What is LendingTree and how does it work?

When I mention to people the importance of getting competitive offers for your mortgage and negotiating them, sometimes they say, “like LendingTree?”.

After all, LendingTree’s tagline is “Compare Mortgage Offers Free”, and bills itself as “the leading online marketplace for competitive loan offers and credit solutions, allowing consumers to shop and compare options from the largest network of lenders, banks and credit partners in the industry.”

It sounds like a one-stop shop to get the very best deal.

Let’s drill down and see what’s really happening.

To test it, I’m going to shop for a new mortgage. Though LendingTree offers many products, I’m going to focus on getting a new mortgage for a home purchase.

I am greeted on LendingTree’s first page with a simple box to choose my objective – refinance, purchase, home equity loan or reverse mortgage loan.

Then, I am directed to enter one piece of data on each subsequent screen. For a single family home mortgage, this is what I am prompted to enter:

1. What city?
2. Do you have a home picked out?
3. Do you have a real estate agent?
4. What is the estimated purchase price?
5. What % are you putting in for a down payment?
6. Estimate your credit score?
7. Your birthday?
8. Have you or your spouse served in the military?
9. Have you had a bankruptcy or foreclosure?
10. What is your current street address?
11. What is your first and last name?
12. Create a log in
13. What is your phone number?
14. What is your social security number?
15. Do you have accounts at any of the following banks [checklist of banks] (optional)?

That’s quite a bit of information they are asking for.

What does LendingTree do with your information?

Let’s find out.

This language in LendingTree’s 2017 investor report gives more detail:

“Our proprietary systems and technology match a given consumer’s loan request form data, credit profile and geographic location against certain pre-established criteria of Network Lenders, which may be modified from time to time. Once a given loan request passes through the matching process, the loan request is automatically transmitted to up to five participating Network Lenders.”

They mention that they do a credit pull before they match you with lenders. They type of credit pull they mention is a “soft pull” which means they are getting your actual credit information instead of the credit score range that you self-reported. From my research, it appears that this type of pull does not affect your score, unlike a “hard pull” which does.

Certainly, since LendingTree is pulling credit using very personal information, I need to know more about how they are handling my data and what exactly they are doing with it. For this information, I turned to their privacy policy.

Below is the section from their privacy policy that describes what they do with your information.

I’ve underlined the salient points (above) which seem to say:

If you click on buttons as you progress through their many questions prompting you to enter personal information, you are agreeing to let them share your personally identifiable information (“PII”) with lenders. And even if you don’t provide your social security number, they may access your credit file with whatever information you do give them to verify that it is a complete request. And, “not all network lenders will obtain your SSN’ (how courteous) but the ones that do have their own individual way of doing things. In addition, the lenders they give your personally identifyable information to will keep your infomation whether or not you ever use their services.

Also, take a look at where I put a red arrow above. They have a typo there that makes it unclear if they are doing a hard pull on your credit. I don’t know if it’s intentional or a mistake, but it’s a pretty important section of the privacy policy for consumers. Do they do a hard pull? Under what circumstances? It’s critical as a consumer to know if they will do a hard pull as it can affect your credit score. LendingTree does not have a coherent sentence to tell you and it is very worrisome.

Let’s take a look at what we’ve learned so far:

LendingTree’s business is to sell highly qualified (i.e. with verified credit information) leads to up to five lenders. A “lead” consists of your personally identifiable information and seems to include your social security number and other identifying information.

That’s pretty valuable stuff they are selling.

Now, what do YOU get?

Well, what I got was a message that “Lending Tree has identified lenders who will be following up with you.”

Then it told me that my SSN was not matching (which is because after I read all of this there was no way I was going to put my social security number in).

I gave them a work number that’s attached to an automated message system with no directory, so I’m not sure if anyone called or not.

To find out what other people got, I clicked on the Better Business Bureau link listed at the bottom of the LendingTree site.

The positive reviews were mostly one line reviews. I found very little detail about what exactly were people’s positive experiences, or what they even got back.

The negative reviews from the same time period, however, were a lot more descriptive. Here are some examples:

A common theme seems to be that people are complaining about being contacted often from lenders, which gets really irritating quickly. Based on the reports from customers online, it appears that the main thing people get from LendingTree after they fill out all of that info is a whole lot of calls.

Keith S. reported on 7/17/17 that he got calls for a product he didn’t even ask about:

Some customers reported that they got calls from lenders even if they didn’t finish the sign up form. Emily E. from 7/21/17 reported the following experience:

Remember the privacy policy above? It seems to say that even if you click the buttons you are consenting to giving LendingTree to use permission to match you with lenders, and even if you don’t give them your social security number, you are giving them permission to pull your credit and give your information to lenders.

(Incidentally, it’s good to be aware of online companies that collect information before you push the submit button. I don’t know for sure that this is what LendingTree is doing, but the reviews and privacy policy give some indication that this is possible.

What else does LendingTree do?

Maybe for some people, LendingTree displays offers for new home mortgages. That’s what I was expecting. But certainly, we are all familiar with the rate chart, where you put in your information and get back a table of quotes.

What LendingTree could be doing for some consumers is either delivering “best” offers to a screen or into the account they make you set up. Even if this is what they are delivering, instant offers for mortgages based on credit score alone, there are reasons why really any “instant” mortgage offer based on credit score won’t ultimately stick.

For mortgages, lenders need a lot more information than credit score to know if you are qualified. Here are some examples of other pieces of information they need:

• The amount of debt that you have
• Your income (including bonus, alimony, etc.)
• Your employment history (at least for the last two years)
• Whether someone will be helping you with your downpayment (such as a loan or gift)
• Your bank statements (at least for the prior two months)

Not to mention that the home buying process isn’t instant. So, even when you get pre-qualified for a loan, it may be a couple of weeks to a couple of months before you are actually approved for the mortgage on a specific home. You’ll need to decide when to lock a rate, and it can often feel like a moving target.

It is nearly impossible to give instant mortgage rates that stick

Even if LendingTree pulled your credit, actually produced the best offers tailored to you in their database of lenders, you would not necessarily get that rate when all was said and done. The home buying process, the way that banks qualify you, and time all work against it.

Here’s what a more realistic process looks like:

Conclusion

You can’t lock a rate until you are qualified to get a mortgage. The lenders just don’t have enough information to make you a real offer based on what LendingTree is collecting. Also, the mortgage process can be long, with a lot of adjusting for the actual price you pay for your home, to the closing date, and the rates that are available when you lock. Lenders that give you initial quotes may not ever be able to give you a mortgage when they dig into your employment history, for example, while other lenders will be able to serve you better.

In addition, LendingTree seems to be playing fast and loose with your personally identifiable information, based on their own privacy policy.

What’s another way to get lenders to compete for your business?

1.     Go to the CFPB site and get educated about interest rates and products. They have current mortgage rates by region and credit score. It will give you a good sense of what range you might expect.

2.     Get recommendations for at least three mortgage loan officers (throw in at least one mortgage broker to the mix, as they have access to many wholesale mortgage lenders)

3.     Organize the material you’ll need to shop around, like debts, income, bank statements, etc.

4.     Whenever you ask for a quote, make sure that ask that the quote is provided in a “Loan Disclosure” form. This is a government standard form and format that is designed to be easy to read, and includes all of the fees. Otherwise, you’ll get back snippets of information in email, etc. and you won’t be able to compare apples to apples.

5.     Pick the best offer and see if you can get them to shave off even more.

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