Should I be skeptical of this lender?
February 12, 2015 7:35 AM   Subscribe

I applied to refinance my mortgage. I told the agent that prior to putting any money down for appraisals, I wanted to check with a few different lenders so I could be comfortable with my decision to work with them. I was warned that shopping for rates would likely negatively impact my credit. A quick googling proved otherwise, informing me that there is a 14-30 day window to rate shop without impacting credit beyond the first pull. I feel deceived by the lender, and I'd like to know if that seems like that seems like a reasonable response.

If this is a relatively new policy, I can understand how they might not know. I guess I'd like to know if the response I got from the lender could possibly be something other than deliberate misinformation to close a sale. Help me distinguish legitimate concern vs. my fear of being scammed!
posted by yorick to Work & Money (15 answers total)
Anyone who makes you feel uncomfortable is probably not someone you want to do business with. That being said, refinancing is pretty much a 'do the math' enterprise. You go with the institution with the best deal.

It's not like you're going to have an on-going relationship with these folks. Most mortgages get sold within 60 days of closing.

So they may be misinformed, or they may be trying to put doubt in your mind, either way...doesn't say much about them as a loan officer. However, if the deal is solid...
posted by Ruthless Bunny at 7:40 AM on February 12, 2015 [5 favorites]

If nothing else, it speaks to the individual you spoke to either being misinformed or a little sketchy. Here's what I think happened: Lenders are encouraged not to do a hard credit pull if someone isn't serious. The individual may just lazily repeat that to everyone, and people basically accept it because it's the common "knowledge" about credit pulls. I think you would hear that from most any lender. They're not as well informed as they should be, most of the time. (This is why you should read EVERYTHING that they give you to sign.)
posted by stoneweaver at 7:46 AM on February 12, 2015 [4 favorites]

I'd be shocked if every lender you deal with doesn't trot that one out - maybe not to you, but to someone every day. But like everyone else said, a loan is a loan, read the fine print.
posted by Lyn Never at 8:00 AM on February 12, 2015

It's a new-ish change to the way that credit reporting works compared to how long some people have been working with them but it's a years old change at this point (circa 2005 I think).

I suppose some people might take long enough to shop around that they have a bunch of inquiries far enough apart to affect their score so he feels that it's still a true enough statement that he can still say it to discourage people from shopping around without qualifying it.

It's a little bit sketchy but just a red flag. As long as there aren't too many more, you'll probably be okay. If you find another lender with a better deal, it might be a moot point anyways.
posted by VTX at 8:25 AM on February 12, 2015 [1 favorite]

I feel deceived by the lender, and I'd like to know if that seems like that seems like a reasonable response.

Does the lender offer the lowest rate for you? If so, get a refinance from that lender. If not, get a refinance from another lender.

Being "deceived" by the lender does not change their mortgage rate, and hence, does not financially impact you in any way. In other words, it's not a reason to make a decision - it's a sunk "cost" (where "cost" is loosely defined, because you aren't out any money).

A one time badly phrased statement (that the lending agent had likely been coached to make in order to make a sale quickly) is not a great reason to skip out on possible thousands of dollars of difference between mortgage rates.
posted by saeculorum at 8:35 AM on February 12, 2015 [2 favorites]

He's just wrong. I'd use someone else. He's either stupid or scammy.

EDIT: Though when we refinanced they had to use an independent appraiser and the appraisal was good for some period of time, like 60 days? 90 days? (still, I'd back away from this guy.)
posted by small_ruminant at 8:36 AM on February 12, 2015 [1 favorite]

If the lender is discouraging you from applying for credit, that can be considered credit discrimination in some cases. If you feel you were being discriminated against, you should file a complaint. The CFPB takes these kinds of complaints very seriously.
posted by cabingirl at 9:15 AM on February 12, 2015 [1 favorite]

Keep in mind that the lender you refinance with may well sell the loan and odds are decent it will wind up being serviced by a different company. Your comfort working with the lender through the refinancing process has really very little bearing on how they will act over the life of your loan.
posted by zachlipton at 9:37 AM on February 12, 2015

This is true. We refinanced in November and they sold it before the month was out.

But we DID end up spending a lot of time working with the mortgage broker, so I'd pick one that was trustworthy and transparent.
posted by small_ruminant at 9:41 AM on February 12, 2015

Call me old fashioned, but I don't think the stupid or scammy deserve your business. The multiple pulls rule is several years old at this point, so there's no excuse for a "professional" to be misleading you. What else are they going to get wrong?
My lender (no other connection) doesn't sell loans and will show you all the rate options up front with no comittment (or credit check for that matter). The process is all online except for the parts that can't be: the appraisal, and paper signing with a local notary. I can't recommend them highly enough.
posted by wnissen at 10:04 AM on February 12, 2015

It's true that multiple mortgage inquiries will not negatively affect your credit any more than one inquiry will.

However, in the process of getting a mortgage with my credit union (very transparent, very good to work with) I had to write a letter stating that I did not open any new credit accounts based on those other credit inquiries that resulted from my shopping around.

So maybe that's what the lender is talking about? The fact that there are other inquiries will complicate things on your credit?
posted by rabbitrabbit at 11:30 AM on February 12, 2015

We had a broker that made us a bit uncomfortable with things like this, and in the end was a nightmare in terms of dumb screw ups with paperwork that didn't lock in a promised interest rate and nearly made us miss closing. For us it just wasn't worth the hassle.
posted by goggie at 12:37 PM on February 12, 2015 [1 favorite]

The arguments about how soon the mortgage will get resold are completely red herrings. If you get swindled out of 0.1% today, it's irrelevant who owns the mortgage tomorrow; that rate is still locked in.

The agent lied to try to discourage you from shopping around. As with some other professions (cough auto sales cough), lying (what might be more politely called "slightly misleading", but is lying nonetheless) is common.

Go with someone who doesn't appear to be lying before you even start doing business with them!
posted by IAmBroom at 1:27 PM on February 12, 2015

(Also, there sure are a lot of mortgage agent apologists here. Bad advice = underqualified, even if not a liar, so fuck that agent.)
posted by IAmBroom at 1:28 PM on February 12, 2015

My credit report specifically cites too many credit reports being pulled as a reason why my score is a bit lower. They were all pulled on the same day about a year and a half ago when I was buying a car and the dealership asked for quotes from like, eight banks. So that's one piece of anecdata as to why they might be saying that.
posted by cacao at 1:32 PM on February 12, 2015

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