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Lousy Loan Offers Still Coming by Mail

If anyone thinks mortgage brokers have been chastened by the financial calamity we've all been through the past few years, think harder. My husband and I received a particularly shoddy refinancing offer just a few weeks ago.

It was packed full of misleading statements, starting with the address window. It read "Pay to the order of:" Well who doesn't want to open an envelope with a check inside? And below our address, it said "RE: Mortgage Payment Refund."

Inside was nothing short of garbage -- on a paper with water marks of the Statue of Liberty and Bald Eagle, much like a government check, no less.

The lender -- which I won't name so as not to give it any publicity -- said it's a member of the National Association of Mortgage Brokers, and used the NAMB logo.

They had looked up our current mortgage and correctly named the institution and interest rate. They offered to save us as much as $450 a month with a refinance. "The federal government under President Obama has made it easier for you to refinance your current mortgage into a new rate as low as 4.00%*" it said.

Hmm. I have not seen 4 percent interest rates -- anywhere. And no matter how I ran the numbers, I could not come up with $450 a month in savings for our loan. The fine print was too small and faint to be read.

Another misleading statement: "This loan is Guaranteed by the Federal Government." While that might technically be true, it's misleading. FHA guarantees protect the lender, not the borrower.

The come-on was signed by a "Licensed FHA Loan Specialist" named Brian. So I phoned the 888 number printed in the letter and asked to speak to him, using his first and last names. The gentleman who answered said "There's not really a Brian..." But he was a licensed specialist, too, and would be happy to help me. When I identified myself as a Washington Post reporter who had received their letter at home, he promptly referred me to a spokesperson who-- surprise!--was not available. A quick look-up of the lender's phone number led me to its "F" rating from the Better Business Bureau.

Such junk in my mailbox does me no harm. If anything, it's good for a laugh. But, really, there are people out there who can be seduced. If this housing bust hasn't been enough to drive such hucksters out of business, what will?

By Elizabeth Razzi  |  September 22, 2009; 6:00 AM ET
Categories:  Foreclosure , Loan modifications , Mortgages  
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Speaking of loan officers, with all the new regulations in place, these shady practices are going on in our own back yard. I recently purchased a home through Miller and Smith and not only do they threaten to take away all the incentives if you don't use their lender, they use the bait and switch method to lure me into the purchase with a phony FHA 5% down qualification. 2 days before settlement, they state that the FHA loan won't go through and that 20% conventional is the only way to go. If I back out, I lose my entire deposit. They are selling houses in Virginia and Maryland. Someone needs to hold them accountable.

Posted by: admin15 | September 22, 2009 12:28 PM | Report abuse

I agree, you should only work with Realtor's and Lenders you trust. If you feel something is shady, run. Be careful of the preferred Title Companies as well. I had a client who was urged to use them and they would toss in title insurance. When it came to preview the HUD-1 they had the sales price and property address incorrect. They didn't respond to the corrections we requested. I have had other agent inform me of Title Companies doing bad title work and newly settled homes being foreclosed on since they seller (Bank unnamed) did not deliver a clear title as required.

Posted by: CTCtheRealtor | September 22, 2009 10:49 PM | Report abuse

As someone who manages direct mail campaigns (not of the kind mentioned), I don't think you can find a person who is more irritated by mail pieces like this one than I am. Advertisers should use up-front direct mail pieces that have a valuable offers for their potential clients. Those are the kind of pieces that get high redemption rates and are a wise use of marketing dollars.

Posted by: ATaylor2 | September 23, 2009 3:24 PM | Report abuse

I think this is wonderful news that many companies are bidding for loan business and it's part of the making home ownership affordable plan.

Posted by: free_np | September 23, 2009 10:29 PM | Report abuse

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