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Sales Calls and Refinancing

Refinancers, you're a hot commodity. Your loan application could trigger unsolicited sales pitches -- with requests for sensitive information - -from businesses you've never heard of.

A colleague at The Post just told me about the unsettling phone call she received last week, a day after applying for a mortgage refinance with her current lender, Citibank. She and her husband have lots of equity and good credit, so she didn't anticipate any problems qualifying. Out of the blue, she received a phone call from someone who said he worked for Foundation Financial Group, a mortgage banker with headquarters in Atlanta and Jacksonville, Fla. He told her that her file had been "flagged," and that he needed her financial information to determine if the refinance was in her best interest.

She wasn't sure about the purpose of his call, but she was absolutely certain she wasn't going to divulge any of her financial information over the phone.

What's happening here is that her loan application was "flagged" as a hot lead for other mortgage lenders. They buy lists of prequalified leads and use the information to try to pick off business from each other.

I called Paul Scott, chief executive of Foundation Financial Group, whose representative phoned my colleague. "Yeah, we purchase prequalified leads," he said. Credit bureaus sell them info on people who recently applied for loans. "It's all public information," he said. The files include the loan-to-value ratio of the old loan you're refinancing out of and the amount of credit for which you have applied. If you have equity, they know it. Scott said he can offer a better deal to one out of every three people that his commission-based salespeople call. "It's not a hard sale," he said.

It's natural, though, for homeowners to assume something is wrong with their loan application when someone calls with questions. After all, who would know you're in the market for a refinance but the lenders you've already talked to? As it turns out, lots of people you may never have heard of have their eye on that data and their finger on the phone.

Their inquiries should not damage your credit scores, says Barry Paperno, consumer operations manager for FICO, a company that compiles credit scores. Multiple credit inquiries for mortgage loans (or auto loans) made within 30 days have no effect on your credit.

You may, perhaps unwittingly, invite these inquiries when you use Web sites to shop for loans, including Lending Tree and Myfico. Keep an eye out for checked boxes that say you want to receive offers from participating businesses, and uncheck them if you would actually prefer not to be contacted.

The Federal Trade Commission has information about opting-out of receiving pre-screened credit offers, including a link to an opt-out Web site maintained by major credit bureaus. But it can take 60 days for your request to go into effect, and even then it may not stop all offers.

If you have any doubts about someone who telephones you after you've applied for a mortgage, contact your loan officer to confirm that the request is legitimately related to that loan. Your lender may indeed need more information, such as a tax return or a pay stub, to process your application. Or an appraiser or pest inspector could need to schedule a visit. Never assume it's safe to reveal sensitive information such as Social Security or bank account numbers over the phone or in response to an e-mail.

Have you been approached by other lenders after applying for a mortgage? Share their sales pitches with other readers.

By Elizabeth Razzi  |  March 31, 2009; 6:00 AM ET
Categories:  Mortgages  
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Next: Why Ask an Ex-Con for Mortgage Help?


I recently recieved a letter from a financial entity that advised me to call them because they knew I was late in my mortgage payments and they could help me. I have a credit rating of 743 or higher and I have never had a credit or late payment problem in my life. My last name is Alvarez and I wonder if they are sending letters to all "hispanics" in my area that are in the process of re-financing. Any clue?

Posted by: alvarezlm | March 31, 2009 12:51 PM | Report abuse

Could be. Or they could have sent those letters to the entire ZIP code. I'm assuming this was not the financial entity that really does hold your mortgage. You wouldn't want to ignore any message from your own lender, just in case payments had not been credited correctly, or an identity thief had targeted you.

Posted by: Erazzi | March 31, 2009 1:42 PM | Report abuse

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