[South Florida Mortgage Insider Blog] Bankrate Bait and Switch Lawsuit
Blackacre Lending - Andy Lockwood
The following piece appeared in a mortgage industry trade publication and confirmed the dark 'secrets' that many already knew about internet advertising. (I've inserted my comments in bold).
But you may be surprised to learn about the inner workings of one of the internet's most popular mortgage sites! And Kudos to American Interbanc Mortgage, the plaintiff and an ex-advertiser with Bankrate, to bringing this surprising issue out into the open!
Enjoy the article!
-Andy
***************
STUART, FL - A lawsuit against Bankrate Inc. claims that the popular website, intended to help borrowers, actually misleads them because some lenders posting rates don’t really honor those rates. [Is anybody really shocked by this?] The lawsuit alleges that this also puts honest advertisers on the website at a competitive disadvantage.
American Interbanc Mortgage LLC, an ex-Bankrate.com advertiser, is suing Bankrate and seeks $16.5 million in damages and a $33 million in punitive damages. [Pretty soon, we're talking real money!] The lawsuit began back in 2002 when American Interbanc Mortgage sued other Bankrate advertisers claiming their rates were unrealistic and put American Interbanc Mortgage at a disadvantage. Later, American Interbanc Mortgage added Bankrate to the lawsuit, after Bankrate did not renew American Interbanc Mortgage’s advertising agreement. [I'm curious if American Interbanc really thought Bankrate would keep them after they sued the other advertisers - that's not exactly good for Bankrate's business!]
American Interbanc Mortgage alleges Bankrate knew what some dishonest advertisers were doing and let it happen. Court documents indicate that Bankrate has had hundreds of compaints about advertisers’ posted rates. The Wall Street Journal reports that one Bankrate advertiser confided to a Bankrate employee saying the borrower would require a “direct pipeline to God” to get the rate they had posted. [Now THAT's funny! I didn't know God was in the mortgage business....but here's a thought: one of these days, I may put out my '10 Commandments of Mortgage Lending.' Thou Shalt Not Bait and Switch. Thou Shalt Honor Thy Good Faith Estimate. Thou Shalt Consider Neg. Am. Loans Only for Short Term Purposes. Etc.]
Bankrate’s reach is wide. Their partnerships with Yahoo and AOL along with their newspaper presence allow their rate tables to be displayed to millions of people on a daily basis.
The case is expected to go to trial this fall.
**********************************
This article highlighted a serious issue in the mortgage business - false advertising by online lenders. You need to guard yourself every day against 'bait and switch' tactics, both online and offline.
How can you do this? Ask questions about every fee and cost. Ask for a closing cost guarantee. (If your loan officer looks at you like you have three heads, tell 'em that Blackacre Lending offers a "No B.S. $1,000 Closing Cost Guarantee", why don't you?)
And look into the reputation of your loan officer. Ask if he's a member of the National Association of Responsible Loan Officers (www.NARLO.com), a nation-wide association of individual loan officers who advocate the full and fair disclosure of and consumer education about the mortgage process. I'm a founding member and head of the Florida Chapter.
If you have any questions about your mortgage, whether for purchase or refinance, call me at the office - 954-236-4500 or visit my website, www.FloridaLoanAdvice.com. The first 3 clients to mention this blog each receive a $20 gift certificate to Starbucks! And that's no bait and switch!
Andrew Lockwood, JD.
Host - "The Best Damn Real Estate & Mortgage Show, Period!"
www.FloridaLoanAdvice.com
Weston, FL 33326
*Licensed Correspondent Lender
--
Posted by Blackacre Lending - Andy Lockwood to South Florida Mortgage Insider Blog at 7/20/2006 07:17:27 AM