Some Vile Misrepresentations

Two absolutely vile things in the mortgage field that I've heard with my own ears in the last few hours (I'm setting this to post on Monday, but you get the idea). The first, a radio ad, hyping a loan as a thirty year fixed loan, giving a rate that, checking that lender's rate sheet, was for a thirty year loan all right, fixed for two years with a three year pre-payment penalty. So yes, you could say that it is a thirty year fixed rate loan, but that's not what everyone thinks of as a thirty year fixed rate loan, and it definitely isn't the industry standard name for what they are selling (which translates into polite english as "feces").



The other thing was waiting in line, I heard the guy in front of me (who worked for Big Name Major Bank) bad mouthing brokers, saying "They can charge anything they want, where it's our policy to never charge more than two points." Well, they may not charge the customer more than two points, but they do put them in a higher rate that would get a broker a six point rebate - if the broker was allowed that after charging a customer two points up front, which would be illegal and also not every broker wants six points total compensation for every loan (Most don't. The average loan I work on is about one point total compensation, and less than that for purchases where I'm the buyer's agent). Then, because Big Name Major Bank is a direct lender they sell the note to a third party at even more of a markup. One hopes you see the extent of the mind games this guy was playing. I said, "Excuse me, but don't you hate it when someone slanders your profession by telling half-truths that give a completely false impression? Then why did you just do it to me?" I managed not to call him slimeball to his face, but he deserved it.



The fact is that you need to shop around. Every profession has its scoundrels, and mine is unfortunately no exception. Many of them masquerade as your friend, but aren't. I suggest using my list of questions to ask prospective loan providers here, but remember that the stuff they quote to get you to sign up may be lies, so sign up for two loans. The way to avoid the problem posed by the smooth talker in the second instance is to evaluate all loans by the criterion that matters to you - which means by the loan you are getting, and what it costs you, not by what somebody else is making. If you can buy a widget at store A for $12.00, or at store B for $13.00, and they are in all other ways equivalent, why do you care that store A bought it for $9.50 while store B bought it for $11.00, and so store A is making more? The bottom line is you get the same widget for less money at store A, even if the store makes fifty cents more per widget. The principle is the same whatever you're buying.



Caveat Emptor

Updated here