, coding, marketing, host.

Know who is getting your application

Applying online for a credit card, car loan or home mortgage probably doesn’t work exactly like you think it does. In fact what you probably do not know is the company accepting your “application”, especially for home mortgages, is not a lender or broker at all. They are simply a lead generation company.

Online Mortgage Rate QuotesMortgage lead generation companies soared during the boom. A large number of solicitation calls answered by brokers and small lenders consisted of someone from one of the myriad of lead generators and resellers which sprang up almost overnight. Without indicting any companies some of the largest have been the guiltiest of tactics which have harmed applicants and companies alike.

During the early part of the first decade lead generation companies worked like Wild West snake oil peddlers and far outside of any regulations. Even today they are still allowed to participate in practices which are in a gray area at best.

Luring in the unsuspecting applicant by advertising interest rates far below what major lenders and banks are truly offering they tempt the shopper into giving their full information in the form of a loan application. What the applicant may not realize is the website they are using goes to a lead generation company and not a lender at all. There is no mortgage professional on hand to actually make the decision.

Immediately upon completing the application the name and location of the applicant is published along with a brief description of the loan needs. Database access is given to the highest bidders who pay anywhere from about $25 each to $75 each for the ability to click on the name of the borrower and purchase that lead. Do not count on that being the only lender who gets the info because even at those prices the lead is generally distributed to a minimum of three loan officers.

What is wrong with this practice?

Theoretically the applicant is expecting a loan at the rates that were advertised by the lead generation company. Expected also would be a mortgage professional who has at least a moderate understanding of the loan process. Generally neither of these expectations are met.

Often times the buyers of bulk leads, therefore the company most likely to phone you, hire banks of telephone solicitors who work from a script and their only goal is to get you to commit to having your credit examined and paying an application fee. Keep in mind the actual loan itself is the real goal but not from that first person who may contact you as a borrower. If you pass their screening then you may, or may not, be passed off to a true loan professional.

While not every mortgage company performs in this manner it certainly is something you should expect. There have even been companies who have hired off shore (International) call centers to call these leads. This means you may be giving your very private information to an English speaking operator in a foreign country where data integrity may not be as important as it is here in the States.

Some lead generation companies hawk everything from life insurance to cell phones. Since the agreement you enter with those companies gives them the right to share your information with their “partners” you may be offering your credit information to credit card companies, insurance agents and cell phone companies while you believe you are simply doing the right thing and shopping for a mortgage.


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I started writing on Active Rain in 2006 when I was representing the mortgage industry. I am no longer in that industry and many of the older posts contain outdated information. Please do not contact me for LENDING or MORTGAGE questions but rather contact a licensed mortgage professional from your area. I have always been in marketing and branding and that is still what I do. Thanks for reading!

Comments (8)

Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate

Just today, I got a call from some kind of mortgage lead company who found one of my blog posts. The guy didn't have a clue.

Jan 26, 2010 12:44 PM
Joel Prince
The Principle Group, Inc - Hixson, TN
Hixson/Soddy Real Estate Broker

I have heard that many people got great deals using

(I shouldn't joke.  There probably is a website out there somewhere with that domain name.)

Jan 26, 2010 01:34 PM
Ray Saenz
Exit Realty Laredo - Laredo, TX
Homes for Sale in Laredo, TX - Texas, Realtor

Well but they advertise that they can offer this and offer that, I agree with you, people should be very careful before taking a decision, I always advise my clients to go with a local, so they can  have a great communication there :P

Jan 26, 2010 01:34 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Ken - it's pretty scary that this has continued to exist. You haev to wonder how many have been harmed adn that there is not better policing of these companies. Why anyone would want to get a loan on-line where yo do not know who is handling it nor how to get help during the process, if you get to that point, escapes me.  Guess it's the ads for such low rates.


Jan 26, 2010 03:03 PM
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Lisa - probably just a salesperson trying to feed himself and family. No experience in the industry just a fee for every lead he sells.

Joel - a smart lawyer would get - but part of the problem we have today is lawyers who are not nearly as ethical as the people they sue.

Ray - I don't want to throw my friends who operate nationwide under the bus because the ones I call friends bring value on a national level. But ... I agree. I could do a much wider geographical area than I cover but I choose to do only Georgia home loans at this time. Local expert is my goal.

Jeff - we do wonder how these companies can continue advertising interest rates without having to follow all of the regulations we as lenders are required to follow. Some of them just pop up a rate with no care or concern if it can actually be attained. The word must get out that these companies are not lenders - they make their money selling the "applicant's" information to multiple sources.

Jan 27, 2010 01:40 AM
Joan Mirantz
Homequest Real Estate - Concord, NH
Realtor, GRI, CBR, SRES - Concord New Hampshire

These outfits were such huge contributors to the mess we are in now....why are they still out there?
Even then I would request that a new client contact a traditional Lender.
Once burned....twice shy!

Jan 27, 2010 07:29 AM
James K Barath, CMPS
Canopy Mortgage, LLC - Crown Point, IN
FICO Pro, Certified Military Housing Specialist

Way to blow the lid off this unscrupulous practice that is a black eye to the entire industry.

Jan 28, 2010 07:04 AM
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

Too bad that we can't actually prosecute people that use fraud... I guess the government is too busy doing "other" stuff...

Jan 30, 2010 02:37 PM