Oregon Mortgages

"Bait & Switch"

This has to be my favorite term in the Mortgage Business. I’m sure that most (if not all) of us Loan Officers have had this happen.

Bait & Switch: A tool that some loan officers will use. Whether it be disclosing a 6.0% Interest rate just to have it change right before closing to 6.25% or disclosing the fees at $3000 and then when you go to sign they turned into $4000.

I’m a firm believer in disclosing EVERYTHING to my clients. I don’t like to have Closing Costs & Prepaids come in higher than I had them sign their initial application for. I prefer to have them come in lower. Besides, it always looks better. At the same time, I will not “hide” a fee so I can say “look my fees are lower” to get someone’s business to then have the real fees show up at closing and they are too far into the process to back out.

I had this happen recently, I had a client call me up and tell me they were going to go with another Loan Officer which is no big deal. I asked them their reasoning and they stated that the “closing costs” we’re lower. I don’t really feel like going into the long version of this story but in the end THAT Loan Officer got their business this time but they called me to apologize and stated that he “lied” to them and that the fees came in higher at closing.

I told them that it happens and that we refer to it as a “bait & switch” I’ll promise you this but in the end that isn’t going to happen. I guess on a side note I will be receiving any referrals that they can send to me since in hindsight they wish they’d of stayed with me.

I guess the moral of this story comes from a blog that I read titled “Shop the Mortgage Broker not the Mortgage” People need to shop the person they plan on working with. Is it worth to have a headache on your hands to nickel and dime? I would rather pay a couple hundred dollars more in fees to have the process be easy and smooth than stress out during the process because I wanted to save that few hundred dollars. The fees shouldn’t vary THAT much when it comes to one LO to the next and if someone is promising you thousands less in fees I’d encourage them to sit down and compare the fees then ask questions. There are fees that a Loan Officer just can’t control, change, mark up….etc. They should all be relatively similar.

Words of Wisdom; If it sounds too good to be true it probably is. There are fees involved in a loan that a Loan Officer has NO control over and cannot change them. I’ve seen Good Faith Estimates where they do not disclose all of the fees thus the “Bait & Switch” so be careful!