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How to Pick the Wrong Lender

Lawrence D. Elliott
February 28, 2006
One day, you’re interested in getting a loan. Your plan is simple: Call a number of lenders and see who has the lowest rate. You call the first lender. He asks you when you plan on getting your loan. You tell him in a couple of months. He gives you a low rate quote. And, after a number of calls, you find the first lender you called has the lowest rate. When the time comes, you know whom you’ll use.

Now fast forward a few months. You call the first lender. His rate is a bit higher than the last time you spoke with him. He tells you that the rates have gone up a bit. He even invites you to check around. Why do that? After all, he had the lowest rate quote when you did your first rate search. You get your loan and all is well, right?

Wrong! This lender used a trick that has become a dark part of the mortgage business. You see, the first lender you called knew you wouldn’t be getting your loan for a couple of months, so he quoted you a rate well below what is feasibly available to you. After you checked around, you discovered his quote was the best. Surprise! You KNOW he has the "lowest" rates because he had the "lowest" rate quote the last time you called him. This technique is actually taught by unscrupulous trainers and is, in my opinion, shameful!

Here’s another trick:

You call a lender, get a rate quote, even meet with him and complete a loan application with the rate he quoted shown in your package. Time goes by, your loan process continues and you are now ready to sign loan documents. When you get to escrow, pen in hand, you discover your excellent rate is much higher than you were led to believe. The explanation: Your program got a little more expensive, the rates went up, or whatever. If you want the rate you were quoted, you will have to pay a couple of more discount points to get it. For those of you who do not know, one discount point equals 1 percent of the loan amount. Nice, eh?


There are so many scams a dishonest lender can pull on you; I would need a book to discuss them all! You definitely can be a sitting duck for a lender who has his technique down. But what do you do to protect yourself?

Easy! Don’t just jump at the lowest rate quoted to you. Heck, anyone can quote a low rate! But if it’s not possible, what good is the quote? More important than the rate, you need to know whom you are dealing with. Investigate the lender before using them. Get referrals from friends and relatives based on their actual use of the lender, not based on what they heard or the lender’s polished ads.

Another great source (and my favorite, of course!) is your real estate agent. That is, if your agent is someone you can truly trust. Agents regularly work with lenders and these lenders know that if they don’t perform, they had better never set foot in that agent’s parking lot again, never mind their office. But make sure your agent actually has first-hand knowledge of the lender. Has he worked with him? How is he with clients? Is he honest and truthful…even if it’s bad news? How timely is he? How are his costs? These are important things to know.

Also, be open to someone being honest with you. Don’t go searching for the answer that makes you feel good. Sometimes, honesty hurts! If you look for that "good" answer, a less-than-honest lender will sense it and they’ve hooked you!

Remember, your real estate agent is not only working for your business, but also for your family’s business, your friend’s business, everything. He would definitely want to ensure you work with quality people who will take care of you as well as he would. I know that’s my philosophy.
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Lawrence D. Elliott


Lawrence D. Elliott is a nationally published author who has been published in many popular national publications, including Chicken Soup for the Soul, the New York Times #1 Bestselling book series.

Lawrence wrote his first creative words in the sixth grade when a teacher gave him a writing assignment. He even create a rudimentary book, filled with illustrations. "Actually," says Lawrence, "they were the most pathetic looking stick figures you´d ever see. But I was proud of my little book."

Heading into the seventh grade, Lawrence was among the earliest group of kids bused from his San Diego inner city neighborhood to a predominantly white school. The racial tensions were high. Often, there were fights before, after, and even during class. To make matters worse, he was identified as having a severe reading problem and was placed in a reading development class. Lawrence remember fighting back the tears of shame as he entered the separated bungalow classroom that first day. Then, Lawrence met Ms. Davila, the remedial reading teacher. She not only worked with him to improve his reading, but she learned Lawrence had a hidden gift. He loved to write. She helped Lawrence cultivate his new-found skill and gently guided him to discover how powerful it could be.

And in those tumultuous times, the fact that she was white had a lasting effect on his life. In her, was the example that there are good people everywhere, you just have to find them.

Throughout high school and beyond, Lawrence spent evenings scribbling his stories and attempting to get them published. The rejection notices mounted. But he was stubborn. However, eventually he was forced to realize that perhaps his talents would possibly be of used in other ways.

Through life, his path lead him through military service, the aerospace industry, even cleaning toilets when it was the best job he could get. Eventually, he landed in real estate where he had a 20-year career. But Lawrence continued to write, if only for his own enjoyment. He was also able to collect a host of characters along the way.

Then, in 2005 Lawrence had a near-death experience with a pulmonary embolism. It was then that he decided to brush off that dream he had as a kid. He decided to give publishing one more try.

In 2006, Lawrence had his first story accepted. In fact, he had four stories accepted! Fittingly, one of those earliest stories was about a teacher who, working with a black kid from the inner city with a reading problem, showed him that he had a hidden gift to share with the world. Since then, his stories have appeared in many popular books and periodicals.

Lawrence believes his life has been a wild ride, replete with twists and turns. There were good times, and bad times. Sometimes, very bad times. But he says he wouldn't trade it for all the gold in the world. "I'm excited," says Lawrence. "I'm also proud, grateful, and somewhat surprised that something seemingly unattainable has become a reality."

Lawrence feels his life has prepared him for this moment and he refuses to squander it.

Currently, he is editing two novels and hopes to have them submitted by mid-year. In addition to writing, Lawrence is also the sole caretaker for his wife Lisa. Their dog Lacie helps, too.


Recently Released:

"Thank God for the Sandwiches" published in Letters to My Mother: Tributes to the Women Who Give Us Life--and Love.

"Well, I've Had A Plenty" published in My Dad Is My Hero: Tributes to the Men Who Gave Us Life, Love, and Driving Lessons.

"God, I'm Shvitzing!" published in Chicken Soup for the Soul in Menopause: Living and Laughing through Hot Flashes and Hormones.

"She Gently Opened Doors" published in Teacher Miracles: Inspirational True Stories from the Classroom.

"Learning to Share" published in Chicken Soup for the Soul Celebrating People Who Make a Difference: The Headlines You'll Never Read.

"Unexpected Guests" published in A Chicken Soup for the Soul Christmas.

"A Visit From Arthur" published in Chicken Soup for the Soul Healthy Living Series: Arthritis.

To get autographed copies of his books, click here.