Who’s Perusing Your Florida Home Loan Request? The Answer May Surprise You

Big brother may not be watching, but mortgage lenders are. When you go online or to a lender in person, and receive a mortgage rate quote or pre-approval, you probably assume your inquiry with the lender is confidential. Wrong you are, writes syndicated columnist Kenneth Harney in the Orlando Sentinel.

Your loan officer might be unaware, but behind his or her back, key financial details about you and your mortgage needs are being hawked to competing lenders within 24 hours of your inquiry to a credit bureau. Firms such as Mortgage Inquiry Data, Inc. of Coral Springs, Fla., offer lenders nationwide access to everyone in a particular area who applied for a mortgage loan within the past 24 hours, allowing them to contact applicants almost immediately with competing offers. Scared yet?

Intellidyn Corp., based in Hingham, Mass., touts its “IntelliAlert” program this way:

“Imagine the value of knowing which prospects have inquired or submitted a live application with your competition” within hours. For ‘Platinum’ customers — those who commit to a monthly minimum purchase of $31,395 worth of hot leads — Intellidyn promises to keep its clients on top of any mortgage inquiry, anywhere, anytime they want.”

• So what’s the big deal?
• Aren’t our financial and credit dealings often pored over, swapped and competed for by eager bidders regularly as it is?

Sure, but that’s not the whole story. Consider the experience of Pat Barney, who lives outside Minneapolis and recently applied for a home equity line of credit from a large national bank. Shortly after completing his application, Barney got a call from a competing lender trying to persuade him to switch to her firm.

Then he got another call. This time, from a competitor who began the conversation by saying it had notified by Barney’s lender that he is looking for a [home equity] loan. Barney manages a branch office of Summit Mortgage Corp. in Edina, Minn., and due to his experience, knew that was a blatant lie.

“Why would [my lender] want to let anybody else know about my application? This is a setup for a bait-and-switch,” he said. “Here I am in the mortgage business and now I see that my customers’ credit information may be marketed and sold within hours to my competitors.”

Barney is also suspicious that lenders calling him this fashion — especially those who were dishonest with him up front — would be highly likely to mislead him with low-ball estimates on rates and fees in an attempt to steal his business.

The information can be highly detailed and sensitive, too. Mortgage Inquiry Data’s website offers the credit scores, existing mortgage balances, loan-to-value ratios, monthly payments, revolving debts, and all sorts of other financial data about the mortgage applicants it profiles.

“Where is the line here? When do you begin to violate individuals’ privacy rights?” asks Ginny Ferguson, co-owner of Heritage Valley Mortgage of Pleasanton, Calif.

Ferguson is a past chairperson of the credit score committee of the National Association of Mortgage Brokers. She says her group will look into possible violations of federal credit and privacy regulations by intermediary firms in the mortgage business.

Meanwhile, Jesse Leeds, sales director for Mortgage Inquiry Data, claimed in a promotion to clients that his business is “compliant with all privacy and Do Not Call laws.” The promotion also claims that the firm is “able to provide [its services] by working in conjunction with the three major credit bureaus.”

However, in an interview, he said the firm gets its credit data from just one bureau — Equifax — not Experian or TransUnion.

Equifax and Experian have confirmed that their firms do offer 24-hour lists of applicants for mortgage credit. TransUnion did not comment on whether it provides overnight contact data for loan origination requests, while Equifax and Experian insist their marketing of overnight mortgage leads violates no federal or state rules. Their claim it that it is a faster version of their general sales of lists for other pre-approved offers of credit.

So, what can Florida home loan applicants take away from this?

It depends on whether you believe that your mortgage inquiry should be private and should not result in your credit score, current debt levels and sensitive information being distributed to companies who plan to compete for your business. While that may be an invasion of privacy, you might appreciate getting alternative offers. It could result in a better bargain, after all.

Be sure you check out any lender thoroughly, however.

Ask for multiple consumer references in your area, and check with financial regulators to make sure it has a clean record. You cannot be too careful with mortgage decisions. And never deal with an agency who claims a local lender suggested they get in touch. Otherwise, you’re just opening yourself up to a new version of the classic con: The Florida home loan bait-and-switch.