Can Mortgage Companies Screw You Over?
Here's the story...
I went to this mortgage company for an interest rate. They in turn quoted me a given rate (6.25%) for my owner occupied duplex. I told them explictly to tell the lender that its a DUPLEX and its OWNER OCCUPIED. They said.. okay.. we'll make sure they know. So all was good and so I went to sign some documents telling me that I understood everything. ... The only thing that needed to take place was the underwriting. (So the interest rate was FROZE). The mortgage company comes back and tells me .. .oh.. the lender changed his mind. Its really 6.4% ... not 6.25%. I'm like VERY upset at them for going back on their word. (and documents) Is there anything I can do in recourse to force there hand to stick to the 6.25%.. and what would it be?
[addsig]
Unless you have it in writing that your interest rate is locked at 6.25%, I don't see anything you can do. I assume that this is a 30-year fixed rate loan product.
You might want to try a different product. How about a 5/1 ARM? Or a one-year ARM? Last week, I was quoted investor rates for a one-year ARM below 4.5% for a stated income loan application.
You might do better if you change lenders.
I am not sure what you could do, but if .15% blows your deal out of the water, it wasn't a very good one to begin with. And if this is for your personal residence, you can always refi in the future, I just don't see this as being as big a deal as you are making it out to be.
Good luck, Dave
The interest rate was written down... so yeah.. I have proof. Also it isn't a matter of the deal being blown out of the water. Its the principle of it all.
[addsig]
No you can not do anything to the mortgage company, except not close. The underwriting is the most crucial step. Anyone can be pre-approved, you are only approved with a committment after the underwriting process.
Lori
[addsig]
Nice... so in other words if a mortgage company has a pre-approval of your loan and the lender sits on it for long enough.. they can wait until the interest rates go up and screw you over. (and we can't do anything about it)
[addsig]
They are not SCREWING YOU OVER!!!!!!! I t takes about 2 weeks to close a loan from start to finish. I can't believe you got a 6.25% interest rate for a duplex. It would be hard to say who is at fault here.
Lori
It is very unlikely that it is the banks fault.
[addsig]
You say that you have it written down. But you did not say where it was written down.
If was written on the good faith estimate (GFI) it don't mean squat. An estimate is an estimate not locked in.
If you have a lock letter saying that you were locked with X lender at 6.25% for a loan on a OO duplex for X number of days. Then you have a rate that is locked and you can push this.
So do you have a lock letter?
One of the bigest problems I had when I was doing loans on a regular basis was rate shoppers. They would call me and ask for a rate. I would give a rate based on what they told me. They would say but this other guy is quoting 1/2% less than you with the same lender.
Now I am looking at the rate sheet and 1/2% less than me is not possible with out more points. My guess is the other guy was going to change the terms mid stream.
But guess what the investor would get mad but I bet they still closed the loan anyway. So if your rate shopping be ready.
So next time I should get a lock letter ASAP from the lender. Correct? Lets assume I do have a lock letter stating that it is at a given interest rate. What can I do then?
Quote:
On 2004-05-14 05:35, lacashman wrote:
You say that you have it written down. But you did not say where it was written down.
If was written on the good faith estimate (GFI) it don't mean squat. An estimate is an estimate not locked in.
If you have a lock letter saying that you were locked with X lender at 6.25% for a loan on a OO duplex for X number of days. Then you have a rate that is locked and you can push this.
So do you have a lock letter?
One of the bigest problems I had when I was doing loans on a regular basis was rate shoppers. They would call me and ask for a rate. I would give a rate based on what they told me. They would say but this other guy is quoting 1/2% less than you with the same lender.
Now I am looking at the rate sheet and 1/2% less than me is not possible with out more points. My guess is the other guy was going to change the terms mid stream.
But guess what the investor would get mad but I bet they still closed the loan anyway. So if your rate shopping be ready.
Take a chill pill Ddemott. Yes, mortgage companies can screw you over. Yes, the do not have to honor their word. Yes, even if its written down.
On the other hand the difference in the two rates (assuming a $250,000 loan) is about $25 a month. You have a choice, go find another lender or pay the $25. Yes, after you close you can file a lawsuit and spend $15,000 in legal fees chasing that $25 per month. Or you can use your energies to go find another deal and another mortgage broker to deal with though I seriously doubt they will be any better, a term sheet from a broker is sorta like a love letter from one of those mail order brides, might mean something but then again . . ..
Is this the first time anybody ever failed to follow through on a commitment to you? Keep your eyes on the ball.
Quote:
On 2004-05-14 06:51, ddemott wrote:
So next time I should get a lock letter ASAP from the lender. Correct? Lets assume I do have a lock letter stating that it is at a given interest rate. What can I do then?
Get a lawyer.
But you will not be able to get a lock letter until the lender approves the loan. This may not be until underwriting is complete. So you will not get one ASAP.
Also if underwriting discovers something that was not disclosed in your aplication then the lock is not enforcable.
My guess is what happened in your case is that the loan officer thought that he could get you X rate but by the time he was able to get you an approval the rates had gone up.
(gulp) Chill pill taken
My point is this. If there is no checks and balances in place. What is to prevent any lender from changing their mind at the last minute. They may or may not be "screwing" you based on your point of view.. but they do have enough leverage to take advantage of the situation.
Let me explain...
So you (MR INVESTOR), ends up needing a loan for your house and so you end up looking for one through several agencies. You find the best one you can get and go for it. Interest rates are at an all time low. The lender states, "Oh I can't get to your loan until a week or two because of all of the underwriting I'm doing. I'll get to it ASAP." You, in good faith, say fine... do it asap and we'll have a deal.
Time passes
In the mean time interest rates go up and the lender turns around and states.. "I'm not going to give you 5.00%.. I'm going to give you 5.5%. Too bad."
You the investor NOW can't even touch 5.5% because rates have gone up and quite frankly you can't do anything about it because
1) It isn't worth going to court about
2) You haven't closed the deal.
Its nothing huge.. but the principle of it. If interest rates were to go up a lot between getting preapproved and actually closing, it might be more of a deal.
Your thoughts...
Quote:
On 2004-05-14 08:15, commercialking wrote:
Take a chill pill Ddemott. Yes, mortgage companies can screw you over. Yes, the do not have to honor their word. Yes, even if its written down.
On the other hand the difference in the two rates (assuming a $250,000 loan) is about $25 a month. You have a choice, go find another lender or pay the $25. Yes, after you close you can file a lawsuit and spend $15,000 in legal fees chasing that $25 per month. Or you can use your energies to go find another deal and another mortgage broker to deal with though I seriously doubt they will be any better, a term sheet from a broker is sorta like a love letter from one of those mail order brides, might mean something but then again . . ..
Is this the first time anybody ever failed to follow through on a commitment to you? Keep your eyes on the ball.
[addsig]
There has to be missing information somewhere in your story. I deal with people every day and lock rates every day. Your story doesn't make sence?????????????
Have you dealt with this bank or broker before?
Lori
[addsig]
I'm dealing with a mortgage broker. And they tell me that its locked verbally but they are telling me that the lender isn't honoring there word. Also I signed some papers that states the interest rate however the loan isn't closed yet. (its a refi)
Quote:
On 2004-05-14 22:00, tinman1755 wrote:
There has to be missing information somewhere in your story. I deal with people every day and lock rates every day. Your story doesn't make sence?????????????
Have you dealt with this bank or broker before?
Lori
You are dealing with an incompentant broker. The rates have gone up and they did not lock your loan for one reason or another. On a conforming owner-occupied refi multi the rate is 6.625% streamlined. Cashout is 7.125%. Rates as of 05/13/2004.
They quoted you a rate but did not lock in. It has nothing to do with the bank just your broker.. They played the market hoping rates would go down but they are going up. I work with someone that does that.
Good Luck
Lori
Those were zero point rates
[addsig]
Quote:
On 2004-05-15 10:01, tinman1755 wrote:
They quoted you a rate but did not lock in.
Lori,
Remember a few months ago when a lender went belly up doing just that? They locked in a lot of loans but did not do a hedge planing to get the extra spread when rates went back down. When they went under a lot of people had rate locks but they could not get funded.
[quote]
On 2004-05-17 00:40, lacashman wrote:
Quote:
On 2004-05-15 10:01, tinman1755 wrote:
They quoted you a rate but did not lock in.
Lori,
Remember a few months ago when a lender went belly up doing just that? They locked in a lot of loans but did not do a hedge planing to get the extra spread when rates went back down. When they went under a lot of people had rate locks but they could not get funded.
[/quote
Well we don't know what point of the deal all of this is taking place. But I do see what you mean.
Lori
[addsig]
Im a loan officer for one of the largest direct lenders in the nation. I agree. with everyone here 1st of you should be looking at an ARM . secondly brokers are subject to their wholesale rep. Brokers are at the mercy of time. you need an appraisal and tiitel before you can formally lock a rate. Only because the broker is probaly shopping 3 good wholesale lenders. which can take 14 days. Unfortunately your timeing was crappy. Your luck you got what you got on a fixed rate. our A paper rates jumped .50% in one day. .I had a lot people calling in to see if they could even buy 5.75 at 1.5 points. Now to get that rate it would cost you 3 points. THe problem most of the time is with the borrower. If you dont know then dont play the game.
Owning a mortgage company, when we get a pre-approval it is still subject to verification of your information. We can get a lock sheet valid for 30 days or even 15 days. They each will have different interest rates. IF we lock for 15 days and for what ever reason you cannot close... Well, the lock dissipates. Interest revert to the current days prevailing rate... Mortgages can be closed within 15 days if your loan officer is doing their job and you are doing yours. The loan file must be complete and ready to submit, if so when submitted it can be underwritten within 3-4 days. Appraisal takes 3 and title done consecutively takes 3 then you should close within 8-10 days. Problems come when here is a question on appraisal. If the lender desires a second appraisal to verify the first, you could be in trouble. Now you add 3-4 days and you are busting the 15 day lock.. And you can bet the interest will go up, even if it goes down... I assure you, we always make it go up.
A side note on (YSP) Yield Spread Premium, The broker, lender or whatever must provide you a Good Faith Estimate within 3 days of submitting a ULA 1003. They must disclose YSP. This will be a separate line item and often is displayed as a percentage of 1-3%.
Prior to closing they must submit a revised GFE. You should tell your LO on the front end, no YSP... FYI, YSP is the amount the lendor will pay the broker for bumping your interest rate. I f someone is chargeing you 0 or 1% origination, bet your money they are getting 2-3% on YSP.. This cost you money.