The meltdown among sub-prime mortgage lenders shows a particularly ugly side of the housing market -- the business of selling high-risk financial products to people who may not be that financially savvy.
Here's another: the flood of solicitations that spill in after you buy your home offering "mortgage protection" and other such critters. They come from companies that, more often than not, are bending over backward to disguise who they are or where they do business.
"The onslaught occurs when there's a transfer of title," said Tom Pool, a spokesman for the state Department of Real Estate. "It's public information, and that's how they find you."
I can speak with some authority about this practice because my family is now being blitzed with unsolicited offers.
We just purchased a home here in Los Angeles -- I like to think of it as the Contractor Full Employment Act of 2007 -- and there's been no shortage of concerned companies wondering whether I'm fully covered on the mortgage-protection front.
Mortgage protection is just a fancy way of saying life insurance. Policies are designed to keep a roof over your family's head in the event that you get run over by a bus.
One of the more straightforward solicitations I've received came from Family Direct Insurance Services in Folsom, Calif., which, to its credit, is easy to find through its website (familydirectinsurance.com). But the company's tactics still leave something to be desired.
"Our records indicate you are not participating in our recommended MORTGAGE PROTECTION COVERAGE," the letter says. "This ECONOMICAL term life insurance can PAY OFF YOUR MORTGAGE should you or your spouse DIE. It provides the SECURITY YOUR FAMILY NEEDS, at the PRICE YOU WANT."
I love it when strange companies shout at me.
Like nearly all such offers, Family Direct's pitch instructs me to fill out a form with a bunch of personal info, such as my height, weight and general health, and send it back in a postage-paid envelope. That's how they get you on the hook. A call from an insurance salesperson typically follows.
I reached the operations manager at Family Direct, Gail Quirk, who explained that her company, like rival insurance brokers, routinely combs through public records in search of recent home sales. Once a list of home buyers is compiled, letters go out.
"It's like any business," Quirk said. "There are always a few that give others a black eye."
One of my particular favorites was from something called Mortgage Protection Insurance Services in Citrus Heights, Calif.
Don't bother trying to call -- no phone number is provided. And don't bother checking it out at its street address, 6939 Sunrise Blvd. It's an office building with apparently dozens of tenants, and no suite number is provided.
Also, don't bother going to the website of the California Department of Insurance and checking the license number that such mailings are required by law to include. The mailer incorrectly features an "O" instead of a zero in the number.
The actual license number, 0C28287, turns up a company called Insurance Wholesalers Insurance Services, which, according to public records, does business as both Mortgage Protection Insurance Services and Quotepath Insurance Marketing.
No one at Insurance Wholesalers Insurance Services responded to my repeated calls for comment.
Then there's the "important notice" I received from yet another mortgage protection program, which reached new lows in obfuscation by omitting not just the license number but also the name (or purported name) of the insurance broker, its phone number or its whereabouts.
The only clue as to whom I may be dealing with was a Burbank address on the return envelope, which, it turns out, belongs to a marketing company called American Direct Mail.
Ssisi Sandoval, an account manager at American Direct Mail, identified the mysterious insurance broker as a New Jersey company called Affiliated Mortgage Protection. "We just mail out the letters for them," she said, "and then ship the responses to New Jersey."
In June, 1st Mariner Bank in Baltimore sued Affiliated, accusing it of targeting the bank's customers with misleading solicitations. A month earlier, Wisconsin regulators issued a cease-and-desist order instructing Affiliated to stop using a local credit union's name in its solicitations.
A spokesman for Affiliated told me he was unable to comment on specific mailings. He said only that Affiliated bought lists of sales prospects from various sources and provided them to direct marketers acting on Affiliated's behalf.
So do homeowners really need mortgage protection insurance?
"This can provide pretty significant protection to a young family," said Brad Wenger, president of the Assn. of California Life and Health Insurance Companies, an industry group. "It's a very legitimate product."
But chances are you'll be best off finding a reputable provider on your own, not responding to some direct-mail pitch from who knows where. Most major life insurers offer such policies.
As for similar solicitations from companies that want to charge a fee to help you file a "declaration of homestead," which can safeguard a portion of your property from creditors in case of financial misfortune, forget it.
"You don't have to do this," said Pool at the Department of Real Estate. "But if you want to, you can do it yourself by completing a form that most counties offer online."
In Los Angeles, that form's available for free on the county clerk's website at lavote.net.
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