I recently received an email from a Loan Originator who wanted some advice on how to develop a "referral based business".   Having a referral based business means that you have provided such a high level of service to your clients that they feel compelled or at least comfortable in recommending you to the people they care about.   My business is dependent upon referrals from my clients and professional relationships.

I have mixed emotions reading this gentleman’s email.   I’m angry that consumers could be prey to someone who is not properly trained and suffer by possibly losing their home or at the very least thousands of dollars.   I almost feel bad for this person who really seems to have had no idea (he seemed almost brainwashed) at what he was doing to consumers with his former employer.   

""I have been in the mortgage industry for nearly 2 years. So I guess in the scheme of things I am relatively new …or maybe not the way that things are currently going. Anyway, I started at a mortgage company that I will not mention here for fear of being sued. It was an extreme predatory lender. I didn’t realize then how much so; I was given 2 weeks classroom training and thrown on the floor to sell. They taught me enough to sell the mortgage but not to properly qualify borrowers, so the rates, fees, etc. always changed.

I really knew nothing of the mortgage industry at the time. That particular company really keep the LO’s separate from the process. You sell the file, pass it off to the processor, and sell another one. Also act as a liaison between the borrower and the company. I was required to call them up every day to let them know that everything was fine then take the fall when the mortgage program completely changed.

The company that I am speaking of really had me sold on them for a while. I really had company pride and truly believed that my rates, programs, and ease of use were superior to any other mortgage company out there. I slowly began to realize that none of this was true. I studied relentlessly for several months on my own time. The more I learned about the industry the more I realized that the company that I was working for was horrible. I began to lose sleep over the fact that all of the “wonderful” mortgage loan products that I had been providing my clients were really the worst deals they could’ve gotten.

Needless to say I left that company when I realized what was really going on…."

When you are considering a mortgage or mortgage advice, please do select your Mortgage Professional carefully.   Don’t let them select you by "cold calls" or deceiving junk mail.   

Hat tip to Tim at Rain City Guide for the photo.  We’re not sure if he’s either a victim of a bad mortgage or if he’s an unemployed subprime Loan Originator.   What do you think?

Update:  Don’t miss America’s Mortgage Broker, Brian Brady’s response to this post:  The Difference Between Right and Wrong.

I feel it’s important to continue to share with you the junk we receive in the mail from mortgage companies with amazing offers.   Seems like the new trend is to go after people who may be facing foreclosures or who have adjustable rate mortgages.   

Let’s take a peak inside these great offers!   

The first one has red letters on the upper right corner stating:

"FINAL NOTICE OF RATE INCREASE".  The next line: "RE:  Mortgage Master Svc Corp.".

Wow.  Looks pretty official and they must know about us because we did get our mortgage at Mortgage Master (where I work).   Once you tear open this important looking notice, it appears to be a check from the "funding department" for $375,000.   That is our mortgage balance and we do have an ARM.    The letter states they have "reviewed our original mortgage loan" and that we "qualify for a Low Cost Refinance or a No Cost Refinance…your new rate could be 4.125% (APR 6.439%)".   

The second letter has big bold black says "FINAL NOTICE-Notice of Overpayment".   Yikes…we don’t to be overpaying anything!  This gem states that "according to their records, you may be making larger than required payments on your home loan" and is offering us a fixed rate for five years at 1.75% (APR 7.012%).  Huh?  I thought we were making the payment due according to our lender. 

The purple envelope really cracks me up.   It’s hand addressed on the front and the back of the envelope even has a little smiley sticker.   This must be from a dear friend.   This is not a mortgage offer, instead they say "We’ll buy your house…even if the stairs are missing".   It’s a two page letter with testimonials and reasons not to use a real estate agent…they’ll help you do everything no matter what condition your house is or how desperate you are to sell.  RUN!  I checked out there website and there is no information about this organization or more importantly, the people who are behind it.   Are they licensed?   Smells fishy to me.   Maybe it’s the smiley sticker.   If you need to sell your home and you don’t have a real estate agent to work with, please contact me and I’ll try to help you with a referral to one.

If someone needs to send mail (or do "cold calls") to strangers to stay in the mortgage business, it’s because they do not provide the level of service that would create referrals from their clients.   They treat their business/clients as "transactional" instead of "long term relationship".   If you’re working with someone who is "transactional", they’re only planning on working with you once; you probably won’t want to return to them for your next mortgage.   

I don’t appreciate scare tactics and I hope you don’t fall for their gimmicks.  Ask for referrals from people you respect and trust if you are in need of a mortgage or real estate professional (or read their blogs).

PS:  If you receive a misleading offer in the mail that does not disclose APR or that appears to be from the government (you know, the gold envelopes with an eagle on the outside usually sent around April so you think it’s a tax refund) and you’re in Washington State, please send it to me.   If it’s a violation, I’ll forward it to DFI.

I often work from my home office.  For a while I was getting deluged with phone calls from people with foreign accents telling me that I had applied to obtain a mortgage from them!   I quit answering the phone when I don’t recognize the number or if the number is blocked.   The calls dwindled.

Here’s the new twist on the same scam…I’ve received a couple of these calls now.  The person says they’re from the “National Debt Center”.   They go on to say that they represent many of the credit card companies you have debts with (it’s not hard to name a few of the big players and get lucky with guessing a card you may actually have).    

Until this afternoon, the phone number was blocked…I just filed a complaint with the Do Not Call site.   We are on the DNC list and still get these obnoxious calls.   When I informed this caller that we’re on the DNC, she slammed the phone down.   Other times, this only seems to be a mental game to callers.   

They can sound pretty convincing…they’re crooks.  Don’t fall for it.  The area code from this caller was 113.   Look out.