Don't be duped by 'double dealing' mortgage comparison sites

Have you used an online mortgage comparison website or app to shop for the lowest mortgage rates? 

If you have, you’re not alone. 

Rising interest rates have pushed more people toward these tools, which promise lower rates and a simplified borrowing process. 

Sites like Better.com, Lending Tree, and Credible.com taut a seamless digital lending process where you are automatically matched with the lowest rate possible on your home loan. Mortgage shoppers then choose their favorite option and finish the entire borrowing process in a few steps from start to finish. 

According to Forbes, this kind of digital lending technology or “LendTech” has transformed the mortgage industry, mostly due to the pandemic's impact on the way consumers now use technology. More people in the market to buy or refinance a home  are turning to online tools allowing them to complete the entire mortgage process from home.

Unfortunately, digital mortgage comparison platforms can have a dark side, and the Consumer Financial Protection Bureau (CFPB) took note. They issued an advisory warning consumers of predatory lending practices from pay-to-play digital comparison-shopping platforms targeting unsuspecting mortgage rate shoppers by steering them toward more expensive loans from their lending partners. 

The companies behind popular digital platforms present their platform as offering an automated way to objectively compare lenders. Unfortunately for borrowers, these companies "may illegally refer people to only those lenders paying referral fees." 

The cost of this can be high for consumers who are duped into less-than-ideal loans. 

"When shoppers use a lender that is not the best option for their needs, they may end up with a lower quality lender or paying thousands more in closing costs or interest." 

According to the CFPB, this practice violates the Real Estate Settlement Procedures Act (RESPA), which requires mortgage lenders to disclose to borrowers "the nature and costs of the real estate settlement process." 

If you search the CFPB's Consumer Complaint Database, you'll see that mortgage-related concerns rank in the top five after credit reporting and repair services, debt collection services, credit prepaid cards, and checking or savings accounts. 

One consumer upset with hidden fees and minimal response from a popular digital mortgage platform loan officer complained: "This would of never happened with a live rep. These online banks need to be more regulated. I feel I was duped with a bait and switch." 

In another complaint, a rate shopper was lured into a digital mortgage comparison platform with a low rate and then switched to a rate that was almost double the first rate.  

"This is misleading consumers and affecting their credit,” the consumer shared. 

Schemes like this are exactly why credit unions exist. Our not-for-profit financial cooperatives were created to empower ordinary people to build trusted financial products that put our own best interests first. 

This includes mortgages backed by real people whose sole focus is on having one another’s backs. For example, CAFCU’s Real Estate Lending team consists of loan experts who are committed to doing whatever they can to be a resource to our members. They work hard every day to assist members with honesty and integrity as they empower their financial success. 

It's an old-fashioned approach stemming from the credit union philosophy of people helping people. Still, though we are traditional in many ways, credit unions have pivoted over the years to meet increasing demand for digital products and services. We now offer online applications for those who want the ease and speed of digital tools without sacrificing that personal touch so important when navigating the complexities of the mortgage process.  

According to Consumer Reports, the best way to find the lowest rate mortgage in a rising-rate environment is to:  

The nice thing about credit unions like CAFCU is that unlike most online lenders, we offer access to a full suite of financial services, which allows your loan officer to focus on your holistic financial health and not solely on your mortgage.  

In addition, credit union loan officers like those at CAFCU do not work on commission, so member satisfaction is their exclusive focus. 

When you are ready to move on a home purchase, CAFCU’s experts can help you explore options for creating a monthly mortgage payment that fits your budget. You can learn more about CAFCU’s mortgage services at cafcu.org/mortgages, where you can read frequently asked questions and start an application online. You can also call the team at 1-800-359-1939, option 2. 

If you want a deeper understanding of the mortgage process, the current rate environment, and how to apply for a mortgage, check out these related articles and resources: