| No Closing Cost and Flat Fee mortgage advertising in | | | | overcharging amounts to .5% higher for you and |
| a word is a rip-off. So much so that California | | | | thousands of extra dollars for the company. With the |
| regulators outlawed the use of the phase in all | | | | No Cost or Flat Fee companies, they plan on raising |
| mortgage advertising in their state. All state | | | | the rate not the typical .5% to insure their profit, but |
| mortgage regulators should immediately adopted the | | | | an additional amount to cover all the actual third |
| same restriction if they truely want to protect | | | | party closing costs as well. This hyper rate inflation |
| mortgage consumers. | | | | could add another .5% or more to the rate you could |
| Until then, the rest of the country is fair game. That | | | | have reasonably expected. |
| means you! Read this carefully and learn to protect | | | | Another ugly truth behind the hype about the No |
| yourself. Not doing so can cost you $20,000, $50,000 | | | | Cost or Flat Fee transaction is the mortgage |
| or even $100,000 over your mortgage paying lifetime. | | | | company makes as much as 5 percent of the loan |
| Let's get started... | | | | amount as a rebate from the lender, and in many |
| Living in Denver where this advertising is still legal, | | | | cases, it is not disclosed to the borrower. On a |
| everytime I turn on the TV or the radio, I see or | | | | $200,000.00 mortgage, they could conceivably earn |
| hear a mortgage ad touting a $395 Flat Fee loan or a | | | | $10,000.00 while giving the impression that they are |
| No Cost loan. Of course we've all seen the Ditech | | | | doing the loan for nothing. Sure the company covers |
| cable TV commercials non-stop over the last 5 years | | | | all the third party closing costs of say $4,000 and |
| stuffing the $395 Flat Fee loan down our throats. | | | | pockets $6,000 pure profit. And of course, you are |
| This is a prime example of a deceptive ad. But the | | | | stuck making a payment on a hyper-inflated |
| one that really chaps my hide, is the Lenox Financial | | | | rate...probably close to a full interest point above the |
| radio spots for No Cost loans that says, | | | | rate you qualified for. |
| "Come in with a $300,000 loan, and you can leave | | | | As a 15 year mortgage veteran who knows how |
| with a $300,000 loan. We make plenty of money. | | | | money is made in the mortgage business, those |
| We don't need to charge you any fees. Don't be | | | | advertisements are upsetting to me. Why? Because |
| fooled by those predators who want to take your | | | | they give the impression that they are looking out |
| money. It's the biggest no-brainer in the history of | | | | for you, the consumer, and they are working for |
| Earth." or words to that effect. | | | | free when they are actually working against you |
| Yea, no-brainer is right...you'd have to have no brain | | | | making huge undisclosed profits. This kind of |
| to believe this garbage. | | | | deceptive advertising used by virtually every bank |
| I visited their website and lie continues, | | | | and broker in America is, in my opinion, the reason |
| "The way it works is simple. Our company has | | | | consumers don't have any faith in mortgage industry |
| created such a high volume through our investors | | | | professionals anymore. This is bad for all good |
| that they are willing to pay us more for your loan | | | | mortgage professionals. We've seen our industry go |
| than any other brokerage firm. This is typically | | | | the away of used car and aluminum siding sales. It's |
| enough money that we can pay your closing costs | | | | time to clean up our own backyard starting with |
| and still have money left over for our company as | | | | these unethical companies. |
| well!" | | | | Everyone who works on your loan is going to get |
| This is the most egregious example of false, | | | | paid by you at closing by one of three ways: 1) |
| deceptive, and misleading advertising ever allowed to | | | | either by a one-time fee listed on your settlement |
| exist in our country. The impression conveyed by the | | | | statement, or 2) by the lender rebate created by |
| outright false advertising, is that a "free" loan is | | | | charging you a higher interest rate, or 3) a |
| possible due to "high volume". Nothing could be | | | | combination of the two. Don't believe the hype. As in |
| further from the truth. | | | | all things, if it sounds too good to be true it probably |
| The truth is mortgage companies don't "waive" or | | | | is. Beware of what you are signing. Read all the fine |
| "cover" closing costs. They "offset" them with the | | | | print (and there is a lot of it.) Ask questions of your |
| kickback income they get from charging you a much | | | | loan originator. Ask point blank, "I know no one |
| higher rate than you qualify for. This is called Yield | | | | works for free. So tell me, how much lender rebate |
| Spread Premium overcharging. The lender pays the | | | | will you get at that rate? How much of that lender |
| mortgage company lots of money, that part of the | | | | rebate will go toward my actual closings costs? How |
| ad is true. Of course, the reason why is where the | | | | much lender rebate will you and your company get?" |
| deception comes in. | | | | Decide for yourself the most important consideration |
| The ONLY WAY that company will pay your fees is | | | | with your new mortgage. Is it keeping the payment |
| if they charge a higher than market interest rate, | | | | affordable? If so, you'll want to pay the costs as |
| getting a rebate or kickback from the lender for | | | | one-time fees and maybe even pay discount points |
| doing so. If they are a correspondent lender or a | | | | to buy down the interest rate. Is it getting the costs |
| bank (like Lenox Financial and Ditech), you will never | | | | paid by lender rebate because you are planning to |
| see the lender kickback money they are paid. But | | | | move in a couple of years and you can afford the |
| due to the higher interest rate they charge, YOU | | | | higher payment? But YOU should be in the driver's |
| WILL PAY for all those closing costs AGAIN AND | | | | seat and make those decisions from a position of |
| AGAIN over the life of the loan in the form of higher | | | | knowledge. All mortgage brokers can provide a |
| monthly payments. In the super-fast-talking legal | | | | mortgage with either you paying the closing costs as |
| statement at the end of their ad, it states that you | | | | one-time fees or the lender rebate paying the costs |
| can receive a lower Annual Percentage Rate by | | | | and you paying a higher monthly payment. |
| paying fees. Oh, really? | | | | Remember this: You Always Pay the Costs for Every |
| You tell me, with double-talk and half truths so | | | | Mortgage...you and nobody else. The only thing to |
| flagrant as to make a politician blush, who is the | | | | determine is how. The purpose of this article is to |
| REAL predator here? | | | | help you understand your options when it comes to |
| So Flat Fee or a No Cost loan ads should signal you | | | | paying those costs. Also, I hope this helps you |
| the rate you'll get is not just inflated, but "hyper" | | | | separate the honest from the dishonest which is just |
| inflated. Since even on loans where the consumer | | | | as important in your search for the right mortgage |
| pays the costs at closing, the rate is inflated for | | | | company and the right home loan. |
| extra profit. This typical Yield Spread Premium | | | | |