Lending Tree's New Guarantee Makes No Sense

[jeffrey]

I just received an email from Lending Tree about their new mortgage guarantee:

With mortgage rates rising, it's no doubt your readers are on the hunt for the best deal when it comes to refinancing. Well, LendingTree is now guaranteeing consumers the best deal – or they’ll pay $1,000. If lenders within LendingTree's network cannot beat a competitor's offer, the company will pay you $1,000 upon closing with LendingTree.

It's just one way LendingTree is providing consumers with peace of mind in a volatile market.

My question is if a Lending Tree lender can't beat another offer, why would you ever go with Lending Tree for the $1,000? Even 1/8 of a point is worth thousands in savings over the lifetime of a home loan. It seems like an all out gimmick because they say they are offering you something, but nobody will ever claim it (and if people do, they are making a bad financial decision). If they really wanted to stand by their service, their guarantee should be to pay you $1,000 if they can't beat / match a competitor's price.

[jefffou]

The most interesting thing to me is that they believed they could get it by you.......the owner of a personal finance forum.

That is a head-scratcher indeed.

[disneysteve]

I've seen other such guarantees that made no sense and nobody would ever claim.

There is a mattress company that says if they can't beat a competitor's price, they'll give you the mattress for free.

First off, no two mattress stores carry the same product because the mattress companies give the products different names and appearances for different stores. Second, why would the store possibly pay off on the guarantee. How could it be better for them to give away the mattress rather than lower the price? "Sorry, we can't sell it to you for $500. We'll have to give it to you for nothing instead." Won't ever happen.

[jeffrey]

I emailed them back and it seems that they wrote the email incorrectly:

My apologies, I misspoke in my below email.

If LendingTree cannot meet or beat a competitor's offer, they'll pay you $1,000 upon closing with the competitor.

Does that make a little more sense? Again, my apologies for the confusion!

That makes a bit more sense. Now I wonder if anyone else wrote them back and asked or if I was the only one...

[jpg7n16]

Very sneaky marketing trick LendingTree. Well played.

[FHA Loan]

The company actually has a good product for those who understand how to use it. And in their defense they end up taking a lot of crap that should be directed at their lenders, not them.

When you fill out a loan request and get offers from several lenders, those are not going to be the "best" offers that lender is willing to give you. Unfortunately, lenders are like car salesmen in that they are trying to make the biggest margin possible off of each loan and you have to work them down to the price you want. If you know this then you have to make a few calls to the various lenders telling them, "Lender 1 offered me a rate a quarter point lower with the same number of origination points and discount points and less closing costs." Then you see the proposition, "When banks compete you win." start to work. Unfortunately, many who apply don't understand the concept of playing one lender off of another to get to a great rate. They simply look at the initial offers and either take one of them or go elsewhere.

It's likely that the issue with the email was a legitimate typo. They have laid so many people off there that they are running a skeleton crew and one person is taking on the responsibilities that used to be performed by 3-5 people prior to the recession.