Most home mortgages in America are now originated by mortgage brokers instead of the traditional banks and credit unions. It is safe to assume that 99% of these mortgage brokers are honest and professional, but like any large industry there are always bad apples in the bunch. When these crooked brokers take advantage of unsuspecting borrowers it does significant harm to the lending industry and leaves the borrowers with a negative view of mortgage brokers. But what if you were able to spot these common mortgage broker tricks ahead of time? The next few paragraphs will explain how the dishonest in the lending business prey on desperate and uneducated borrowers.
The most common and well known trick that mortgage brokers, mortgage bankers, and traditional banks have and will use is the old "bait and switch." This trick is actually used in many, if not most, sales industries. The trick is done by being misled, lied, deceived or fooled up front into thinking that you are going to qualify for a better deal than you are or you are, your payments will be much less than what they will really be, or your closing costs are going to be much less than what they actually end up being. The few bad salespeople that use this old and dishonest practice give a bad name for the majority of other hardworking and honest salespeople. The reason the bait and switch works is because so many consumers are looking for the best deal out there and many times the person or company with the best deal does not always end up being the best deal in the end. The toughest thing for a salesperson is to get a potential client in the door. Unfortunately, for a very few, once they get you in the door, they will lie, deceive and mislead to keep you there. Basically they will tell you what you want to hear. Once you have committed to going with them, there is little chance you will walk away at the closing after you have gotten that far. These few unscrupulous salespeople know and understand this and while they understand they will upset some customers and even lose some of them as well, it is simply a numbers game to them and they are simply in it to make a quick buck. These types of salespeople are not usually around for a long time and they bounce around from company to company.
Here is a list of ways to help make sure you do not fall victim to this "bait and switch" scam.
1. Ask for references
2. If it sounds too good to be true it probably is
3. Google your salesperson's name to make sure there are not any complaints online about him or her
4. Check out ripoffreport.com to make sure your salesperson or company is not listed on here for unethical practices
5. Trust your heart and your head when deciding which company or mortgage broker to work with, go with who feels right and not just the cheapest person. You will be happy you did. Saving a dollar or two a month because of a few hundred dollars difference in closing costs is not worth the headache of dealing with someone whom you can not trust.
6. Ask for everything in writing and signed by your salesperson and his/her manager or threaten to walk away if they can not put everything into writing. If they are unwilling to do that then something is wrong.
7. Ask for proof of your rate lock confirmation to verify your rate has been locked at the rate it was supposed to be locked in at.
8. Compare Good Faith Estimates between everyone you are considering using and if you notice any large discrepancies between them, you should second guess the "oddball" Good Faith Estimate.
9. Finally, ask questions of anything you are unsure of.
Following the above mentioned tips may not guarantee that you don't get sucked into the "bait and switch" sales tactic, but they will definitely help to improve your chances that you won't fall for a "bait and switch" move.
When speaking with a mortgage professional, be sure to ask for references as well as website or other public information so you can do some research on the company. An upfront and reputable mortgage professional should be more than happy to provide you with that information.