Beware of Teaser Rate Lead Generation

We have always known this to be a danger, but it seems like the class-action vulture lawyers have found a vein of gold to begin mining. They seem to be starting with the deep pocketed lenders and lead providers:

NovaStar, other Bankrate clients hit with $46 million judgment (Inman News Subscription Required)

Arguably, there is a bit more a play in this class-action suit than teaser rate advertising. However, it does indicate potentially hazardous landscapes for the traditional Interest-only, 3 year ARM or Neg-Am, 720 FICO, 80% LTV advertisement.

Unfortunately, the cure is not in the advertisement. This is merely a symptom of the problem. The solution is creating a trustworthy, honest relationship with the customer. A reasonably intelligent person will understand they may not qualify for a particular program if you start by listening and then follow with education.

Here is a technique I often use. Restate the scenario and particulars of their mortgage and financial situation. Then give them an example of the scenario, which the teaser satisfies. Then tell them how and why you are giving them the right mortgage for their current financial situation and needs. I also like to add the future scenario that we are trying to get them to–financial freedom or better credit, perhaps.

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