Tag Team Mortgage Schemes

Posted by: Amey Stone on July 26, 2005

Here’s how this real estate-related financial scheme goes: A mortgage professional convinces you to refinance your home, pulling out a chunk of equity. Then he or she refers you to a financial planner or investment advisor who persuades you to buy a bunch of financial products with that freed up cash that may be either unnecessary or too risky. Both financial pros earn big commissions along the way.

“There are many financial planners and mortgage advisors who may inappropriately recommend that homeowners pull equity from their homes, and use it to make riskier investments elsewhere without any determination of suitability,” said Leon Morris, executive director of the Mortgage Institute For Financial Services Professionals (MIFSP), in a press release I received today.

I've never heard of the MIFSP before, but I have had friends tell me of the exact scenario the release describes.

It seems like offering new courses in "mortgage based financial planning" (a term the MIFSP has trademarked), is an idea whose time has come.

Reader Comments

James

October 20, 2007 5:05 PM

We recently decided to refinance, and we got hit with exactly the same scenario-the lender had a partnership with the broker, who was in cahoots with the insurance agent, who knew a carpenter, etc. Talk about dovetailing!

Post a comment

 

About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

BW Mall - Sponsored Links

Buy a link now!