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Hawking your private mortgage data

Info now sold to competing lenders within 24 hours of loan pre-approval; 'bait and switch' set-up

By Ken Harney

When you get a mortgage rate quote or a pre-approval, you probably assume that your inquiry with the lender is confidential, right?

Wrong! Your loan officer may be unaware, but behind his or her back key financial details about you and your mortgage needs are being hawked to competing lenders within 24 hours of your credit bureau inquiry. Firms such as Mortgage Inquiry Data Inc. of Coral Springs, Fla., offer interested lenders nationwide "access to everyone in your city who applied for a mortgage loan within the past 24 hours. You can contact these people the next day and offer them a pre-approval for a better loan with your company."

Intellidyn Corp., based in Hingham, Mass., touts its overnight "IntelliAlert" program this way: "Imagine the value of knowing which prospects have inquired or submitted a live application with your competition" within hours. For "Platinum" customers -- those who commit to a monthly minimum purchase of $31,395 worth of hot leads -- Intellidyn promises to keep its clients on top of any mortgage inquiry, anywhere, anytime they want.

So what, you say? Aren't our most intimate financial and credit affairs sliced, diced, and served up to the highest bidders on a regular basis anyway? Sure, but consider the experience of Pat Barney, who lives outside Minneapolis. Barney recently applied for a home equity credit line from a large national bank. Shortly after application, he got a phone call from a competing lender trying to persuade him to switch to an equity line from her firm.

Then he got another call, this time from a competitor who began the conversation by saying, "I've been notified by your lender that you're looking for a [home equity] loan." Barney, who manages a branch office of Summit Mortgage Corp. in Edina, Minn., knew that was an outright lie.

"Why would [my lender] want to let anybody else know about my application?"

He was also suspicious that lenders calling him this way -- especially those who were dishonest up front -- would be highly likely to lowball their estimates on rates and fees in order to steal him away.

"This is a set-up for a bait and switch," he said. Worse yet, he added, "here I am in the mortgage business and now I see that my customers' credit information may be marketed and sold within hours to my competitors."

And the information can be highly detailed and sensitive. Mortgage Inquiry Data's Web site offers loan inquirers' credit scores, open mortgage balances, loan-to-value ratios, monthly mortgage payments, revolving debt balances, plus other personal financial data about you.

"Where is the line here?" asks Ginny Ferguson, co-owner of Heritage Valley Mortgage Inc. of Pleasanton, Calif. "When do you begin to violate individuals' privacy rights?" Ferguson is past chairperson of the National Association of Mortgage Brokers' credit score committee, and said her group plans to look into possible violations of federal credit or privacy regulations by intermediary firms selling 24-hour mortgage inquiry and contact information provided by the national credit bureaus.

In a promotion sent to lenders, Jesse Leeds, sales director for Mortgage Inquiry Data, claimed that his business is "compliant with all privacy and Do Not Call laws." The promotion also claimed that the firm is "able to provide (its services) by working in conjunction with the three major credit bureaus." However, in an interview, he said the firm actually gets its credit data from just one bureau -- Equifax -- not Experian or TransUnion.

Spokesmen for both Equifax and Experian confirmed that their firms do offer 24-hour "trigger" lists of applicants for mortgage credit. TransUnion did not comment on whether it provides overnight contact data. Equifax and Experian insisted that their marketing of overnight mortgage inquiry leads violated no federal or state rules, and is merely a speeded-up version of their routine sales of lists for other pre-approved offers of credit.

What's the takeaway here for you? That probably depends on whether you believe that your mortgage inquiry should be a private matter and not trigger dissemination of your credit score, debt levels, and other sensitive information overnight to people who plan to pester you with calls or junk mail.

On the other hand, you might appreciate hearing alternative offers which may be superior to the one you've got. However, before signing up with a lender who bought your name from an overnight "lead" mill, make sure you check that lender out thoroughly. Ask for multiple consumer references in your area. Check with financial regulators to make sure the company has a clean record.

Otherwise, as Barney suggests, you could be opening yourself to one of the oldest con games going: bait and switch.

Ken Harney is a real estate columnist with the Washington Post.


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