Lenox Financial Mortgage Review
Lenox Financial Mortgage is known for their ever-present radio campaigns touting “no cost” refinancing and is the prime example of what I call “deceptive or incomplete” advertising.
Refer to my article, “No Closing Cost Mortgage Advertising Is a Lie” to see how Lenox Financial and others pull the wool over the eyes of the average mortgage consumer.
You can tell a lot about Lenox Financial Mortgage by the way they advertise. For example, what do think of a mortgage company that employs “hard sell” outbound telemarketers that bug you at dinner?
Nothing good, right?
If you notice in all those Lenox Financial Mortgage radio ads, they say things about how closing costs are a rip-off and act like they invented the “no cost” loan. Nothing could be further from the truth on both accounts. When folks take credit when credit isn’t due, that says something about them. And this says something about Lenox Financial Mortgage too.
Nothing good, right?
So my advice is stay way from them. Use a local mortgage broker who markets with integrity, doesn’t employ questionable marketing messages, and doesn’t take credit for things he shouldn’t.
To learn how to find a local ethical mortgage broker , use The Mortgage Advantage and end mortgage shopping forever.
UPDATE 9-25-07: Lenox Financial Mortgage settles a consumer fraud lawsuit with Arizona whose Attorney General claimed the company violated state law when they advertised “no closing costs” mortgage without the requisite disclaimer that not everyone would qualify for such a mortgage.
Lenox Financial CEO John Shibely whose voice you hear on the ever-present radio ads pronouncing his “no cost refinance” is the “biggest no brainer in the history of earth” signed the “assurance of discontinuance” as a commitment to cease the fraudulent practice or discontinue advertising and paid the $95,000 fine and the State’s court costs.
Given the fact that Lennox Financial Mortgage probably makes $95,000 a week on the Arizona loans they pull with their deceptive ads, the real “no brainer” for Mr. Shibely was paying the fine and never letting this case see the inside of a court room.
If it ever did, the real injustice and deceptive nature of the term “no cost” would really come out. The truth being, the borrower still pays the costs on a Lenox Financial Mortgage “no cost” loan, it’s just in the form of a much higher rate…and the jury would have awarded millions of dollars in damages…not the pittance Arizona State levied.
But at least it’s a start. Shining the light on false advertising in the mortgage industry is a tough row to hoe, especially with the likes of Lenox Financial Mortgage. Good work Arizona and kudos to your Attorney General Terry Goddard (and Cherie L. Howe who actually prosecuted Lenox Financial) for having the ba**s to stand up to these just-under-the-wire legal corporate con artists!
Now get your legislature to pass a law like California making the words “no cost” or “no fee” illegal and you can go after them for what really matters!
Good Luck!
Author: The Mortgage Insider
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There is no way to eliminate closing costs. That won’t happen ever.
You can either pay them out of pocket or you can roll them into a higher loan amount OR you can take a higher interest rate that will cover them in a higher payment every month.
The last is the “no closing cost” deal. The fraud or deception comes in the name it has been given. John Shibley didn’t come up with that. The loan should certainly be called something else less misleading.
Brad,
“There is no way to eliminate closing costs. That won’t happen ever.”
From your lips to God’s ears….
Rob,
I purchased the Mortgage Insider pack and I am looking forward to studying it.
Prior to its arrival, I was wondering if the material makes mention of opportunity cost of capital. In other words, is there any merit to suggesting that the future value of the money I save today by paying no closing costs can outweigh the mortgage rate premium?
I generally consider myself financially savvy so I tend to always do cost-of-borrowing calculations. Could it be suggested that investing $5000 in risk-free treasuries creates more value than saving 1% interest on a mortgage? I suppose this scenario is most appropriate to refinancing where I already have a home to live in, and not purchasing.
Thanks for your insight.
Ross L.
Ross,
Super…if you are currently shopping for a mortgage…you’ll need it.
One could do a “breakeven analysis” on a borrower “YSP paid” hard costs vs. borrower “cash at closing paid” costs….if that was all there was to it.
But I’m afraid it never happens in the real world that way. Borrowers never get a simple transfer of the “hard costs they otherwise would pay” once YSP is allowed to slip into the process.
Once the YSP door is opened mortgage salesman know clients have no idea how wide they open that door!!!
Is it opend just enough to cover true costs…or does the salesman increase the rate to create a bigger commisssion too?
You know the answer to that one, right?
As you’ll learn in the Mortgage Advantage, shopping for a loan is more about showing the mortgage provider what you know about how he makes his money and the documents used to paint him into a corner so the YSP door never gets opened in the first place.
Good Luck!
RKV
I wish I would have checked out some of this info before I got involved with Lenox. I have to say, I was very scepticle of the whole fringe jacket/cowboy hat thing (the dude is a DORK), but I thought what the heck….the older I get, the stranger and more annoying everyone seems to me anyway.
My first contact with Lenox was in July 08 and I am sitting by the front door right now in Oct 08 waiting for my “cash out” check back from Refi. 3 Months of daily phone calls and 3 different appraisers to get this deal closed.
I did end up getting screwed in a sense that I was told no closing costs and I was getting $11,000 back at closing……but now, 3 months later…..I am only getting $2,875 back at closing. Sounds like about $8,000 in closing costs to me. Same payment as promissed but interest rate was about a point higher.
I guess I was wondering if there was anyway to sue and at least get the $8,000 back that I was supposed to get?
M
Mark,
Sorry to hear about your 1 percent rate bump…that’s what’s gonna cost you over time.
Doubtful on a lawsuit…but Dork is an understatement!
RKB
After reading all of the other comments none are as compelling as this one. Where did the $8000.00 go?
Mark,
Wow! You ask for my help…and then bawl me out.
If you were sold on this idea, why waste my time and yours?
But since you did, I’d really like to know the outcome.
Would you be so kind and honest, even if the outcome seeking this loan is not as advertised to come back…and update us on what happened?
I’d really appreciate that…
Good Luck to you…I have a feeling you’re gonna need it.
RKB
Rob,
Your exchange with Mark Ward is an interesting study in human phsychology. It seems that people often seek affirmation more than the truth.
Although I do agree with your assessment of Mr. Ward’s income, I do not fully agree with how the mortgage industry treats assets. It seems that if car loans and credit cards are treated as debt (i.e. cash outflows), then annuities and interest bearing bank accounts should count as income producing assets (i.e. cash inflows).
The counter-argument from mortgage brokers is that a person can take their savings and go gamble it away in a casino. With that line of thought, how secure is a person’s employment in this economic climate? To me, cash-equivalent assets, especially in FDIC insured accounts, should count as much as income from a job that may be gone next month.
I would love to hear your thoughts.
Ross L.
Ross,
Assets do count, but all the AUS algos don’t weight assets as heavily as they used to …or near as much as income. It’s always been a bias…always will be.
As far as employment being as flaky as assets from an underwriting standpoint..the studies don’t concur.
Folks who have assets and a job one day….will lost the assets but still have the job…the next day. Jobs are the constant, so that’s what get heavily weighted when it comes to approving loans.
As corollary proof, look at the default rate on the “no income verification” loans…as high as the subprime loans!
Credit and income reign supreme in the predictability of successful mortgage borrowing.
RKB
Rob,
Now I can’t leeave your comments unanswered. You are the very type person that makes my head spin when I think of the arrogance you mortgage people have to decide can I make my payments. … Your the reason I hate mortgage people. … Your condicending attitude makes me want to puke…. I was turned down because … It just so happens to take our income below the limit that most normal working peoples percentage of what a house payment should be. … Except you arrogant narrow minded people who tell me how to spend my own money. … So a lennox agent has learned how to beat the fannie mae computer. …. I appreciate someone looking at my situation with a brain and not a computer. Thanks for letting me vent. Maybe you might want to get a heart and learn how to see more than the bottom line. Not all lenoox lenders are trying to rip people off, maybe there just trying to help them get what they really want and can afford but due to lack of common sense and an abundance of arrogance in the lending industry and many times greed they can’t get a home.
Enough said.
Mark,
I sounds like not only have you fallen in love with idea of home ownership, you’ve fallen in love with a house too.
If you, as a self-employed person, have in fact provided all your income documentation to 4 mortgage companies only to get denied…THAT SHOULD TELL YOU SOMETHING.
The foreclosure crisis was caused by many lenders who used “Stated Income” or “Bank Statement” loans to qualify folks, many of them self-employed, who should never have been given a loan in the first place.
In the best case scenario Lennox is blowing smoke about the approval.
In the worst case, you get a stated income loan you should never have had in the first place…and you add to the foreclosure rolls 18 months from now.
Everyone is screaming about irresponsible lending…and lo and behold…Lennox is still do it!
Where on God’s Green Earth are the regulators?
Rob,
The reason we want to buy mow is in our area of the country the house we want has a basement and is over 5000 sq ft. the house has been on the market for 9 months. It started at $260,000 and now they will sell for $220,000. It’s a 14 yer old brick home. My realtor friend has been helping me find property (He gets nothing out of the deal since he is not doing the buyers agreement. He feels the house is worth minumum $235,000.
He says in this area we are at the bottom and have started to rebound since there are not that many homes available to choose from now compared to last year. Since stated income loans are not available now with only a 10%down payment, we feel next year this house will be gone and who knows how they will treat self employed people with not enough net income on a tax return. I have spoken to 8 companies and 4 have pulled all documents to see all the facts, including lennox. they are not requiring tax returns but only bank statements to varify income. So why wait. We need a very big home for our family size and don’t want to buy something to small for the money. This home gives us that space needed unlike most homes in our area. I’m listening too you so help me see I can have hope in a year.
Mark,
First let me address the “if I don’t buy now” issue.
Real estate values are slated to fall another 20- 30% over the next year. Why are you in a hurry to lose money?
Wait until this time next year and buy a house today worth $130,000 for a $100,000.
You’ve waited 48 years…wait 1 more and save $30,000-$60,000.
Next item…since I don’t know all your information – it takes at least 20 pieces of data – to “prequalify” someone – and even though you gave a few pieces, I’d need them all to render a usable assessment as to the validity of the “others” saying “no” or Lennox saying “yes”.
It’s easy to say “yes” or “no” without all the data.
What you need is to wait a year…let prices hit bottom…then find an ethical, local, mortgage provider who doesn’t spout off “approvals” just to get the business.
The real way to shop for a mortgage is not listening to radio commercials but to get educated on how to correctly shop for a mortgage. The Mortgage Advantage can help you there.
Good Luck!