4 Mortgage Scams You Should Watch For

Corporate greed has ruined the mortgage industry. Not the LOs — most of them, broker and retail, have honest intentions. It’s the sales managers, SVPs, and Regional VPs who want their people to sell inflated rates so they can drive nicer cars. If you’ve read my posts, you know I don’t sugarcoat. So here are the top scams I see them pull:

The use of quotes denotes something I heard, observed, read, directly from the source:

1. “Pull their credit immediately and tell them if they shop you, their credit scores will go down and their rate will get worse”- This is classic BS said on a nationwide call from a CEO. You have 14 days (some sources say 30 but I always advise 14 days) to get your credit pulled from different lenders without the subsequent pulls affecting your credit. So shop away.
2. “If you use us, we’ll give you a free refi when rates improve”- Usually this is added to sweeten the deal to win business when an LOs rate is worse. But the quick takeaway is this: If their rate is worse today, why will it be better in 6-12 months. Further, there is no such thing as a free refi, they just inflate your refi rate to absorb the cost. Shitty rates today, means shitty rate down the road.
3. “Morning rate report: 6.526% — with some tiny disclaimer so they can skip posting the APR” – Quick takeaway, If they post their rates like this without the APR—they are setting you up for a bait and switch. Always ask your lender what their rate is WITHOUT points, shop those. This guy will always send an over inflated “cost analysis,” when he could save everyone’s time by just saying “my rates suck.”
4. “If I locked you today, my rate would be X, but I’d recommend floating it”- Do you like gambling? If so, definitely float a rate during a volatile rate environment. Recently I beat an inhouse lender who strongly recommended floating a 60-day lock. This lender promised that rates would go down.
   
   What he didn’t foresee was the Iran conflict which brought rates up over a point. I locked my client on a 60 day lock, knowing I could relock at another lender later if pricing improved.

If you are still with me, drop a claim, scam, pattern you are seeing in the comments and let’s roast them together.

Blake out.