Home > Articles > Business & Management > Finance & Investing

Homebuyers Beware: New Rip-Offs

Caroylyn Warren introduces her book, "Homebuyers Beware" and explains that mortgage rip-offs are still alive and well.
This chapter is from the book

The loan shark who bragged about making $40,000 in commissions off of one homeowner contacted me again. Last time we met, we enjoyed filet mignon at an upscale restaurant, Daniel’s Broiler, overlooking Lake Washington, and he divulged to me his secret for overpricing loans, which I revealed to the world in Mortgage Rip-Offs and Money Savers. What would he have to say to me now? I wondered if he’d be angry.

I couldn’t help but shudder at the sound of his voice over the phone, and yet, I couldn’t resist the invitation to meet with him again. I just had to know how his “story” ended. Had he reached his goal of retiring rich while still a young man?

He suggested we get together at Starbucks, quite a step down from the elegant steak house we dined at before, but I didn’t care. For me, it was all about the insider information.

So with a tall skinny DoubleShot in hand, I settled comfortably into a mocha-hued leather chair to hear what Mr. Big Commissions had to say. He wasted no time getting right to the point.

“What if I could show you how people can pay off their 30-year mortgage in seven to ten years without refinancing and without changing their current lifestyle—would you be interested?” he asked.

“Yes, of course,” I said.

“And if I could also show you how people can leverage themselves to have a million dollars or more in savings in the time they’d normally pay off their mortgage, would that be even better?”

“Yes, of course.”

“Great. Then if I show you this and it makes sense to you, is there any reason why you and I couldn’t do business together?”

“Good job asking a preclosing question,” I said, recognizing the sales tactic. I couldn’t help but smile. This was going to be good. “So what is it?”

He chuckled and sat a little taller in his chair, like he was pleased at the rapport he was building. “You see how easy that was? Everybody says yes at that point. And here’s the beautiful thing: With this program, you generate passive income. Agents are making 30 grand a month—for part-time work.”

Passive income? Money coming in with no more work required? At that point, I knew it had to be some kind of multilevel marketing plan where the people at the top of the pyramid got paid on the sales their recruits made; before I could ask, he whipped out the latest edition of Broker-Banker Magazine and showed me the feature article endorsing the equity acceleration program. According to the article, the founders of the company were all about helping America get out of debt. The publisher of the magazine proclaimed, “This is the real deal.”

It was a doozy, all right—one of those “too good to be true” things. But it looked so good on paper, people were eating it up, sales were booming, and anyone who passed a super simple test had the opportunity to make a ton of money.

And when money pours in, you know what happens next. Copycats decide they want a piece of the action, and they start up businesses with essentially the same program, but with a different name and logo.

Soon after, in came the e-mails from folks asking me about equity acceleration programs. Sure enough, the sales agents were busy recruiting other sales agents and the word was spreading. The homeowners contacting me now wanted to know whether or not this program was legitimate. (My response is in Chapter 27, “Deception Exposed.”) People now are less naive, asking more questions than they did a few years back, before jumping into something.

That is a good thing.

Ever since the mortgage meltdown of 2007, the world of credit, homebuying, refinancing, and equity management has changed. Over 250 lenders died a slow and painful death, or in some cases, a sudden crash and burn. Tens of thousands of loan officers were out the door and even more were struggling to hang on and ride out the storm, hoping for better days ahead. Others moved on to new schemes, looking to make just as much money, only this time, with less work required.

Ethical loan officers working in the best interests of their clients did what they could to be a light in their spheres of influence, but the economic crash was a behemoth involving too many players in high places, too big to control.

Teaser rates, deceptive “pick-a-payment” loans that gobbled up home equity like a hungry hippo, giant prepayment penalties, loans for people with no verifiable income, and other insanities led to the mortgage meltdown of 2007–2008. On multiple occasions, I tried to stop borrowers from signing toxic loans, but they would have none of it.

One evening, I called a nurse to warn her that her loan was obscenely priced and to explain how she could get a fair deal. I was incensed that a greedy loan shark would take advantage of a woman who had served in a hospital, caring for the sick, for 25 years, and I wanted to help. But instead of being grateful, she responded by filing a complaint against me for meddling in her business.

All that is history now...so has the craziness ended? Or has the absurdity simply reinvented itself for the current conventional market? Take a clue from these recent true stories...

  • A banker surprises her homebuyer with an $11,000 “Discount Fee” that did not appear on the original Good Faith Estimate. When the homebuyer asks what the new fee is for, the bank’s loan officer replies, “I don’t put the Discount Fee on the Good Faith Estimate so as not to confuse people.” Then she slides into some rhetoric about how she thinks God led the homebuyer into her office—or should I say, her spider web?
  • An escrow company charges $100 to transport loan documents back to the lender by Fed Ex and a $40 courier fee to transport the loan documents. So are the documents going by Fed Ex or by courier? And since when does Fed Ex charge a hundred bucks for an envelope with 50 sheets of paper? When I call the president of the escrow company about this nonsense, he says, “Those fees don’t go to Fed Ex or to a courier; they’re just for our own profit.”

    “So they’re bogus fees?” I ask.

    “They’re just there for our profit. We use a courier for about half our loans, but charge it on all,” he confesses. Evidently, he doesn’t think the $650 escrow fee and the $85 doc prep fee are enough profit, so he fabricates two more fees—from the president’s mouth straight to my ears.

  • A self-proclaimed mortgage expert tells loan officers not to worry about the decline in business. At his seminar, he’ll coach them on how to make 20 grand on a single loan, “as easy as shooting fish in a barrel.” He boasts of making 10 million dollars personally. To back up his claim of having the “financial secret,” one of his protégés testifies that he now makes “six times what I used to get on a loan, while working just 35 hours a week.” This is not a pitch for subprime loans; this guru’s borrowers have 720+ credit scores.

Don’t be deceived: The lust for money is alive and growing like a ravenous monster. New so-called anti-predatory laws lull people into a stupor, convincing them that all the bad loans have died like a fabled sea dragon—but that’s not true. Many of these laws are doing more harm than good, and bad advice disguised as helpful tips are circulating around the Internet faster than a nasty virus.

I know all too well. I’m in the trenches, in the thick of what’s going on, helping people avoid scams, ploys, and tricks—and get the best financing possible.

My Credentials

After working in subprime lending for Ameriquest, GreenTree Financial, and Full Spectrum Lending/Countrywide, I spent seven years working for a squeaky clean full-service mortgage broker in Seattle. During this time, I worked simultaneously as a mobile loan signer, which made me privy to the loan terms of dozens of additional lenders.

Then to advance my career, I accepted a position as an account executive with First Franklin, a wholesale mortgage company that lent money to mortgage brokers all across America. This made me privy to what went on behind closed doors: underwriting exceptions that turned denied loans into approvals, bribes, fraudulent loan applications, advertising strategies and ploys, “off sheet” rate pricing for “special clients,” lavish parties designed to bring in more business, and some shocking confessions made by certain individuals in management. First Franklin is no longer in business.

Now I’m back in touch with Main Street America, helping good folks buy houses and refinance. (For more information, see my Web site, www.AskCarolynWarren.com.) As a homebuyer’s advocate, I am telling you that it is possible to get a fantastic deal and save tens of thousands of dollars on your mortgage—but only if you avoid the financial land mines. That is what this book is all about: exposing the latest and greatest deceptions and helping people save a king’s ransom on their home financing.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020