Is This Mortgage Lender Reputable?

August 19, 2002 "I have been solicited over the phone for refinancing by a company called�, claiming to be a direct lender insured by Fannie Mae. I do not find them on your list. The rates they quoted me were very attractive. How do I go about finding out if I am dealing with a reputable company?" You are fortunate, because this lender left a clue. Fannie Mae does not insure lenders, and that means that you shouldn�t trust anything else they told you -- especially about interest rates. There really is no place for someone like you to go to check out a particular loan provider. That�s why they should be selected in the same way as wild mushrooms: identify a few you know are good, and let the rest go. I don�t have a list of approved lenders. The list on my web site consists of Upfront Mortgage Brokers (UMBs) who agree to act as a borrower�s agent in shopping for a loan. These brokers set their fee in advance and pass through the wholesale price from the lender. There is no comparable list for lenders, although I have listed and evaluated a number of single-lender web sites and multi-lender auction sites. If you don�t want to use one of the UMBs or any of the internet lenders listed on my web site, and you have no dependable referral sources, throw a dart at the yellow pages. While most lenders who solicit by telephone are OK, most rogues solicit by telephone. Hence, the chances of hooking up with a rogue are greater if you accept a blind telephone solicitation than if you select a loan provider at random. Copyright Jack Guttentag 2002

Jack Guttentag is Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania. Visit the Mortgage Professor's web site for more answers to commonly asked questions.

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