Written by Jayson W. Johnson, SmartRateSearch.com

The Mortgage Lead Reseller Trap!
Are you searching the web for a new mortgage to buy your dream home? Are you considering refinancing your current mortgage? It seems that you cannot open an email, view a website or even turn on the television without being overwhelmed with companies offering their “assistance” with your mortgage search. The pitch goes something like this: “Have lenders compete” or “compare up to four lenders' offers” and so on.

Many of these companies have spent millions of advertising dollars to become household names, and they have succeeded. They will quote incredibly low interest rates that are very appealing in today's tough economy. You might think, “Why not click that banner ad if I can lower my 6% rate to 4.25%?” You will know a lead re-seller by familiar catch phrases such as: make lenders compete, or compare lenders, then they ask you to complete a simple form. This should be a warning bell!

You may know these company names, but you might be surprised to know that these companies are not lenders and will never make a lending decision. They are what are called mortgage lead resellers. These companies are in business for one purpose and one purpose only – to gather your confidential information and sell it multiple times to mortgage brokers and lenders.

When you perform a Google search, for example, with the phrase “mortgage rates”, over 51 million results are returned. There are not 51 million lenders total on the planet! In fact, within the coveted first page placement results, only an average four advertisers are real lenders. The rest are mortgage lead resellers and they are incapable of locking those really low interest rates they display so proudly in their advertising. Why? Say it with me, “They are not lenders!”

There are three additional problems consumers should be aware of that are inherent in this process. The first is a result of the buying and selling of leads. Lenders will pay up to $100 for one lead, purchasing five to ten at a time. The lender then typically only writes one mortgage from this group. At that point, one mortgage has cost the lender from $500 to $1000 dollars. They in turn pass this exorbitant cost on to, you guessed it, the one consumer who gets the mortgage.

The second problem affects everyone applying for mortgages through mortgage lead resellers , and it has to do with confidentiality. The process is such that you never know who actually has the confidential information that you submitted to the mortgage lead reseller . With identity theft becoming an ever-increasing threat to consumers, you might assume your information is kept under lock and key, so to speak. You would be wrong!

In a recent visit to a local mortgage brokerage office I took some liberties and snapped some photos. This is how they are protecting the confidential information they purchased from a nationally known mortgage lead reseller!

If you recently submitted your application with a highly recognizable reseller, this could very well be your confidential information in piles on the floor! If your identity is stolen due to the neglectful or intentional behaviors of one of these lenders, you have no recourse simply because you do not know, nor will you ever know, who received your information.

The third problem with the process can be termed, “Opening Pandora's Box.” The lenders have invested money in you by buying the lead, and their employees are trained to “not take no for an answer.” You can expect constant phone calls day and night from loan officers pushing to gain your business, at least until you change your phone number! Once the consumer is in the mortgage lead reseller system the phone calls and emails can continue for weeks, months and years after the initial application. This screen shot is an example of a reseller offering to sell mortgage leads now from information submitted by mortgage shoppers back in 2005!

If you are shopping for a mortgage do not to be enticed by the marketing trap of a mortgage lead reseller! There are better ways to find the right lender with the best pricing for the mortgage product you need.

SmartRateSearch.com is not a lender or a lead reseller, but a watchdog organization that allows the consumer to compare lenders and their offerings through our proprietary Virtual Loan Shopper. Consumers can then choose a specific lender and apply directly with that lender. This unique system allows the loan applicant the opportunity to locate the best lender pricing without the annoyance of the endless phone calls from aggressive loan officers. More importantly, the consumer knows exactly who has their confidential data at all times.