During a real estate buyer's market, you’ll see all sorts of crazy offers being put out there by sellers. I’ve seen homes marketed with vacations, cruises – even a Mercedes Benz. The mortgage industry seems to be entering that same sort of phase. But as if the lowest interest rates in more than 50 years isn’t enough to draw more refinancing homeowners, lenders are making deals with credit card companies, airlines, trade associations, etc., to draw your attention and your business.

Take this latest offer I received in my email inbox from American Express. I actually requested to be on their list, so this was not a spam – I like the company because of its stupendous customer service. However, this offer confused me.

It starts like this:

“Dear Cardmember:

When you get a mortgage or refinance your home with Mortgages from American Express², you'll not only get the guaranteed best price, you can also earn 1,250 Membership Rewards Bonus Points for every $10,000 in booked mortgage value. There’s no limit to the number of bonus points you can earn.”

Now, being a card-carrying American Express Rewards Bonus member, I had to move immediately to the fine print (which was in 7.5 point type – most newspapers print in 9 and web sites usually go with about 10 – so it was pretty small type). Here’s the next statement I read:

“American Express does not solicit, offer, endorse, negotiate, or originate any mortgage loan products, and is neither a licensed mortgage broker nor a licensed mortgage lender.”

Uhhh – wait a minute: “When you get a mortgage or refinance your home with Mortgages from American Express…” and then, “American Express does not solicit, offer, endorse, negotiate, or originate any mortgage loan products…”

Okay, if that’s not confusing, then what is.

Actually, the potential loan you would receive is being offered by New Jersey–based PHH Mortgage Services, which apparently has worked out a marketing agreement with AmEx to use its name in its loan promotion – plus give AmEx members extra Bonus Points. Offering bonuses such as this with mortgages is nothing new – it’s just taken on a new hype with the low interest rates and the light-speed marketing of the Internet.

In fact, just today, I received this email from a sales rep from American Airlines:

“American Airlines has a new partnership with Wells Fargo Home Mortgage. AAdvantage members using the Wells Fargo First Class Home Financing program will receive 1,000 AAdvantage miles for every $10,000 of loan amount on a new purchase or refinance, with no limit on the number of miles that can be earned. Soon, home equity loans will be applicable, too.”

It’s creeping up everywhere, it seems, even United Airlines and online mortgage advertiser site LendingTree have an agreement (according to this sales rep).

It’s not just the mega-billion dollar companies making such offers. Access National Mortgage, a medium-sized company based in Virginia, for instance, teams up with companies and associations to offer their members and employees quarter-point credits at the table as an added benefit for association membership or employment.

Lenders are going after your business, whatever it takes. They know that with record-level interest rates, consumers are looking deeper at their offers – even deeper than points, fees and interest rates. If you could find that two mortgage companies offer the exact fees, points and interest rates – but one is willing to send you on a cruise to boot – why not go for the extra benefit.

Don’t throw away your magnifying glass for inspecting the fine print, however. Some companies offer premiums for using their services – such as the trip to Disney World – but then bump up enough fees just to pay or subsidize the offer. Compare the good faith estimate (which all mortgage providers are required to provide) and see what they are charging for legal, copies, delivery, document preparation, etc., to ensure you’re getting the true bottom line.

Next time we’ll take look at how a premium offer from a lender can violate the law.

Published: July 18, 2003

Use of this article without permission is a violation of federal copyright laws.

Mr. Carr has covered real estate since 1989. He is the author of Real Estate Investing Made Simple. Got a personal real estate issue? Post your questions and comments at Anthony’s blog: commonsenserealestate.blogspot.com.