Loan Home Inc. Lead Generation Scam

Loan Home Inc. is a lead generation company telling consumers that they can be paid for the referral of their own transaction, or the transaction of friends and families.

Before we tease apart why consumers should avoid this obvious scam, let’s briefly review what mortgage lead generation companies do.  Loan originators obtain clients from many sources.  Some have built up a strong client base over the years, others make sales calls on Realtors asking for client referrals, others work at a bank and possible customers walk into their branch on a regular basis.  Not all LOs like working with Realtors because they demand high quality service, and not all LOs have a client base. Some LOs work for companies that advertise on the radio.  TILA Mortgage, Paramount Equity, American Equity, and Best Mortgage are some of the companies that advertise on  KIRO 97.3 FM in the greater Seattle area.  Radio advertising is expensive but it works. The phones ring at specific times and the LOs are there to pick up the phone but since the firm is paying for the radio ads, the LOs will typically split the fee income with their firm as they should. 

Lead generation companies troll the Internet for consumer leads, use banner ad campaigns, and/or send out mortgage email spam and then sell these possible homebuyer or refinancing homeowner leads to loan originators who pay a fee to receive that person’s contact information.

I receive all kinds of emails from lead gen companies every week trying to sell me leads (I do not originate loans.) Recently I’ve been responding to the emails and asking if the salesperson can send me samples of the advertising material used to procure the leads.  I’ll bet you’re not surprised to hear that NOT ONE COMPANY has replied to my request.  Why? Because lead generation firms blatantly violate state and federal  lending laws in their advertising.  Loan originators typically won’t talk about lead gen tactics because they might already be addicted to the crack that is also known as mortgage leads and they don’t want to turn in their crack dealer.

Clamping down on lead generation firm advertising is not my personal top priority but it should be a priority of any loan originator who wants to advertise legally.  The more the industry continues to buy leads procured by using deceptive advertising, the more the industry is unable to get their own phones to ring by advertising legally. 

This new scam is quite clever:  Loan Home Inc.  says anyone can “sign up” their own self(!) for this program and when they decide to buy or refinance, Loan Home Inc., will connect them with a “reputable, ethical” mortgage broker or mortgage loan originator and the consumer will be able to get money back (sounds awesome!) after closing. Whoo hoo! Sign me up! The consumer can also sign up friends and family and get money back when they buy or refinance, too!  What could possibly be wrong with this cool-sounding idea?

Well consumers, what’s going to happen is that your name and your friends/family names will be SOLD to mortgage brokers and loan originators who have no clients or who are willing to pay money to Loan Home Inc., for the ability to earn money off your deal. That’s right, you are an object to be bought and sold to the highest bidder. 

Realize that whoever Loan Home Inc., sells your contact information to, is going to have to pay Loan Home Inc. a fee and that fee will be much higher than the money you are going to “get back” from Loan Home Inc. because LHI is going to keep a percentage of that fee to cover its costs as well as to make itself a nice profit.  Next, whoever has purchased your lead is going to increase the fee you pay BY THAT AMOUNT OF MONEY IF NOT MORE. 

In the LHI example, on a $250,000 home loan, consumers are paid $800 for their own home loan lead. If so, then the person who purchased your lead will simply increase the fees consumers pay by……$800.  Since the majority of people do not come in with cash at closing on a refinance, consumers will be financing that same $800 over the term of the loan; not necessarily a good financial decision.  Another way for the lender funding the loan to earn back the money they have to pay LHI and you is to sell you a loan with a higher interest rate. Worst case, the consumer will pay higher fees as well as a higher rate just for the ability to get back $800 on a $250,000 loan.

LHI also sets up a nice-sounding multi-level marketing plan in their powerpoint slideshow. 

I wonder if they hired an attorney who understands Section 8 of RESPA to review their business plan?

Section 8 of RESPA prohibits anyone from giving or accepting a fee, kickback or anything of value in exchange for referrals of settlement service business involving a federally related mortgage loan. In addition, RESPA prohibits fee splitting and receiving unearned fees for services not actually performed.

Violations of Section 8’s anti-kickback, referral fees and unearned fees provisions of RESPA are subject to criminal and civil penalties. In a criminal case a person who violates Section 8 may be fined up to $10,000 and imprisoned up to one year. In a private law suit a person who violates Section 8 may be liable to the person charged for the settlement service an amount equal to three times the amount of the charge paid for the service.

It doesn’t sound like the company owners have a background in mortgage lending.

From their FAQ page:
Q: Will there be additional fees added to my loan?
A: No. The lead generation compensation that Loan Home pays does not constitute an added cost to the loan or the loan process. By paying you, we are taking profits from the mortgage companies and returning them to you!

Oh boy! Let’s stick it to the mortgage companies.  What a great sales tactic. I’m sure the mortgage companies love reading that.  Please do not fall for this, consumers.  There is no way in hell that any mortgage company is going to just give you back its profit.  You ARE paying for the money Loan Home Inc., is giving back to you.  It will be in the form of a higher interest rate or in the form of higher fees or likely both.  There is no such thing as free money.

Please, please do not fall for this scam. Instead find a local loan originator who lives in your community. If you want to shop, then ask for a Good Faith Estimate from three or four sources on the same day:  Your retail bank (where you do your checking and savings), a mortgage banker (a lender that does not offer checking and savings and specializes in mortgage lending), a mortgage broker (who can shop the market for you), or a credit union.

LHI says they are ready to do business in several states (including WA) yet I can find no business license issued to “Loan Home Inc.,” or a license under the name of either of their founders in Washington State. 

Interestingly, when I read the biographies of each of their founders, the name of the web page (look up at the very, very top of the web browser) says “Linda Torres.”  That’s just sloppy webmaster work but it did entice me to bing her name.  Looks like there’s a Linda Torres who’s a loan originator in the Chicago area and the two other founders are from Chicago.  I wonder if the leads are being funneled over to their friend Linda who appears to be one of the other founders of Loan Home Inc.

35 thoughts on “Loan Home Inc. Lead Generation Scam

  1. Nice work Jillayne!

    Correct on every point. The lender buying the lead has to mark up the cost of the loan MORE than the $800 passed on to the consumer, but who knows how much.

    It’s funny, I just took and passed the national exam today, and this scenario was one of the questions!

    The amount of illegal advertising for credit is still terrible, and nowhere worse than on the internet (OK, direct mail MAY be worse, but it’s harder to ferret it out).

      Jeff Carlisle recently loined LoanHome to in an advisory role.
      Loan Home just TANKED. Good thing Jeff was there to guide all the poor Loan Home orphans
      to his latest MLM venture, Boresha Coffee.
      I spent a lot of money advertising Loan Home. I’m so glad I paid for the privilege of being a sheep in Jeff Carlisle’s MLM flock.
      I’m sorry, but I don’t feel like selling coffee to everyone in my email file.
      The whole thing smacks of scam. How much did Loan Home take from Jeff Carlisle to come be the “savior”? How much did Jeff get to guide his flock to Boresha? I’ve got to hand it to those guys, they really know how to screw a dollar out of someone.

      • Hey There !!
        I was trying to track down Jeff Carlisle about his MLM.. Do you have a contact number for him or know where I can reach him to talk to him about that business .. Thanks….

  2. Jillayne… this is exactly why sites like lendingtree and bankrate are usually not the cheapest. Someone has to pay for those leads and advertising and it is the consumer.

    There is no better source of finding quality loan originators than referrals.

  3. Jillayne, re: “If you want to shop, then ask for a Good Faith Estimate from three or four sources on the same day”… consumers should be prepared to not have a GFE provided to them unless they have all 6 points of information for the mortgage originator that constitutes an application:

    Borrower’s full names
    Monthly income
    Social security numbers (to run their credit)
    Property address the loan is for
    Estimated value of the property
    Loan amount

    This is because of the liability HUD has imposed on mortgage originators when they issue a GFE. If they issue a GFE with any of the 6 items above not provided, HUD presumes the LO has all 6 and the LO is on the hook. (Cannot issue a revised or corrected estimate aka create a “changed circumstanc”).

    Consumers should be prepared to receive a rate “work sheet” or quote sheet from mortgage originators UNLESS they do provide all 6 items…then the LO is REQUIRED to provide a GFE within 3 days or to “cancel” the “application” that those 6 items constitute.

    A consumer can ask if the LO will guarantee the costs on the rate work sheet or if the fees will be the same as what would be on the GFE.

  4. Russ,

    I also like the referral model but we shouldn’t forget that many predatory lenders used the “friends and family” referral model to assume blind trust while gouging those people with high fees. I have seen it happen and I’ve seen the HUD-1s. Very, very sad. Especially when the “trust” was used at places like churches.

    I don’t think there’s anything wrong with getting a couple of GFEs or worksheets to use to compare.

    Then the consumer can go back to their referral person and ask the referral person to educate him/her one what’s the better loan program and why.

  5. Hi Roger!

    Congratulations for passing your national LO exam! Whoo hoo! Aren’t you glad that’s behind you? one of my students today said she’s going to have to drive to Yakima to take the test as that’s the only test center with openings between now and June 30th.

    • Yeah, it was pretty tight getting in, and then I found out I actually had til the end of the year to complete! Nice to get it out of the way though.

      Now I feel kinda bad taking somebody’s slot that REALLY had to take it by June 30th.

  6. re: #346918: “I don’t think there’s anything wrong with getting a couple of GFEs or worksheets to use to compare.”

    As long as the consumer knows how to shop mortgages and understands that rates are a moving target. Lately we’ve been averaging 3 rate sheets (rate changes) per day. If you called Russ first thing in the morning and Roger during your lunch hour and then me during an afternoon break–you may not be comparing apples to apples… you might think one of us has more competitive rates (assuming our cost are the same) when it’s really just the current market.

    Consumers need to block out a half hour to make all your calls or email and give each LO the same criteria at the same time.

  7. Jillayne, it was a predatory LO who was taking advantage of the people who went to her church and committing fraud that caused me to start bloggging (combined with LO licensing).

  8. jillayne:

    There were certainly some predatory lenders who abused their relationships. However, I still believe a consumer is less likely to run into that type of person through referrals. The reality is that most LOs who are worth anything do not buy leads, nor are they bidding on your loan through lending tree type services. LOs buy leads because they have no sustainable referral business. LOs without sustainable referral business don’t have it because they are either new to the business (so they don’t know what the hell they are doing) or never earned it from previous clients.

    Being an LO is about relationships. The longer you do it and the better you are at the job, the easier it gets because your phone rings from past dealings with satisfied clients. If a LO has been in the business longer than around 3 years or so and still has no referral base then something is seriously wrong with either the service they provide or their marketing efforts.

    • Most LO’s are good people, at least in my experience. I think Jillayne’s view of LO’s is a bit different than mine, but that may derive from the perspective afforded by her career. Likewise, I think most policemen have a dimmer view of humanity than I do, as they are continually asked to confront the worst behaviors of humanity.

      I think it would be a far worse world to inhabit without Jillayne, and policemen.

      To get referrals from churches, schools, neighbors, etc., requires demonstrating good character 24/7, over a period of years; to get referrals from former clients requires having former clients that are extremely pleased with service and outcome.

      I have been extremely fortunate to get the majority of my business in the past 3 yrs from those sources.

      Russ, I really enjoy your writings, thanks for contributing.

      A bit off the subject…OK a long ways off the subject…here is a financial site that I think is of a similar caliber as Rain City, akin perhaps to Calculated Risk. Minimal snarkiness and nonsense, intelligent comments, brilliant analysis.

      The Pragmatic Capitalist.

      Proud to give him a plug…

      • Roger, sadly getting referrals from churches, schools, neighbors requires trust. Just because someone trusts a person doesn’t mean that a person should trust them. That’s what makes LOs like Lisa B predatory–she used the fact that her fellow church members “trust” her, to prey on them.

        Last I heard, Lisa B has not been caught…

        I do think it’s important to do business with local mortgage originators instead of an out-of-state call center or a place where LOs are just fed leads. They’ve done nothing to warrant the business except write a check.

        If I were a consumer, I would have serious doubts about working with any LO who has to pay for business (because they’re clients don’t return or refer).

  9. I dont really agree with this post. Lead Generation Companies arent scams. Is the point to this article to totally out Loan Home Inc? This is bad press at its finest. Perhaps your getting paid by a competitor to bash on this company?

    • I agree Corey! There is no substance or proof in this article whatsoever! I think there is some bashing taking place in this article and I think it sucks! What goes around, comes around!

    • BAM!

      Jillayne, you are SOOO funny!

      It is often more profitable, and always less risky to run a lead generation service.

      They are regulated by no one, with desperate customers, and zero transparency.

      There is no site for Imploded-Lead-Generation-Services.

      Kinda wish there was, but the truth is, no one would miss them.

      I agree with Russ, that on the whole, a borrower is better off using a referred loan originator.

      Yes, as Rhonda points out, there are abusers (wolves, in sheep’s clothing), but even someone like Lisa Bautista was surely shunned by her community, even if the law never got around to making her pay. The comments here are ample evidence of that.

      I act on every single loan as if the client was in my church, or my neighbor, or a parent of one of my kid’s friends (many are). Keeps things simple…when you encounter a difficult decision…just do the right thing.

      It doesn’t guarantee the outcome, nor does it eliminate all problems, but it does simplify things.

  10. The one question that lead generation companies never answer is if they are generating so many qualified leads, why not just open a mortgage company? What sense does it make to sell leads to struggling LOs for a few dollars when you can actually just close the loan yourself and a make a few thousands?

    Anyone with any business sense would just staff up their operations to handle all the leads that are coming in and close the loans, right?

    Even the biggest lead generator of them all, LendingTree, figured out they could make more money just closing the loans themselves.

  11. Received a phone call from Loan Home Inc. just now and the company representative asked to speak to RCG readers so as to correct some of the information I provided in the blog post. I asked him to create a comment and leave the comment here for all of us to read.

  12. I know several people have gone through the Loan Home system and the money paid to them was NOT listed on the HUD?!?

    If the proceeds paid to them are NOT listed on the HUD, then they CANNOT represent an added cost to the loan, otherwise it would violate Federal Law!

    If proceeds are paid to the consumers and are NOT listed on the HUD, then they logically part of what is called “The Service Release Premiums”. To the layperson these fees are commonly mistaken for the “Yield Spread Premiums” (which are listed on the HUD and under RESPA jurisdiction)!!

    The Service Release Premiums are NOT under RESPA jurisdiction and are specifically excluded in Regulation X of Section 8 of RESPA.

    The reason many mortgage “brokers” are ignorant concerning the “Service Release Premiums” is because they are ONLY paid to Mortgage BANKERS; not the lower-level middlemen (mortgage brokers).

  13. I ran my loan through LHI. compared rates with the 3 local banks, 1 CU, 4 other online services.

    The Cost of the Loan was about $75 more than the cheapest on the list. It was done timely and professionally.

    I got $650 back minus the $75 it was higher than the lowest closing costs, and I came out ahead.

    You can Slam all you want, but you relay should look into what you are bashing, as you seriously all have absolutely no clue what you are talking about.

    As far as RESPA, try reading their web site or call them directly if you still have questions. I did they sent me the info right over the same day.

    Any LO’s on here bashing it are just trying to put down competition because they are scamming their clients them selves.

    My experience with LOs is that 95% of them are jacking prices but claimnig no cost loans to fool people in the door. Then you find that sure there are no lender fees but they have jacked the closing cost to $6000 to line their pockets. The same loan that can be gotten from LHI for $1000 closing costs. But they won’t tell you unless you ask. LHI Brokers are contracted to lay it out for the client from the start.

  14. There’s a comment way up toward the top from Duke Schmitty. I’m responding to that comment.

    Hey Duke, what happened? When affiliates such as yourself sign up to “sell” Loan Home, Inc., do you have to PAY them for the privilege of doing this?

    Wow, that seems odd because on the website it looks like anyone can just start using their system/program without having to pay any money. Tell us more.

    • You can sign up as a “free affiliate”, and market it to individuals. You can pay for the right to market it to companies and charitable organizations. A “BDA” (Business Development Affiliate) can market to an organization of any size. (There was an intermediate position avaialable that allowed you to market to businesses with a max of 25 employees and they liked to change the rules every week)
      When I signed on, the BDA was $400, because I was one of the first 50 in my state to do so.
      I then pumped money and effort into advertising. I tried! The system looked viable, with huge potential for residual income. Now I’m wondering what was genuine, and what was a set-up to lead a giant group of people into a very well planned MLM scheem. I’ll be jumping on when a class-action lawsuit starts.

  15. Hi Duke,

    Thanks for the update. Why couldn’t a free affiliate just market the program to companies and non-profits that he/she was already involved with? For example, a free affiliate might want to sell the program at her own place of employment or at her mom’s place of employment much like people sell tupperware or Mary Kay or Avon at work. A free affiliate might want to sell these same things at their Rotary Club meeting or at their Mortgage Women’s monthly dinner meeting….It just seems odd that the comany would make people pay money to sell to corporations.

  16. Duke,
    What did you mean they “tanked”? Are they out of business? Any articles or memos to read?
    Was doing due diligence on them this week.

    • They announced it on a company phone call last week. After the announcement, there was a huge pitch to another of Jeff Carlisle’s MLM ventures. I am reading an article right now that confirms my suspicions:

      Stand with me for a moment atop our private mountain, and look out over the entire network marketing industry…

      It’s not pretty, but in one word here is what you’ll find:


      A finite group of people who are traded like cattle from one company to another every 9 to 12 months.

      They were once called junkies, but the infection has spread to people above that description.

      Network Marketing has become obsessed with “timing

      • Beware… If Jeff Carlisle suddenly appears on the scene to give guidance to your MLM, you’re headed toward a cliff. Then, after you’re depressed and vulnerable, clutching at straws, he’ll throw you a line.

  17. Jillayne,
    Linda Torres was listed as one of the founders of Loan Home. I’m sure they funneled all the business through her at the mortgage brokerage.

  18. All,

    I signed up for Loan Home, Inc. (“LHI”) last September, after doing due diligence on behalf of a friend who was considering signing up but wanted my advice.

    When I first heard of the program, I was highly skeptical. I then reviewed the agreement, did some background checking, and reviewed the LHI web site to evaluate the claims being made. I dropped off from actively marketing Loan Home, Inc., in December of last year for personal reasons having nothing to do with the company, so I cannot speak to any changes that may have taken place since then.

    What I found contradicts a number of assumptions that you appear to have made:

    My first concern in performing due diligence: How can LHI offer to pay a commission on a residential real estate transaction for a referral, that does not violate RESPA?

    Answer: Funding for the Loan Home, Inc., commission structure does NOT come from the primary transaction; it is provided via the “secondary market” transaction from the lending institution, and therefore is expressly outside RESPA. The secondary market transaction is the event that triggers the obligation to pay the referral. By definition, it takes place after closing (although in many, if not most cases, the secondary transaction has been pre-arranged).

    Loan Home, Inc., claimed that, among their requirement for being a lender in the program was a $50,000,000 wholesale line of credit for transactions. Someone seeking a qualified loan through LHI would be put in contact with a participating mortgage banker, not a mortage broker. The savings from reduced marketing costs provided the incentive for the lending institution to participate, and to provide funding that would pay the commissions to the LHI downline.

    MLM concerns – There is no cost whatsoever for an individual to sign up, and they were permitted to market to individuals or small groups, but not to businesses. The rationale behind the fee was that LHI did not want untrained individuals going to businesses without proper support, in order to avoid spreading misinformation that could lead to problems for the company.

    If an individual wanted to market the program to businesses, or other institutions, they were required (as of mid-September) to pay a $125.00 fee for the right to market to organizations, and the rationale given to us by Loan Home, Inc., was that it was to: (a) cover the cost of training, administrative setup for your site and materials; (b) to provide a disincentive to those individuals who might otherwise waste the time of others “tire-kicking”; and (c) to control the message being given to the market to provide consistenty and legal compliance.

    I attended a full day seminar near the LHI HQ in Lombard, and spent some additional time speaking with the principals, who were providing the training. I asked them about their own due diligence. As I recall, at the time LHI were active in twelve (?) states, and were attempting to expand as conditions justifed. A major constraint was the legal work required on a state-by-state basis to ensure that LHI did not violate state restrictions, in addition to federal standards.

    I found the answers to all of my questions to be straightforward and credible. For the time and money that the principals spent on the training, setup, and materials I found rationale behind the fees credible, and the fee to be extremely reasonable.

    IMHO, the biggest challenges facing LHI were: (1) market timing. The company began its ramp-up just as the market was tanking and loan transactions were dwinding; (2) resistance by potential participants based on RESPA concerns (to the extent that they understood either RESPA or the LHI program’s compliance with same – exactly the sort of misinformed opinion you have encouraged in this forum); (3) concerns that LHI was a “pyramid scam” – it would be difficult for a pyramid scam to make money when there’s no cost to join.

    I have not experienced anything to suggest that LHI was anything other than a legitimate business enterprise. Again, as to recent developments to move LHI marketers into another MLM venture, I have no comment as I don’t know the facts.

  19. Hi Marty,

    Thanks for stopping by and sharing your experience. Yes the RESPA concerns you bring up are valid and I would encourage Loan Home, Inc., to make their business model more transparent, as well as the business relationship the owners of the company have with the bank or mortgage bank where the servicing release premium is being given back to the consumer as well as the salesman, if indeed everything is happening outside the scope of RESPA. One of the owners of the company called me on June 29th. I asked him to create a comment and post it here to educate our readers on LHI’s business model and to this date have received nothing.

  20. Hello all! As of today, 7/30/10, the Loan Home, Inc. HQ office number is not taking calls. As previously noted, they have tanked. Taken people’s money for the privilage to “sell” their program to companies and non profits and then closed their doors. They were extremely unprofessional and didn’t stand a chance in the cut throat real estate / mortgage market place. The cheaply done promotional materals and you tube videos reacked “cheap”. Michael Karczewski, founder and CEO claimed he was a Naval Academy grad and former police officer. Typical Chicago cop, I guess. He said during a meeting the the mortgage banker he was working with was United Mortgage.
    Anyway, when the class action lawsuit starts, please keep all informed.

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