Borrowers shopping for a mortgage are vulnerable to “low-balling,” which is the practice of quoting a price to a borrower below the price the lender is actually willing to accept. The purpose is to be selected by the borrower who is shopping prices. Because lenders cannot be held to their price quotes until they are locked, it is always possible for the low-balling lender to find a reason for raising the price later.
The prices at which a lender is prepared to lend are termed its “posted prices”. To low-ball, a lender must have a way to deviate from its posted prices to meet a specific situation that requires a lower price quote to win the deal. Discretion to deviate from the posted prices is granted to loan officers, and to employees with responsibility for delivering price quotes to one or more web sites.
Low-balling is a constant temptation for lenders who know that their price quotes are being compared to those of others. The practice is especially pervasive among lenders who purchase internet-generated leads, since they know that the leads they purchase are being sold to other lenders as well. See Mortgage Lead Generation Sites.
Low-ballers are not deterred by the price disclosures mandated by the Good Faith Estimate (GFE). They merely date the GFE so that the price has expired before the borrower receives it.
Borrowers on this site are not vulnerable to low-balling simply because they have access to the posted prices of the lenders on the network. They do not encounter a loan officer until after they have made a decision to select the lender based on the prices posted by all the lenders on the network. Lenders have no opportunity to low-ball.