The People's Money
Watch Out Mortgage Refi Spamming On The Rise
By Robert K. Heady
Bank Rate Monitor
You
see them plastered all over your incoming e-mail. Spam messages
that urge you to refinance your mortgage now because "rates
are at a 40-year low and won't last forever." Plus, the
e-mail goes on, "You can even do it with bad credit."
And the lower mortgage
rates go, the more spam you get.
Other spammers even
promise to "reduce your debt payments by as much as 70 percent,
with interest reduced to 0 percent." It's not unusual to
receive five to 10 such e-mails a day.
Tempting, no? Yeah,
sure, but you'd better beware.
Those pitches aren't
originating directly from the outfits that will actually lend
you the money. They're coming from a huge army of marketers -
(begin italic) who never reveal their names, addresses or phone
numbers (end italic) - fronting for hundreds of lenders and debt
management companies to whom they forward personal information
on you. Their goal: to cash in on live leads.
How do they operate?
No one has an exact, full bead on these promoters, but it starts
by someone buying maybe 20 to 40 million e-mail addresses and
sending out their spam. Sources tell me it's now possible, for
example, to match up addresses in court records with e-mail lists.
"After pornography," one expert told me, "mortgage
promotions today are the most prevalent form of spamming on the
entire Internet."
Almost always, the
spammer will tell you it'll only take "one minute of your
time to fill out our easy application." Fortunately, most
of them now shy away from requesting your Social Security number.
But they want other information, such as your home and work phone
numbers, property value, purchase price, balance owed, rate you've
been paying, name of your employer, monthly gross household income,
and how much you wish to borrow. They'll also ask for your credit
rating - "excellent, good, fair or poor."
(Forgive me, but anyone
who supplies all that private info to someone who doesn't tell
you who they are, or how to contact them, needs his or her brain
examined.)
- Gabe Minton, vice
president of industrial technology for Mortgage Bankers Association
of America in Washington, D.C., suggests that consumers who receive
such spam e-mail shouldn't even request that their name be removed
from mailing lists "because it lets someone know they're
alive." He also sees a danger in providing personal data
unless you're sure there's a privacy/security lock displayed
at the bottom of the Web page.
Yet, the refinancing
boom, because interest rates are so low, has captured everyone's
attention, and the Internet is where they shop rates. For instance,
Minton recently conducted an unofficial poll among approximately
50 of his MBA colleagues and found that all of them - 100 percent
- had refi'd in the past two years. And all of them, every one,
had used the Web to shop for the best rates.
It shouldn't be surprising
that electronic information now plays such a dominant role in
the multi-step mortgage process, says Minton. It begins with
rate shopping, then credit history analysis, property information,
and preliminary underwriting. Thanks to two new federal laws
passed by Congress in 1999 and 2000, the next trend will be electronic
signatures by buyers to complete the mortgage loan, he adds.
As for the fact that
many lenders today will approve you for a loan despite a poor
credit history - but at a higher "sub-prime" rate -
"the business today is so flexible and variable that it
shouldn't come as a surprise," says Minton.
MBA has a Web site,
www.stopmortgagefraud.com, that tells you what to beware of when
applying for a loan.
Meanwhile, to guard
against the spammers who are after your money, you might take
this wise advice from Doug Perry, first vice president of Countrywide
Home Loans, Rosemead, CA, a national leader in residential mortgages:
"Make sure you
work with a reputable lender that will stand behind its promises.
Don't pay up-front fees for a `consultation' or for `prequalifying.'
Fees are for appraisal and credit report only.
"And remember,
if it sounds too good to be true, it probably is."
Editor's Note: Consumer-rights
advocate and financial expert Robert K. Heady is the founding
publisher of Bank Rate Monitor. He invites Bull & Bear reader
mail on consumer money problems and solutions but cannot respond
personally to all inquiries. Send e-mail to jrnl8888@aol.com,
or write to P.O. Box 14875, North Palm Beach, FL 33408.
