FAttl SECTIONS DAILY HERALD SUNDAY,,MARCH 9. 2008 Mortgage sites 9 referrals platform is flawed JackGuttmtag Mortgage professor Five years ago, I wrote an article on Internet mortgage referral sites, six of which I examined with some care. In 2007, Loan.com joined the group, claiming a unique distinction: All the loan providers on its site have to abide by a borrower bill of rights. The question is whether this provides any substantive benefit to borrowers, or is it just another species of hype? I think the site sponsors get an "A" for effort, the same type of "A" I received as an 8-year- old when I tried to vault a bar and landed on my head. The problem is that they applied the idea of certifying loan providers, which I have good reason to believe they picked up from me, to a referral site model on which it doesn't work. It is the same model used by the firms I examined in 2002, and which are still operating: Bankrate.com, Bestrate.com, Compareintere- strates.com, Domania.com, Interest.com and Loanpage.com. Referral sites charge loan providers who post their mortgage prices on the sites. They are a better information source than newspapers because their coverage is generally wider and the prices are usually current. Referral sites connect to the Web sites of the loan providers listed, and may also show their telephone numbers, which is convenient. However, selecting loan providers who show the lowest prices on a referral site NEWPORT COVE UNIQUE PLANNED COMMUNITY ON CHAIN O' LAKES Beautiful 42-acre waterfront development with 67 single-family homes, private marina flc waterfront park Home sites from $120,000 - $450,000 Home/lot packages from $365,000 - $1.1 million Models of en 1 lam-5fm Fri., Sal., Sun. drMon. Grass Lake Rd. in rural Antioch, to Bluff'Ijike Rd., to the '.horn of Bluff Lake www.newport-cove.com or call 847.726.2727 NEW AMERICAN HOMES INC. Win HI nu LARK Is YOUR FRONT YARD mmmmm Get the Market Value of your home by email, every 30 days. yr ' •<*? www.LakeCountyMarket Values.com Active, pending and sold comps, it's automated and it's FREE. AScrvl«b)TbtLn1l(McDnnciellTtiin/Rt/MnSuburbiil I I.( 1344 S. Mllniiikn Air • l.lbf rtyvllk, IL 60048 M7-M7-MM-M7-M7.5MI Direct Single-Family Homes Priced from the mid $400's Oak Grove Luxury Homes Amid Wonderful Woods Y 3U barely see the homes through the trees in this naturally splendid setting, but what homes they are. Stately. Single family. With floor plans that let you do it your way. Add a home office, expand the family room, bring the warmth of a woodburning fireplace to your master suite. It's up to you. But visit soon. Your choice of sites and scenic vistas will never be better, and neither will the price. Superb Standard FEATURES: • masonry fireplace • central air • volume ceilings • city utilities • full basement • heavily wooded lot • master suite with magnificent bath WYNWOOD BUILDERS 1-90 west to Rte. 31, north to Ames Rd. (approx. 2 miles north of Rte. 176), egsi ' to model. Open Mon., Wed., Fri. 11 to 5, Sat. & Sun. 12 to 3. (815) 444-6070 Others Build Homes... Right now, ask about our FREE Super Energy Efficient Package "The Gift That Keeps On Giving" Modern Homes can custom-tailor a plan to meet yout needs, or build from your plans. You'll choose the options. You'll work with our skilled interior designer and our respected craftsmen. And you'll love the result. For not only will you enjoy the unparalleled luxury and comfort of a Modern Home, but all those little personal touches that make it truly Your Home. A place where warm and wonderful memories are waiting to be born. Single-family homes From the mid $200's IN TREVOR, WISCONSIN: 1-94 to Rte. 173 exit. West to Rte. 83. North to North Ave. West to Trevor Rd., north to entrance. (262)862-6000 ;ro Homes, Inc. DESIGN/BUILD/REMODEL Single-family home's From the mid $200'f \ IN WINTHROP HARBOR: 1-94 to Rte. 173 exit. East to Lewis. Left on Lewis to 13°. East on 13 lh to model. (847) 973-8886 &t*l>er Skoret Single-family homes From the mid $200's | IN LAKE VILLA: Minutes from the Chain 0' Lakes. I-94 north i to Rte. 132 exit (Grand Ave.) west. Follow until Rte. 59. ! Turn left and take to subdivision on right. (847) 973-8886 | Cretkfide \ All-new community From the mid $200's IN TREVOR, WISCONSIN: For information, call or visit Rock Lake Meadows. (262) 862-6000 upttl 'xjluuJtiy & ^u www.mwJtrn-bomej.wm is hazardous, for three reasons. I will illustrate these reasons with Loan.com, though they apply to the other referral sites as well. First, the prices shown apply only to borrowers who meet the highest underwriting standards — "creampuff loans." In the case of Loan.com, the posted prices don't apply if your credit is less than good; if you are putting less than 20 percent down; if you cannot fully document your income and assets; if you are refinancing to take out cash; if the property is anything but a single-family house; or if the property is not your permanent residence. These exclusions constitute a majority of borrowers. It is foolish to expect that the lender with the best price on a creampuff will also have the best price on, e.g., a low- documentation or small-down-payment loan. The correlation is close to zero. Second, you can't shop adjustable-rate mortgages (ARMs) effectively, even if your loan is a creampuff, because information is not provided on ARM features that affect the interest rate after the initial rate period is over. These include the rate index, margin, rate adjustment caps, and maximum rate. Third, and most important, borrowers can't fully rely on the prices shown on the screen because referral sites provide an enormous temptation to lowball, or price below the price the loan provider actually expects to deliver. A low price is the only way a loan provider has of grabbing the borrower's attention. Loan providers can't be held to the prices they quote, since they are committed only when they lock, at which Popular Single-Family Home Close to Everything! 1384 Baroque Avenue The Tuscan: A gracious home on a corner homesite. 2,475 sq. ft., 4 bedrooms, 2.5 baths and a 3-car garage. Kitchen with island and huge walk-in pantry, 42" cabinets, upgraded appliances and countertops. Family room with ceramic tile fireplace, upgraded carpet and pad and staircase with oak rails. Full basement with 3 pc. bath rough-in. This gorgeous home is a must see! Excellent shopping at nearby Deer Park Center. In Volo: Take 1-94 to Behidere Rd. (Rte. 120) and exit west approximately 12 miles to Grlmer Rd., then left to the community entrance. Or, take Rte. 12 to Rte, 120, east to Gilmer Rd., (lien right to community entrance on the left. Open daily 10-6, Friday 12-6. ' CAMBRIDGE HOMES ty (847) 984-4934 NEW SUNRISE NWISION Bordering Rock Lake's scenic shores, the sites of New Sunrise Subdivision claim the surrounding beauty in anticipation of homes with equally elegant standards. ONLY 2 SITES REMAINING COMMUNITIES For Further Information Contact S.R. Mills or Glenda Dupons at: (262)842-0452 or (262)358-1031 • www.BearCofflmunities.com AUCTION REAL ESTATE AUCTION DEVELOPER CLOSEOUT APRIL 5, 2OO8 SIX BRAND NEW TOWNHOMES Antioch, IL Rt. 12 (Rand Rd.) N. to Rt. 59 to Bowles Rd. to Inverness Ct. AUCTION INFORMATION CENTER: 1320 INVERNESS COURT Two-story, 2BR/2-1/2BA and 3BR/3-1/2BA units, up to 2,497 sq. ft. Gourmet kitchen, open living area, master suite, loft, distinctive architectural touches throughout, full basements, deck, 2-car garage, situated in expansive wooded area with great conservation views. PREVIOUSLY PRICED UP TO $528,000 SUGGESTED OPENING BIDS FROM $185,000 TWO TO BE SOLD ABSOLUTE, REGARDLESS OF PRICE OPEN HOUSES 11 AM TO 1 PM, MARCH 22 * 30 AND 4 TO 6 PM, MARCH 25 & APRIL 3 RICK LEVIN & ASSOCIATES, INC 773-252-45OO WWW.RICKLEVIN.COM point the market may have changed. The market Is volatile, with prices reset daily and sometimes within the day. Further, the final price is contingent on the borrower being approved, a process that provides ample opportunity for price adjustments, many of them legitimate — as when the borrower does not meet all the underwriting requirements assumed in the displayed prices. Easily concealed in a legitimate price adjustment is an illegitimate increment that retrieves the lowball quote from the borrower's grasp. The largest of the referral sites, Bankrate.com, has been sued by a loan provider claiming diat other loan providers were lowballing. In its defense, Bankrate.com claimed that it polices the behavior of its loan providers through a process of mystery shopping, and if it finds that a loan provider is not honoring the prices posted on Bankrate's site, it will temporarily suspend them from advertising on the site. Dozens of bounces a month indicate a pattern of widespread violations. It also indicates that the punishment of being unable to list for a few days is not much of a deterrent. It is not in the financial interest of the site to bounce them permanendy. The borrower bill of rights on Loan.com includes a "Rate Quote That Won't Change," i.e., no lowballing. But low- balling happens, despite the pledge, and Loan.com has had to adopt the same tactic as Bankrate.com to deal with it. Loan.com has mystery shoppers to check for compliance, and they suspend violators — but not for very long. Given the existing referral site structure, lowballing is an insoluble problem. I predict that in 2008 a new type of referral site will arise that does not have the problem. WEST CHICAGO Prince Crossing Farm S 539,900 Including Site SPECTACULAR CUSTOM WINDSOR • Lot 72 Featuring Benjamin/Evergreen 25 Schools • 4 Bedrooms, 3.5 Baths, Custom Granite Kitchen • 2-Story Family Room, Luxury Master Bath • An Energy Star Home, 2x6 Walls & Much More! Call Christy Wbelanfar details 630-665-5700. www.AirhartConstruction.com N NBA (jQ LESS THAN A YEAR OLD This Cambridge 4 Bedroom Is A Roomy Heatherstone Model. Large Master With A Loft Area For The Children. The New Subdivision Has All The Wants And Needs Of The Family Lifestyle. Come Take A Look & Enioy. Wait Till You Meet This Waterloo. Not Anything Like Napoleon's! $253,000 LARGE HOME On nearly One Acre on Green Bay Rd. Adjacent to Green Bay Rd. Business Dlsttict In Beach Park. Live In Existing House or Rent it Out until property Is ready lor Commercial Development. In-Law Arrangement Possible. Up to 1,000 Square Feet Garage allowed on property. House Sold 'As-ls.' Verify Potential Uses with Village of Beach Park. $250,000 ENJOY COUNTRY LIVING. In Wadsworth with This 4 Bedroom 2 Bath Farm House With A 3 Car Detached Garage. Kitchen Overlooks Vacant Land Behind Home. Gurnee Schools. Where In Wadsworth Can You Find A Home For This Price? $265,000 BEAUTIFUL 1.11 ACRE LOT In Area Of Nice Homes On Larger Lots With Country-Like Atmosphere. Last Lot Available. Identical Lot Next Door Just Sold For S80K. No Wetlands Or Floodplains According To Lake County Maps. Well & Septic Required. Soil Test Results Available Upon Request. Buy Now With Confidence & Begin Building In the Spring. $80,000 15200 Wadsworth Road, Wmtewbrth, IL < [The best place to live. (In one of America'* DM* places to live.) In 8006 and 2006, NapervlllewM IM on* of beat place* to live in the • 5 mioutfil from charming ckjwnujvm Napetvife * Convenient »cc«$t to WW.I-3S5S Incredible ***i!r^ ^rf f JVViB wrthfabuteuj THE IROQUOIS CLUB opportunity*! IBwtcoom Developed by Phillip Mania Hal Esatt. &Jo and maAning by The Habitat Company.
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