On-line Lenders in a Battle Over Who Has the Right to Profit from YOUR Personal Information

TamlynBuyer Info

Ok that was probably a little over the top…or maybe not.

It was announced in several articles like this one , “LendingTree Sues Zillow Over Real Estate Technology” by CNBCthat Lending Tree is suing Zillow and 3 other online lending rivals for infringing on their patents for using the Internet to obtain loan application information and then sell it.

I know that some people think this is a convenient and maybe less scary way to see whether you can qualify for a loan. But please think about the consequences of using an on-line loan “broker”.  You fill out their on-line application providing your social security number, address, phone number and other private information.  You then, with the click of a button,  authorize them to “sell” your information to many lending institutions and  then each one starts pulling your credit.  You are then contacted by 10 to 15 lenders who tell you about their rates and what you can borrow, you get phone calls and emails and more phone calls and more emails.Whether or not you choose to use one of the lenders you need to understand that Lending Tree or any of these other on-line lenders will hold on to your private (identity theft) information for 2 to 3 years.

Here is a quote from a dissatisfied user of on-line lending:

… our information is SOLD widely to all sorts of lenders, good and bad. Since I was taken in by Lending tree I have no less than 40 phone calls and untold Emails from every conceivable lender on the planet. Every evening and weekend I am still getting these calls from the latest shmuck that purchased my private information. …

This quote was a comment to an article on this website: http://inkblots.markwoodman.com/2005/05/24/cutting-down-the-lending-tree/

One other thing  that concerns me as a real estate agent is that these lenders are generally out of your state and do not understand the local market or state specific rules and regulations surrounding home purchases.  When you decide to purchase a home you should consider the various services you will use to purchase the home as a team.  As your real estate agent, I want to work side by side with your lender and the title company to insure that you are getting the best service possible, that we are meeting the dates and deadlines set down by the contract and, that each specialist is looking out for your best interests.  In my experience the lenders that have been obtained on-line by my buyers don’t want to work with me or even coordinate the process with me. They don’t really even communicate well with the buyer.

Some examples:

  • The lender based in Texas doesn’t  understand that Colorado is a “cash at closing state”, the money needs to be at the title company on the day of closing or you don’t close.  This has delayed closing which cost the buyer time and money staying in a motel and keeping the moving van waiting to deliver. It stressed out the Seller who had to close on this home prior to closing on their next home … All because the lender ignored my communications.
  • A lender from the East coast required a termite inspection at the expense of the buyer prior to loan approval. In Colorado the incidence of termite related damage is quite low and it is difficult to even find a termite inspector in the Denver area. It needs to be considered on a case by case basis in Colorado.
  • A lender ordered the appraisal, against my advice ,before we were through inspection or had even received title documents.  They charged the buyer $500 for the appraisal, <other appraisals at the time were going for $350 to $400> and the buyer decided not to proceed with the purchase because of issues the inspection turned up.  The $500.00 for appraisal was non-refundable and wasted.

Also watch for inflated fees, their rates may look good but they may pad an extra $100 here or there and have a higher origination fee, it adds up. Such as $500 for an appraisal and then require a second appraisal (with a padded fee) because the first one said the market was in a down turn (where isn’t it ???)

My advice is to stay in control of who has your information. By all means shop around for the best loan for you and work with local lenders who you can meet with face to face and who are willing to be part of your home purchasing team.