It’s no surprise that banks are coming up with innovative ways to elicit new mortgage business. The following tricks are ethically questionable:
1. Getting your contact information
The first trick banks use is associated with credit reporting. Mortgage companies must pull a copy of your credit report which is one credit score per bureau and the lender will use the middle credit score to qualify you for mortgage financing. The credit reporting agencies are for-profit companies and, as a result, they sell your contact information to loan competitors.
Consider the following scenario; you apply for a $500,000 home loan, within a few hours you start receiving a barrage of emails and phone calls from various other mortgage companies telling you that your credit was run and that they understand that you’re shopping for a mortgage. This is because they purchased your data from the credit reporting agencies. Unfortunately, there is no regulation from the credit reporting agencies to resell your data which then causes you to be inundated with unsolicited mortgage offers.
How to avoid this hassle
When you’re applying for a mortgage with the lender of your choice make sure that when they pull your credit report they do not put your phone number on the application. They can pull credit and then put the phone number on the application after obtaining your credit report which should significantly reduce the likelihood of you getting solicited by lending competitors.
2. Watching your transactions
The second trick bigger banks like Chase are starting to use involves poaching customers for earnest money deposits. When you make an offer to purchase a house and you get into contract you’re required to put in an earnest money deposit (EMD for short) into escrow. It could be any dollar denomination that you and your realtor and seller agreed to base on the terms of your purchase agreement.
Let’s just say for example the earnest money deposit is $5,000. You get into contract and then the next day you go put your $5,000 into escrow from your bank account. The earnest money check causes your bank to question you about buying a home.
How to handle this hassle
This practice is something that banks are starting to do as another sneaky way to poach a consumer. Watch for this. You are under no obligation to answer their questions with regards to your home buying project.
At the end of the day you as a consumer have the right to choose whoever you want to work with to handle your mortgage loan financing. Pick a lender who you feel comfortable first and foremost, followed by the lender that you feel with deliver on their expectations and promises. Consider this: would a big bank who solicited you via your earnest deposit or purchased your data from a credit inquiry going to meet or exceed your financial expectations? Think about it for a second. A lender who sets clear expectations and is accountable is probably not a lender who is poaching you based on trigger data information.
This article originally appeared on SonomaCountyMortgages.com and was syndicated by MediaFeed.org.
Featured Image Credit: DepositPhotos.com.
