Jeff Lazerson’s dream - getting folks a fair deal on a mortgage – using the Internet - took five and a half years, reports the Orange County Register.
The California mortgage brokers‘ online service officially goes live today. It’s a shopping tool he claims will get borrowers a firm rate quote - not just rough, ambiguous offers.
The site, mortgagegrader.com, is a pushback to a dirty little secret in the mortgage game: It’s become almost impossible to comparison shop, and that’s never good for a consumer.
Mortgages are tough to digest for the mathematically challenged populace. An array of complex products makes most apples-to-apples calculations even trickier.
Very few figures offered by a mortgage calculator tell the whole story. Add in the once-frantic rush to buy property and the recipe for trouble formed. That’s especially true if you see the fat profits mortgage lenders make.
Numerous borrowers got pricier bad credit home loans when they actually could have qualified for cheaper prime mortgages. Lazerson insists his system curbs such abuses through the computer matching credit worthiness to the right product.
Other times, loan shoppers have picked an alluring initial monthly payment – and ignored the true costs of the loan. Some of that is the borrower’s fault, but some has been landers’ misguided or even unseemly behavior. Too often, folks who get an overpriced deal are minority and lower-income borrowers.
For instance, Countrywide Mortgage agreed to settle discrimination claims from New York’s attorney general, who alleges that the lender may have given that state’s black and Latino customers costlier loans.
Another mortgage behemoth, Wells Fargo, just launched a bilingual consumer education effort for its growing lending business for less-than-stellar financial profiles. This comes after Wells Fargo faced criticism about the fairness of this subprime mortgage program.
Lazerson thinks his MortgageGrader may cure some key fairness issues.
He says he’s not simply passing your financial profile out as a raw sales lead for lenders to respond to. He says his system gets a prospective lender only the data required to build a quote. That’s income, debts, credit profile and loan-to-value ratio - not personal details like name, ethnicity or even Social Security number.
Only after a banker decides to offer a deal -and it’s accepted by the loan shopper - do the full details of the borrower’s background get advanced to the lender.
Lazerson started this quest in 2001 by pondering ways the Internet could improve California mortgage lending. He’s not the first to use the web’s comparative shopper power, and his thesis - making the game fair and cheaper - can’t be argued with.
“Consumers got it in a second,” Lazerson says. “It was the industry that I had to convince.”
Lazerson couldn’t pull off his dream without cooperation of various lending sources to create a marketplace. Lenders were initially reluctant to sign on, fearing the newness and profit-slashing potential of the site.
Lucky for Lazerson, the mortgage game changed. All of a sudden, a new tool is worth a trial.
Lenders aren’t all bad actors ripping folks off, and considerable progress has been made getting non-traditional borrowers into mortgages they once couldn’t get. But work needs to be done to clean up the mortgage game and educating the borrowing public is a necessity. It’s not just the industry’s burden.
In a sense, your credit report is a sort of fiscal fitness statement of your credit habits.
It names your credit accounts, identifies them by type and tracks balances, credit limits, payments, available credit, open-or-closed status and other information that reveals how well or how poorly you pay each account.
The report, which is one of the primary factors in determining whether you qualify for a traditional or bad credit mortgage loan, also documents your credit requests and notices of liens, judgments and other “derogatory” remarks, remarks from the consumer, and other information.
When you apply for a bad credit mortgage or other credit, the creditor takes a look at your credit report, among other documents and data, to determine if you qualify and to determine how much credit it will grant you. It’s a good idea to keep tabs on your credit report so you can correct any mistakes that could adversely affect your application, and to improve credit whenever possible.
An unblemished credit report not only gives you fast access to credit, you also pay less in interest than you would if your report contains blemishes.
You are entitled to one free credit report a year from any of the three big credit bureaus, Experian, TransUnion, and Equfiax. But beware of “impostor” websites that pose as “free credit report” but which are only questionable marketing gimmicks designed to enroll you in credit-report monitoring and other credit services in exchange for granting you “free” access.
A credit report is not the same as a credit score, which is a numerical analysis of your credit worthiness at a certain point in time, and it not available under the free report provision. If you are looking for your score, note that many people are uninformed or misinformed. Two things are rarely mentioned:
- Make sure that the mortgage broker you are using is aware of the existence of different versions of software used for the various scoring systems. Older versions are not as forgiving (i.e., they produce lower scores) as the newest, up-to-date version, and many resellers of credit reports never bother to disclose this to the broker, much less the consumer.
- Consumers shopping for a home mortgage loan who request their own credit scores are not going to be given the same midscore they would be given in a tri-merge credit report produced for a mortgage broker, which is usually a decent amount lower.
The botton line: Our credit scoring system, while better than nothing, is still full of inaccuracies, lacks many operating standards and is in need of a serious overhaul. Bear this in mind as you begin the process, and get a head start on it. You may need all the time you have to clear things up and ensure that you get the best deal.
So, you’ve decided to become a homeowner? Or you’ve at least entertained the notion?
Before you even decide if you want a fixed-rate mortgage or an adjustable-rate mortgage, take this step:
This course of action simply involves supplying a lender with basic information regarding your debt, income and assets. From there - at no 
cost to potential borrowers - lenders will respond with the mortgage amount for which you qualify.It’s a helpful initial step of the process.
Such pre-qualification can help you narrow your range of homes. Moreover, it proves that you’re a serious shopper, one whose offer will be taken more seriously than an offer from someone who has not spoken with a lender.
In other words: you have a better chance of actuallly purchasing that dream home now!
The pre-qualification stage also allows you to discuss with your lender any goals or needs you may have regarding your mortgage. He or she can then explain your home loan options and recommend the type that might be best suited to your particular requirements.
