The Mortgage Application Deposit Scam

The mortgage application deposit scam is a long running scam. The idea is to get your mortgage application and the accompanying deposit at all costs!

Saying or doing virtually anything to get your signature on the mortgage application along with your deposit is the name of the game.

Typical sales “hooks” used in the mortgage application deposit scam:

“We can do that, no problem.”

“The rate is 5.5%” (something really low)

“You’re approved!”

“We’ll beat any deal”

“Closing costs…we have no closing costs”

“Closing costs…only $395″

“Your house is currently underwater, no problem”

“No job, no problem”

Many companies like Ditech use some fantastic promise to collect a mortgage application deposit…a non-refundable deposit no less! They make a ton of money from deposits. If they tell you “no problem”, they get your credit card number. That’s all they wanted in the first place.

I got a call from a reader who said Ditech emailed him the mortgage application to sign along with a credit card authorization in which the fine print (he admitted he didn’t read it…ouch!) said under no circumstances would he chargeback their initial $600 fee. So when the final documents came and none of the terms were the same as the initial mortgage application, he naturally didn’t close and requested a refund.

Ditech denied the refund request at which time he informed the call center rep he’d be charging back his credit card to recover the $600. To which the rep. said,

“Good luck. I hear that everyday. It won’t work. You signed away that right when you authorized to charge the card in the first place.”

WOW! What a bunch of crooks!

You may be wondering, “How do crooked companies make money from deposits?”

Most states have consumer protection laws in place outlawing “application fees” or “application deposits”, so brokers and banks circumvent the law by calling their $500 deposit a “fee”…not a deposit and not a mortgage application fee.

Usually it takes the form of a fee for locking the rate or appraisal and credit reporting…anything to skirt the law that sounds plausible.

And most of the time, this mortgage application deposit con game works!

Once again, the industry wants you to focus on the products and not the providers.

Don’t fall for it!

Get an education on how to choose and work with a trustworthy, experienced, competent provider. The mortgage industry is inherently “slimy”…but finding an ethical broker for your next mortgage application is possible.

If you haven’t yet, check out our Mortgage Advantage home loan shopping system to learn just how to find, interview, hire and keep honest your next home loan provider.

Good Luck!

Author: Rob K. Blake
Published December 23, 2007

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