Lender credit change
We initially locked our mortgage with this bank, 7 days later we relocked at the same bank with a different investor per the mortgage loan officer. I got the terms of the loan in writing via an email from the loan officer, which he stated the rate, and the lender credit of $2,600 was what we had locked at. We initially got a GFE and TIL when we locked 7 days prior, but never recieved a new GFE or TIL when our loan was relocked with the higher lender credit, the rate did not change. 16 hours prior to closing, the lender sent me the final HUD-1A and this was the first time that we noticed the lender credit had been decreased by $800 to a total of $1,800 from the $2,600 that the lender initially told us we were locked at. My credit score was well above any threshold (800+), the LTV did not change on our loan as we put the 20% down in cash that was verifiable, and my DSCR was well below any threshhold (less than 20%). I contacted the Lender & Market President, and was told this was a misunderstanding and miscommunication and they would not honor their statement, at this point we had the option to either close the loan or find a new lender 16 hours prior to closing and risk losing the property. We closed the loan, and lost the additional $800 lender credit. I contacted the FDIC and they said an email is not a legally binding document and there was nothing that they would do, does anybody have any other ideas?? I personally think the lender forgot to lock my loan, and when he finally remembered the pricing had decreased to where he could not offer what he initially said he would. This is the exact statement that the lender gave me, "You are locked at 4.75% and we are paying 1.75% of the balance as a lender credit (1.75% * 149,600 = 2,618). That's $2,600 lender credit." Please somebody tell me how this is a miscommunication or misundertanding?? I know it is $800, but my wife and I are first time homebuyers and that money is important to us. Any help would be extremely appreciated...we are almost out of answers besides knowing that the banking world has not changed one bit from 5-6 years ago. by jjhankins893 from Chandler, Arizona. Oct 2nd 2013
I personally called and spoke to the Market President versus sending a certified letter, and then reported the bank to the FDIC. The FDIC was absolutely no help, and the CFPB only would forward the complaint onto the FDIC, they also would provide no help on the matter. The Market President was the individual that addressed the complaint with the FDIC, and said that this was purely a "miscommunication". There were two different avenues that I was interested in helping get an answer, is an increase in a lender credit to a borrower a changed circumstance where a new GFE should have been issued, or when the loan was relocked with a new investor should have there been a new GFE issued since this was a new lock with a new investor??
William J Acres (William_Acres)
#74 ranked lender in Arizona - 8,728 contributions
If that's his statement, then you did not have a misunderstanding.. he simply lied or made a mistake at your expense. However, since you identified this problem before you completed the sale, and subsequently finalized the sale, even though you knew there was a discrepancy, you essentially have forfeited any cause of action you might have been able to bring to try to cure the problem.. You can call an attorney and consult with them, and you could also file against them in small claim's court, but given the small amount in question, it's going to be more hassle than what it's worth, and since you did finalize the sale knowing of the discrepancy, it's doubtful you would win.. My guess is the lender didn't forget to lock in the rate, he was floating the rate to see if pricing would improve, and if so, he could make even more money on the loan and still offer you the same credit. This happens often when dealing with a big bank or mortgage bank.. mortgage brokers on the other hand have to tell you upfront exactly how much they are charging you to do your loan, and that amount cannot change regardless of pricing.. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com
William J Acres (William_Acres)
#74 ranked lender in Arizona - 8,728 contributions
Locking a loan is a Change of Circumstance and would require a new GFE be disclosed. Changing investors would also be considered a COC since you would have to re lock with the new lender, and would also trigger a new GFE disclosure. Since the laws for GFE's no longer require you sign acknowledging you received it, some lenders don't re disclose as they should, and if they don't it's hard to prove they didn't. Your word against theirs kinda thing... Sorry.. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com
Mike Silkworth (msilkw_195_870)
#29 ranked lender in Michigan - 531 contributions
So sorry to hear of your poor experience. If you have already contacted the CFPB and they did not do anything, you are likely out of options other than a small claims court claim or filing a complaint against him with the State of Arizona Licencing Board. It sounds like you have done a lot of research as your understanding of "Mortgage Talk/Terms" is impressive. I can promise you that the behavior you described is very atypical of the Mortgage Industry now and all the "shady" lenders I was aware of are now out of the business. You likely will need to get another Mortgage someday - your experience is exactly why it is best to get a referral from friends, family or your Realtor.
Mike Silkworth (msilkw_195_870)
#29 ranked lender in Michigan - 531 contributions
In reading the other responses, I noticed an inaccurate statement made about the motivation of the lender -- to float so he could make more money. This is impossible - a loan officer is paid as a percentage of the loan amount and can not be paid based on the profitability of the loan. I work for a Mortgage Bank and feel for me and my customers it is a great structure. That being said - the most important factor in choosing your next lender is not if they work for a bank, mortgage bank or a broker - but rather how trustworthy they are and how hard they will work for you. Trust your Realtor for a referral - they know the best Lenders because they work with them every day.
Can you folks give me a reference to the specific law or a section of Q & A's that references the Change of Circumstances, that way when I call the FDIC individual that rules on this case I can ask her to reference this specific portion of the Regs in my complaint. Not sure if she would possibly reopen the case, but it very well might be worth a shot?!? I have also filed with the State of Nebraska Dept of Banking and am waiting on a ruling, time will tell there.Finally, we are currently already in the process of refinancing, I work close enough to the Mortgage industry that I know if you refinance within 6 months of the original mortgage being sold on the secondary market the lender will lose all of their SRP. Should close in a week or so, so we will get the final laugh....but it is still more about the lack of integrity and moral then the $800.
Joe Metzler (JoeMetzler)
#17 ranked lender in Minnesota - 4,848 contributions
Sorry to hear of your troubles... This is a prime example of buyer beware, and lowest isn't best. I say all the time that 10% of the success of getting a mortgage is the company you choose, and 90% is the loan officer you choose. Choose wisely! Did you know bank loan officers are not required to be licensed? Don't ever work with an unlicensed Loan Officer. Check for a license at www.NMLSConsumerAccess.org At the very bottom, if it lists at least one or more states, the person is licensed. If it says "Federal National Mortgage Originator", that person is NOT licensed. Pretty fancy name for an unlicensed Loan Officer. In MN or WI, visit www.JoeMetzler.com for a licensed loan officer to assist you.
William J Acres (William_Acres)
#74 ranked lender in Arizona - 8,728 contributions
In regards to my comment about floating being "inaccurate".. sorry Mike, but if a lender funding a loan with their own money, either by correspondent or warehouse line, then additional SRP can be received if there is an improvement in pricing and the loan is not locked. The loan officer does make the same on every deal, but his bonuses can be derived on other factors, such as volume and income generated.. your company might not pay that way, but a lot of other companies do.. regarding where to see the rules.. here's the FDIC's link to a PDF that outlines RESPA (see page 6).. http://www.fdic.gov/regulations/compliance/manual/pdf/V-3.1.pdf As I stated earlier, once a loan officer discloses his fees for originating a loan, he cannot change it.. however once a rate is locked, (GFE trigger) then he must re disclose. When he changed lenders, and relocked with the new investor, (GFE trigger) he must re disclose. How he re discloses is another thing. As I stated earlier, your word against his, but you would have a compelling argument if all of your transaction was done via email, and he is saying he DID re disclose to you, yet you never received the email, then you might have a way to go, but again, you knew of the discrepancies and continued with the transaction, which is most likely going to get your complaint dismissed. Also, regarding his SRP, some lenders have a 6 month recapture clause, but a lot of other lenders are 3-4 months.. I'm here in Arizona and if you would like to call me to get a more in-depth explanation of my views on this scenario, feel free to call me anytime.. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com
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