Mortgage fraud abounds. Mortgage fraud abounds.

Friday, July 3, 2009

Applying for a Mortgage? Beware of the Loan Officer in Sheep's Clothing


If you have submitted a mortgage application and you've been notified that it has been approved, you might want to curb your enthusiasm. It's quite possible your loan officer is about to take you to the cleaners. Why? Because you probably don't have a clue how easily it can be done.

Think otherwise? Take this quick quiz.


The long and short of it is simply this. If you understand how mortgages are priced, you could easily save yourself thousands in undisclosed/under-disclosed lender fees every time you purchase a new home or refinance the old one. Given the fact that the average family buys a new home or refinances once every 3-5 years, over the next ten years you could conceivably save enough to buy a new car.

How much you stand to save depends on three important factors:

1. The size of your mortgage.

2. The lender you submit your application to, and

3. The truthfulness of loan officer you deal with.

While the first of these factors is obvious even to the unschooled, most borrowers fail to understand the importance of the last two. I say this because in the 15 years I was in the business, I rarely encountered a borrower who had even the vaguest idea how to shop for a mortgage.

The posts appearing in this blog are presented in natural order so if you read it from top to bottom you'll be able to take full advantage of it. Individual section titles appear in the left hand column for repeat access.

Unless or until Congress takes steps to require all lenders to provide a full disclosure of the fees they charge consumers for mortgage lender services, I have no intention of posting updates save for the comments readers make to individual posts.

Needless to say, I hope you find this as useful as those who continue to ask me for assistance. If you find this blog useful, please spread the word.

R. Harrison Scott

Postscript: I have done my level best to provide accurate information. If you find factual errors or misrepresentations, please don't hesitate to make direct comment or to email me with corrections. All comments are moderated, not because I wish to censor opposing views, but to ensure the discussion remains civil.

Update: The Federal Reserve has finally taken action to put an end to abusive mortgage pricing practices. Come April 1, 2011, lenders will no longer be allowed to price loans (raise interest rates on newly originated loans) to generate additional undisclosed/under-disclosed income via service release premiums. Thereafter, readers are advised to regard this blog as a historical reference because its content will no longer be relevant.