I want to relate two separate experiences my clients had utilizing the services of Lending Tree.

The first one was a past client who was in the process of refinancing her home.  She called the lender that she had used for the purchase - which by the way was a bit complicated and tricky.  Where timing was critical and where the lender - out of his own pocket - supplied a personal loan for the financial commitment needed for her to buy her dream home.  Namely the home she is refinancing. 

He quotes her rates, I do not know whether they are competitive, but I do know that he would have done the best he could have for her - since he had already done it once before.

Next she calls Lending Tree and gets quotes that are much lower, or so both of them told me.  I don't know what the numbers were but they were significant enough for my client to first go with the lowest Lender who cost her time and did not perform, the second one was a bit better - but then it came down to the end of a very long road the appraisal didn't come in as high as they needed it too so the second was a full point higher than what was quoted. 

Sad part was that I had located an appraiser whose opinion was different than the one that was used who could have found the value and could back his opinion with different data.  I don't want to leave you with the impression that we were in anyway trying to manipulate the data in any unorthodox manner; we just based the value on different criteria.  We are talking less than 4% between one appraisal and another.

Next -  

I have been in a transaction that time was most valuable and we were negotiation mainly on time, I represented the seller and we had agreed to a reduced price to get the time.  Well when close of escrow comes and the loan documents were not in, we find out that the buyers has decided to utilize the services of Lending Tree and we have problems that resulted in significant delays to my sellers, exactly opposite to what was agreed upon. 

The buyers relay a tale of broken promises along with unclear or absent communication resulting in them at the eleventh hour being presented with a loan that was doable but had a 36 month pre-payment penalty, points, and other related lender fees which were either not discussed, not agreed to or the commitment given these buyers was something much different than what the documents reflected. 

The resulting interest rate was considerable higher than the average rate everyone else was quoting at the time they began this process, with no points and no pre-payment penalty. 

The buyer's being wonderful, honest, happy, joyous people just wanted to start their life together in a wonderful house in a great neighborhood surrounded with wonderful people (namely me!).  The buyer's made the decision to accept a very different financial scenario then they first envisioned. 

My clients are wonderful, adventurous, intelligent people ready for a new challenge within their life together and are striking out on a trip that will forever enhance themselves and their life together.  It was very important to them that when they entered this stage of their journey they would leave cutting a clean cord.  But, they had to leave with this shadow over their departure.  A departure which was very bitter sweet, they wanted the adventure but they really didn't want to leave the neighborhood.  It had been a difficult decision for them.

Both these wonderful families are stressed to the max all because of someone in the lending business thought more about his money and what would work for him, rather than on the client's money and what works for the client. 

Next, I hear Rush Limbaugh promote and advertize for Lending Tree.  I understand the concept - make one phone call, oh so convenient, and let complete strangers, with no commitment to you or your financial well being and based on, what they call "competition" alone, not on the human element give you a simple number in which you can decide who will get your business. 

Shame on you Rush for not understanding that price is a bundle of benefits, not just a simple number.  A low rate with high points, closing costs and pre-payment penalties may not be the "best deal" for some.  Yes, you get to boast to your friends what a great rate you might have gotten - but at what cost.  Where obtaining a loan with an average rate with no penalties, low or no closing costs and no pre-payment penalty might be the better deal, in the short run. 

From what I have heard, again second hand, that the lenders Lending Tree connects you with motifs operandi is to get them in with an artificially low rate, engage them in a difficult process and slam then in the end.  Who cares - Viva La Loca (live the good life).  You will never do business with these people again, grab what you can when you get the chance.

Lending Tree was never directly involved with these experiences nor am I trying to say that Lending Tree did not do exactly what it was contracted to do - connect the end user with a group of lenders that may or may not be willing to compete on the most base of level - the number, and to screw the client on the terms.
 
The very slogan - When Banks Compete, You Win, truly begs the question on what field of play are they competing on, and the only logical answer is on rate.  Terms takes a second seat - deliberately I might suggest - so that value (for the lender/broker) can be built into the loan - while the end user - you! Pay more than what you could easily get from someone who quotes a higher rate but their fees or terms are much less expensive. 

I know that the math whizzes in the bunch might say that a lower interest rate will save you ba-gillions over the life of the loan.  They are right but the life of the loan could be 30 or 40 years.  Okay I grant them that - but you don't see the lion's share of the benefit on the interest side till about the last 15 years (or more - much more ) of the life of the loan. 

Now when did you have the same loan for 15 years?  I mean - wow - I change my hair every 6 weeks, I buy clothes every season, I need a new car every 4 years or so and I might sell my house and move within 10 years. 
IF NOT SOONER! 

So is Rate important or not.?

Yes and no. 

Below is a table that gives you a basis for the relationship between rates and fees. 

Ultimate Case = Low Rate - No Fees.
Great Case = Average Rate - Low Fees.
Not too Great = High Rate - Low Fees.
No so Bad = Average Rate - Avg Fees.
Bad = High Rate - Avg Fees
Run Away = Low Rate - High Fees

So, Lending Tree's lenders that they recommend can only compete on the low rate - high fee arena which is the worst scenario for the end user.

Does Lending Tree have a responsibility to understand the inverse relationship between rate and fees and advertize accordingly - I think not - but the end user should see the snake in the wood pile and be able to identify a Dirty Loan when they see one.