Lead-Generation Sites

A mortgage Web site designed to provide leads to lenders. A 'lead' is a
packet of information about a consumer in the market for a loan. Lenders pay for leads, and these
sites are an important source of them. Prospective borrowers fill out a questionnaire covering the
loan request, property, personal finances, and contact information. The sites use this information to
select the lenders to whom the information is sent. Lenders then prepare offers to the borrower based
on the same information. Lender Screening: Lender selection by lead generation sites should be
valuable to borrowers with one or more challenging features, such as poor credit, incomplete
documentation, or little cash. Such borrowers can avoid wasting time soliciting lenders who won't
deal with them. Lender screening also provides some protection against falling into the hands of
rogues—lenders or mortgage brokers out to extract as much revenue as possible from every customer.
The sites have every reason to bounce a lender who attracts multiple complaints from borrowers.
Promoting Lender Competition: Lead-generation sites are sometimes called 'auction sites' because they
purport to provide a group of lenders, usually up to four, who will bid for the borrower's business.
Selecting from among lenders provided by an auction site, however, is as difficult for most borrowers
as selecting among any other group of lenders. The sites don't require that the initial price quotes
provided by their lenders be sufficiently complete to allow borrowers to make intelligent choices. It
is no easier to get settlement cost data, or the complete specs on an ARM, from these lenders as from
any others. Neither can the sites protect borrowers against 'sharp practices' by lenders during the
period between initial price quotes and the time when the price is 'locked.' Guidelines for the Most
Effective Use of Lead-Generation Sites: Decide beforehand whether you want a fixed or adjustable rate
mortgage, as well as your preferred loan term, down payment, and points. If you are uncertain about
any of these, do some homework .Fill out the questionnaire as accurately and completely as you
can. That information is used to match you with the lenders most likely to be interested in your
loan.  Mortgage price information comes from the lenders who contact you, not from the site. The
amount of price information they give you may depend on what you ask for. Remember that
on fixed-rate mortgages you need the interest rate, points, and dollar fees. While some lenders are
not in the habit of providing their dollar fees in initial price quotes, you can insist upon it.  If
you are interested in an ARM, you need to know more than the rate, points, and loan fees. Receiving
price quotes over the telephone is looking for trouble. Ask lenders to e-mail or fax their prices to
you. The interest rate and points quoted by a lender apply only to the day you receive them. The
prices that really matter are those quoted to you on the day you 'lock' the loan with the lender. The
lock means that the lender is committed to the prices. Lender locking requirements vary widely,
ranging from very little, to a signed application, to a signed application plus a non-refundable
payment. You are entitled to know at the outset exactly what each lender's requirements
are, and how long it should take if you do everything expected of you.

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