Why Did Quicken Loans Lie to This Veteran?
Quicken Loans might have funny TV commercials….
They also have complaints from thousands of victims of unprofessional, and even unethical business practices. And that’s NOT funny.
This is a true story about a young first time homebuyer that came way too close to losing tens of thousands of dollars, and possibly the home that he and his family have their hearts set on.
- The Victim
- The Crime
- The Evidence
- The Verdict
- The Sentence
- Quicken Will Only Get Worse
- Working With Professionals
Like most first time home buyers, there are a lot of questions, and the fear of not getting the “best deal”.
This young Army Veteran is no different. As a Veteran, he is able to take advantage of a VA guaranteed home loan that does not require any down payment.
This is an amazing loan program, as well as it should. That small and very special segment of our society that makes the sacrifice of serving in the armed services should be given every advantage possible.
I think because this young man is a Veteran that it struck me as more evil and malicious than the multiple other times I encounter inexperienced or straight out unethical loan officers and lenders that mislead or lie to consumers.
We have an accepted contract, and escrow is open. The clock is ticking. The seller of this home also put in the contract that the home buyer will receive a $75 closing cost credit for every day we close escrow early, so time is of the essence.
The home buyer was being encouraged by people around him to “shop for a lower payment” even though we were already in the process.
This is good advice in most cases, just not necessarily after you’re already in contract and there is a deadline that needs to be met. You should be comfortable with your lender before your officer is accepted!
There are a couple of reasons why I know that a lower payment would not be possible without paying additional money to reduce the interest rate.
First, I am a mortgage broker. This means that I have much lower rates than most direct lenders or banks.
My lower rates and fees are simply the nature of being a small business owner. I don’t have the overhead or expenses that big box lenders have, and therefore I can pass that savings on to consumers.
The second reason is that interest rates have been rising, and we already had an accepted offer, and his interest rate was locked prior to rates rising the past two days.
I receive an email stating that he had found a lower payment, and to stop the process on our end.
Knowing the deadlines we are up against, and that interest rates had risen since we locked him in, I knew something was up.
After reaching out to the home buyer, he sent me a Loan Estimate from Quicken Mortgage, indeed showing that the payment was lower.
The reason the payment is lower is because Quicken lied to this Veteran home buyer.
I’m normally a very trusting person. I do not want to assume that Quicken is lying, and I hate having to say that this was done 100% on purpose.
I also hate having to write about this incident because I worry that you might think that I’m just complaining because Quicken tried to steal a customer from me and ignore the warning.
I have on many occasions told folks to stay with the lender they are currently working with, or even to choose another lender because they are able to do something that I cannot.
This doesn’t happen often, but it does happen. The consumer ALWAYS comes first, even if that means that I lose the business. Period.
The evidence, however, leads me down leads me to no other conclusion besides that this loan officer purposely lied to the consumer to try to meet their sales numbers.
Exhibit A – Loan Estimate
The first thing I noticed is that they had locked in an interest rate of 4.99% on a 30 year fixed VA guaranteed loan. Not a bad rate, but I already have his interest rate locked at 4.75%
In no scenario would a 4.99% interest rate cause the payment to be lower than a 4.75% interest rate. That doesn’t happen.
So I looked down at the next section of the loan estimate at the projected payments.
Bingo! There’s the lie. Big and bold, and as obvious as the nose on my face. Quicken manipulated the numbers to falsely show a lower payment.
How did they do it? They purposely used an inaccurate calculation to estimate the property taxes that are included in the monthly mortgage payment.
In California, property taxes are approximately 1% of the purchase price. In this case, I had already looked up the tax records and special tax assessments for this home.
The property tax rate for this home is 1.1078% + $13,21 in special tax assessments. This information is publicly available and is not hard to get right.
The actual property taxes are $351.91 a month. Anyone that has ever done business in California would know that it’s very unlikely that you will have a $119.85 payment for a home purchased for $380,000.
Quicken estimated the homeowner’s correctly, but left off about $232.06 of property taxes when offering him a “lower payment”.
The fact that they put any amount in there means that the loan officer at Quicken knows what property taxes are.
Exhibit B – NMLS Consumer Access Website
Again, I try to give people the benefit of the doubt, so I looked up the loan officer using the NMLS Consumer Access website.
I don’t have anything against people that are new to the business as long as they are in an environment where there is support and training so that fatal mistakes do not happen.
The last evidence that there was NO WAY Quicken could offer a lower payment or lower cost to the borrower was the fact that they are charging him a 1% origination fee. That’s $3,800 in fees that I am NOT charging.
This was not an effort to provide the consumer with a better loan. It was a blatant and purposeful tactic for lying to the consumer to make them “think” that they would get a lower payment.
This loan officer has been in the business for a little over 3 years. They definitely know how to calculate taxes and insurance. It took me about 5 seconds to recognize that the taxes were not even close to be correct.
If this person was working with a company like mine, they would have enough experience after 3 years so that something like this could not happen noticing that it’s wrong.
If this loan officer was at all concerned about being accurate, they would have checked, and double checked their numbers. But he didn’t care.
Quicken knew that the payment is NOT lower than what he already has.
This employee of Quicken loans did exactly what they are incentivized to do, which is to get the business by any means necessary to meet their sales volume numbers. Even if it means lying to an Army Veteran.
I find Quicken Loans to be guilty of lying to consumers in their advertising campaigns, which is consistent of the experience of thousands of angry and disappointed consumers that fall for their scams and get burnt by them.
I hereby sentence Quicken Loans to as much public criticism as I can possibly encourage. There must be accountability for companies that are willing to lie to consumers as the core of their business model.
I’m just a small business person that’s been helping folks buy homes for about 20 years now.
I don’t have a huge budget for educating and empowering consumers to contrast the size and scale that Quicken is able to spread their lies.
How do we enforce this sentence? I’m not sure.
The best I can do is be this little squeaky wheel, and try to get as many other mortgage professionals, real estate professionals, and informed consumers to join me in exposing these shady business practices.
Quicken Can Only Get Worse
Despite what Quicken would like you to believe, they have NOT discovered a better way to qualify for a mortgage. What they have been successful at is creating a better way to trick consumers into filling out a lead form online.
Quicken uses awesome technology and a really successful and funny advertising campaign to try to trick consumer into believing that they’ve “cracked the code”.
The fact is that Quicken offers the exact same loans that the rest of us offer, and must follow the exact same underwriting and documentation guidelines that everyone else has to follow.
Quicken employs minimally compensated sales people that are incentivized to meet sales volume numbers.
Companies like Quicken feed, and survive on the low hanging fruit of a refinance market when interest rates are low.
The first goal of a tele-mortgage lender is to collect a credit card on the initial call and push you into a commitment as fast as possible before you have a chance to stop and think if it’s even the right decision for you.
There is much more room for overcharging, and inaccurate information that will “sort itself out” at the end of a refinance. That DOES NOT WORK if you are in the business of helping consumers buy homes.
When you make mistakes on a purchase mortgage, the family that is buying the home is either stuck with a rate and payment that is higher than they can afford.
The worse case, and most likely scenario here is that they lose the home because they cannot afford the mortgage payment.
Mortgage professionals that specialize in purchase money mortgages understand what is on the line, have years of experience, and know how to anticipate challenges before they occur.
No purchase money mortgage professional would every risk their reputation with the home buyer, or real estate agents by lying or praying their way through a home buying process. That doesn’t happen.
Working with Professionals
I can not emphasize enough the importance of hiring a professional, experienced Realtor and loan officer when selling or buying your home.
When you call a lender from a TV or radio commercial, or click an ad you saw on the internet that has a catchy headline, you are playing competence roulette.
I personally have been in the business for almost 20 years now, and started this website 10 years ago to educate and empower consumers.
We have had over a million consumers visit this website and I have answered many thousands of questions from folks all over the Country.
I hear horror stories like this on a pretty regular basis. Quicken is not alone in running the type of business model that puts profit before people, they are just the biggest, and therefore the biggest offender.
If you are trying to buy or refinance your home in California, I can help. You may ask questions about your options below, or shoot me an email directly to email@example.com.
If you are outside of California, I can introduce you to a loan officer from our Expert Network that I personally know and trust.