Jack M. Guttentag The Mortgage Professor

Yahoo! Finance User - Thursday, August 16, 2007, 2:52AM ET  Report Abuse

• Overall: 1/5

If the aggregation and dissemination of Bank Rates are controlled by a single hub or entity -- Bankrate -- acting as an unregulated central Banking Exchange, the opportunities for market manipulation and abuse of market power increase exponentially, with potentially catastrophic consequences for the entire United States consumer banking and mortgage markets, and any other related markets. "You don't have to take our word for it when it comes to Bankrate's abuses; Bankrate's own words best and most reliably describe how its conduct violates federal and state antitrust laws," said Norbert Mehl, BanxCorp's founder and CEO. "We encourage regulators around the country to take a close look at the consumer harm Bankrate's business practices are causing, and how its monopoly position is causing detriment to banking and mortgage customers and adversely affecting a market that is critical to our nation's economy." In fact, on May 2, 2007 during its First Quarter 2007 Earnings Call, Bankrate's President and CEO, Thomas R. Evans, stated as follows: "One of the things that is a tremendous gating item for us, we believe is in terms of competition, and barriers for competition, is how does anybody else break into this, if we have tied up all the best newspaper relations, the best co-brand relationships and we've got a dynamic organic traffic website. How does anybody else get into this business and compete with Bankrate?"

patriotsin05 - Monday, August 6, 2007, 10:39PM ET  Report Abuse

• Overall: 4/5

I think Jack Guttentag writes very informative articles and I suggest to all my clients that they read his articles. I don't think all brokers are necessarily lying to clients but the competition in the market the lack of consumer knowledge is to account for this. I am in the industry, I am a mortgage banker for Quicken Loans and I have hundreds of clients and I have only been in this industry for about 2 years and I will tell you that I have never once lied to any of my clients about costs or fees. I do my own research and look out our competitors pricing every day and we are all very comparable. We may be an .125 more in cost on a certain loan than another broker/lender or also .25 less. Bottom line is we are all very comparable and unfortunately consumers shop themselves out of getting an honest deal that they actually qualify for. I have friends that are brokers and do the right thing and I will tell you that my company is the best company to work for because it is part of our culture to be upfront and honest about costs, its consumers that think we are lying to them or overcharging them because brokers or other lenders lie to them to get their business. This was my first job out of college and I have been very successful in this business and its because I take care of my clients and am always upfront about things.

Yahoo! Finance User - Thursday, August 2, 2007, 10:52AM ET  Report Abuse

• Overall: 2/5

Jack Guttentag is a treasure chest of information, however he always seems to be anti-broker and pro-bank and pro-online lenders. You never see in an article by Mr. Guttentag that banks or online lenders could be using "low-balling" or "bait-and-switch tactics, these are always attributed to independent brokers. However as an up-front broker myself, and being shopped against banks, credit unions, and online sources everyday, I can say with great authority that these practices are as common with banks and especially with online sources as they are with independent brokers; online sources may even be worse. Until a loan officer has pulled credit and has a borrowers bank statements, taxes and pay stubs in hand he is unable to give an accurate quote. Anything less and your quote is being estimated only. For instance you can have a borrower with a 680 FICO that looks like an A-paper borrower BUT what you don't know until you pull credit is that they had a bankruptcy two years ago and therefore may not qualify for a conventional, A-paper loan, so that "best" rate you quote isn't even legitimate. I run into this all the time when I've done a thorough examination of the a clients borrowing ability and quoted them, then have them shop me with Lending Tree, Quicken Loans, etc., who come back with unrealistic rates and loan terms. Inevitably the customer comes back to me when the other sources can't deliver what they promised and the real loan terms are not anywhere near as good as what I offered. Recently I had a client that was shopping that brought me a GFE from a national bank. This bank had not actually sent the loan to underwriting yet to get a conditonal loan approval, but had quoted them on an FHA loan needed 3% down, at a rate that was 0.75% under the current FHA rates and the borrower would have had to pay 1.375% to buy th rate down to that level, AND had them open a savings account there with the lure of matching ever dollar they deposited with a bank credit of three dollars (up to $3,000) toward their closing costs. On the GFE they were still having to bring in $12,000 to close a $232,000 home. I pre-approved them on a 100% FannieMae loan and their payment was still only $60 more a month with only $3,000 out of pocket total. They went with the bank, then got the bait-and-switch and one week before closing backed-out because they disheartened. These situations happen every day, yet it is always the independent broker that is scrutinized. Not all states, but in Utah where I am independent loan officers have to be State licensed and are regulated. Loan officers at banks do not have to be licensed and are not regulated by the State. As a final note about this, in a huge Ponzi scheme in the state of Utah recently it was two senior loan officers from one of the nations largest banks that was originating fraudulent loans to strip equity from properties that was being "invested" by the "group", not independent brokers. Now I'm not saying that all brokers are on the up and up, but that they are unfairly under the microscope while the same or worse practices are being carried-out by loan officers at banks and they are nary even being looked at. And for Mr. Guttentag, is it any wonder he is a freelance writer for sites like this, Bankrate.com and others and he constantly talks them up at being the way to go when getting a loan. As one broker once pointed out, you'd do better than an online source by just randomly picking four or five local brokers from the yellow pages and getting quotes than you will with an online lead-generator like Lending Tree, Bank Rate, Quicken Loans, etc.

dragon_of_ice@sbcglobal.net - Thursday, August 2, 2007, 10:36AM ET  Report Abuse

• Overall: 5/5

This is a greatly informative article. As for the comment earlier about having the same base rate: Interest rates, like gas prices, are based on the market. The same *program* has the same base rate for every lender every day. The only way it changes is by the market shifting. There are lots of mirrors and smoke involved with mortgage lending these days, which is why this article is useful. The bottom line is that the only *actual* difference between lenders/brokers are the fess *they* charge such as origination, doc prep, underwriting, and processing. Everything else that seems different is all perception based, not actual. In addition: Who cares if the author writes articles only about industries in which he is involved? It's good that he's sharing some inside knowledge. At the end of the day just work with a lender that you know is reputable, can deliver on what you want and need now as well as long term, and most of all: someone you like/trust/respect.

Yahoo! Finance User - Tuesday, July 31, 2007, 4:50PM ET  Report Abuse

• Overall: 4/5

Unfortunately, this is true. There are brokers out there who will quote rates that are below PAR pricing to lure borrowers in. I have seen that many times in my business. I have had borrowers I was working with that got a quote that was much lower than what the market was offering and decided to go with it, only to have them come back to me when they didn't recieve what they were promised. This is a tactic that some brokers use to get borrowers to commit to them and steal them away from other brokers that way be working on their purchase or refinance scenario. Once the loan docs are prepared and ready to sign, the broker drops the bomb on the borrower that the rate is not what they thought or that the fees were much higher (sometimes due to offering below par rates, they must buy the rate down). The hope of these brokers is that the borrower will not want to start the loan process over and will just sign the loan docs to get it over with. These are competetive times for mortgage brokers since it is harder for them to originate loans, so they do whatever it takes to get a borrower commited to them! Be careful and check out the companies website, staqnding with the DRE (Department of Real Estate) and the BBB rating. Don't be afraid to work with a few different brokers so that you ensure you are getting the best rate and cost for your transaction. For more inforamtion on how to protect yourself from these things on your home purchase or refinance loan, please visit www.theloandivision.com. To ask a specific question, please visit www.theloandivision.com/faq.php Best Wishes and Good Luck!!!