Answer: Just because a company is large and nationwide
does not mean they provide poor service. However, you need to know what you're walking into. Please don't confuse these companies
with major banks. It's easier to understand if we break these down to three groups: national internet based
mortgage companies, lead generation companies, and finance companies. Let's take at look at each of these individual
groups.
National internet based mortgage companies came on the scene with a bang around
the turn of this last century. Their advertising leads you to believe that they can save you thousands in fees because they
are so large and efficient. As we addressed in Fees & Options 101 the cost of providing mortgages can either be covered by fee or rate, but the costs are there either
way. This is especially true when you run a large company with multimillion dollar advertising budgets. These companies replace
loan officers with banks of telemarketers that never meet the client, will never run into them in the community and have no
vested interest in keeping them as customers. They advertise that they don't have commission loan officers and that's
true. The person you would be working with gets paid whether you are pleased or not. Who do you call when you have a problem?
Using an internet based business may make sense to save $20 on electronics, but when it comes to getting help with your largest
financial transaction, don't you want to know they're going to be there for you when you need them? If you're not sure who
we're referring to, think of companies with names like Die Tek and EE Loans. You'll see their names pop-up in ads all
over the internet. How do you think they measure their success? Do you think it's by the number of referrals they receive?
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Lead Generation Companies are confusing to many outside our industry. Their ads make it sound like they
will save you thousands by getting banks to compete for your business. Let's make it clear -- these companies do not
provide mortgages. Like the large company that promises you that you can learn the value of your home "free, on the web" they
simply generate leads that they sell to lenders and/or Realtors. They get you to fill in a form with some pertinent data and they sell that information to mortgage companies who's
loan officers are too green to earn their own clients. If you want to have a flood of telemarketing loan officers accross
the country call you, just provide your information to companies with names like Lending Bush, Quick Quote, Smart Mortgage,
Bank Rates, and Next Day Loans. If you visit the site of a mortgage company and can't find a list of their loan officers,
it's either because they don't have any or they turn them over so fast they don't want to spend the effort of putting them
up and taking them down of their site.
The final group we're going to address is the most frustrating for us. These are sub-prime lenders and finance
companies that have developed retail mortgage divisions. The problem we have is they don't make it clear that their
solutions are designed for people with serious credit issues. Too often we have client referred to us who "fell in with them"
unknowingly. We have seen clients with impeccable credit
get saddled with "alternative financing" loans that have short term commitments, higher than average rates, pre-payment penalties,
and up front fees that would make Jesse James blush. We've met loan officers who worked briefly for some of these companies
and tell us their targeted income on each loan was 7%! These kinds of companies used to be found in discount strip malls,
but they are making so much money now they are buying TV commercials
and even putting their names on ball fields. We're talking about companies with names like Amerry-Guest, Benefiscal
Finance and Housewares Finance.
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