If you want to know how we got into the mortgage mess, this is a good reason. This post came from an associate in California, it is worth repeating here.
I really dislike this slimy advertising. You too? Lets do something about it. I received this junk mail postcard in the mail today. My first question is, who sent it? The company names used are Lincoln Capital and and Lincoln Capital Group with a California DRE license number of 01414409. CA DRE lists a Lincoln Capital whose DBA has been canceled and Lincoln Capital Group in San Jose but neither match with the license number. The license number belongs to a broker in Bakersfield with no DRE listed DBAs. When I called the phone was answered “Loan Department“. Well folks, that really cleared things up. What About the 4.5% Rate? When I asked for information about the rate and fees I was told that someone “a mortgage professional” would come to my house and explain. Of course I would be thrilled to invite someone to my home belonging to a company ashamed to reveal it’s real name. So if they won’t give me rate information I’ll have to draw my own conclusions… sorry, the very tiny black print shown on this page is unreadable and on the actual card almost. But I was able to barely make out the disclosure the advertised rate could change at any time. Anyone willing to bet it won’t… Pay $13,875 for a 4.50% Rate? The payments for the various loan amounts on the top postcard are based on 4.50%, Interest Only loans. There is also a 07-01-09 date next to the rate disclosure in the tiny black print so, I am assuming “Loan Department” is claiming the advertised rate was available on that date. Checking back with one of my best priced, very picky wholesale lenders I found their lowest Interest Only rate was 5.125% and it cost 2.50 points more than their amortized rate. When 2.50 points are added to the points for their 4.50% amortized rate the result is 4.625 points. So maybe the rate was actually available on 07-01 if “Loan Department” or, whatever it’s real name is and the “mortgage professional” coming to my home are both working for FREE. Wanna bet? The APR in small print is shown as 4.99%. “Loan Department” did not disclose the loan amount used to compute the APR so again I must improvise and just make it $250,000. Using $250,000 the 4.99% APR requires total points and fees to be $13,875. So how are we doing so Far… hmmmmmm
- It is questionable to me the advertised rate was ever available.
- The California Department of Real Estate requires the advertised company name and license number match exactly. They also require the company to be a legal entity. Two DRE strikes? This guy is either gutsy or really stupid.
- I believe RESPA requires the advertised rate and APR be shown in the same print size. I also believe the loan amount basis for the APR calculation must also be disclosed.
So lets look a little further Skip 2 Payments? Well, gentle readers, that is just a damn lie. Payments are NEVER skipped in a refinance. They can be included in the loan but they are never skipped. Prominently on the front side of Postcard: Our Current Clients Receive… No Closing Costs… No Points.. No Title Fees… No Appraisal Fees… No Credit Report Fees… Ever again This is ABSOLUTELY a bogus play on words. At first glance most consumers would think there are no fees but upon closer reading it appears that “Loan Department’s” existing (if any) customers won’t pay these fees but NEW customers probably will be required to pay. It really could not be any other way because: if the above fees are included in the loan amount then they DO exist. Or, if Loan Department claims to pay them; based on their pricing structure there is not enough profit for Loan Department pay them. And the conclusion is: It appears to me Loan Department is just another lowlife preditor un-intimidated by ethics, proper disclosure, RESPA or even the DRE. If “whatever it’s name is” was in business three or four years ago they were, most assuredly eagerly sticking families into Option Arms and Sub Prime loans. Active Rain, Lets get mad and take action In any real estate market there are always preditors eagar to take advantage of what for many consumers can be a confusing process. One group leaves the business or goes to jail and another sinks to fill the void. As this is written there are almost 158,000 professionals on AR and WE can make a difference. We don’t need to be policed by self serving politicians, we can and should to it ourselves. Here on AR we have a forum to expose this type of advertising wherever and whenever it appears. If this is beyond your comfort level… send the ads to me. This kind of advertising steals our business and our reputation. This industry is our house, where we live, lets keep it clean. Bill Ladewig, Your FHA Guru 800.664.7283 (Save) Bill@YourFhaGuru.com Http://www.YourFhaGuru.com