Mortgage auction sites such as LendingTree.com pull together a group of up to four lenders who bid for your loan. I once called them "lead-generation sites," because from a lender's perspective, that is what they do. A "lead" is a packet of information about a consumer in the market for a loan. Lenders pay for leads and auction sites are an important source of them.
I recently looked at nine mortgage auction sites: Cityloans.com, GetSmart.com, InterestRatesOnline. com, LendingTree.com, LoanApp.com, LoanHounds. com, LoanWeb.com, LowestMortgage.com, and Mort-gageExpo.com. While LendingTree is ahead of the others, their similarities are more important than their differences.
All of these sites essentially work the same way. The prospective borrower fills out a questionnaire covering the loan request, property, personal finances, and contact information. The sites use this information to select the lenders to whom the information is sent. Lenders then prepare an offer to the borrower based on the same information.
The sites send the information provided by applicants to "up to four" lenders, except for MortgageExpo. com, which sends it to only one. Lenders are selected based on prior information provided by the lenders regarding the types of loans, borrowers, and properties that they are prepared to consider. For example, an applicant with poor credit who wants to purchase a condominium would not be referred to a lender who has told the site it only wants loans to A-quality borrowers purchasing or refinancing single-family homes. Similarly, an applicant who doesn't want to document income or assets would not be sent to a lender who always requires full documentation.
In principle, the lender selection function performed by auction sites should be particularly valuable to borrowers with one or more challenging features, such as poor credit, incomplete documentation, or little cash. Such borrowers can avoid wasting time soliciting lenders who won't deal with them. How well the sites perform this function, however, is difficult to determine.
The lender-screening process employed by the auction sites also provides some protection against falling into the hands of rogues—lenders or mortgage brokers out to extract as much revenue as possible from every customer. The sites have every reason to bounce a lender who attracts multiple complaints from borrowers. Only LendingTree.com, however, has developed a rating system for its lenders based on reports from borrowers.
In sum, auction sites may be useful in screening out rogues and allowing borrowers with poor credit, incomplete documentation, or little cash to find lenders that deal in those market niches. Such borrowers will probably do better at auction sites than by throwing darts against the yellow pages or visiting single-lender sites. (With few exceptions, single-lender sites don't quote prices that apply to those borrowers.) Strong borrowers who can find their desired loans priced on single-lender sites will probably do better shopping those.
Was this article helpful?
People who struggle with saving money and getting out of debt will find these things in common: They don't know how to stop blaming. They have no idea where their money needs to go! They don't know they need to forget the home equity line. They also don't understand they need to sell some investments. Many more problems untold. Well don't worry, With the strategies that I’m about to let you in on , you will have no problems when it comes to understanding how to get out of credit card debt.