Flip Flop Lender
I had a reputable and well respected mortgage broker give me a good faith estimate for the purchase of a condo with a 20 year term @ 6.875 % based on 20% down on a $ 200K purchase with a $160K mortage. ( a no docs loan as an investment property in the name of an LLC ) the appraisal came in way low so that all the lender was willing to do was a $104K mortage. As an alternative I
suggested cross collateralization with another condo we have with quite alot of equity already in it ( condo is appraised at $ 410 K we owe only 185K on it ) The lender accepted this as additional collateral and agreed to loan us $ 150K rather than $ 160 K with us putting 50K down as well. Fine ......I go to closing and as I am sitting there signing papers ,I discover that the terms of this loan is only 15 years now ! From the original good faith estimate of a 20 year term ,to now this 15 years term. This means an additional $ 180 a month payment to come up with for us. Needless to say I was not very happy with this additional dollar amout each month ,but more disturbing was the way I found out about it at the closing table when it was really too late to do anything about it but just get PO'd and sign the papers anyway. I left the closing feeling violated and annoyed with this sort of behaviour from all of these so called professionals. Is this just how these things work ? Last minute changes to mortgage terms with no prior notification ? I thought I had a good rapore with the mortgage brokers and dont really want to hold their feet to the fire if this was there fault since I appreciate the other business they have done for me in the past but can anyone tell if this sort of thing is acceptable and can they get away with it clean ? As far as I know it was the lender who just decided to change the terms at the last minute and there was nothing I could do about it. When I asked the mortgage broker about this she implied if I made too much of an issue about it ,the lender could actually call in the entire loan based on something in their contract. She made it seem like this is the way they could "punish" me if I gave them any trouble about the way they ignored the good faith estimate.... I mean ,having a 20 year term was very instrumental in our decideing to go forward with the deal in the first place ,had I known 15 years ,we may have passed on it for our own reasons. Can anyone here advise me on this subject so that I can at least avoid such shenanigans in the future. Thanks so much !
I am sorry to say that you are probably out of luck. the good faith estimate probably says something to the affect of " this is in no way a commitment to loan and the loan terms can change at anytime and on and on". I'm telling you these big companys in any buisness are covered legally in more ways than one. the only way you could even try to "punish" them is file a claim with the state attorney generals office or the BBI. other than that you could never use them again but you wont even make a dent in there buisness. and as far as the broker goes, I would let them have it and let them know that the difference between a 15 year and a 20 year is a very big deal! I would let them know how upset you are that they were not aware of these changes and how they acted upon finding out. and then never use either of them again, there are way to many brokers and lenders to waste your time on incompatent ones.
When loan terms or loan amounts change you should be "redisclosed" You didn't have to take the deal. I wouldn't have taken it if it was not what I wanted
Lori
[addsig]
In an effort to maintain good relations, I would talk to the mortgage broker and simply ask why they didn't inform you of the change. To find out at the closing table is unacceptable. If the mtg broker can give you a justifiable explanation (i.e. proof that the change was disclosed & perhaps you didn't get the info (??), then I would ask for a discount on the next deal or re-fi (0 points, no app fee to be exact) to somewhat compensate for the non-disclosure prior to closing. In this way, you are not the bad guy and continue to obtain favorable financing for future deals.
I promise you that the broker knew about what was happening. I am a broker.
1/ The loan underwriter, account manager, or account rep from the bank will ALWAYS ALWAYS call the broker to indicate ANY change in the loan. So I guarantee the broker knew about this at minimum 4 days before closing.
2/ If there is a change in the terms of the loan (usually not the interest rate) the bank usually requests a new 1003 or good faith with the corrected terms from the mortgage broker....it doesn't have to be signed by you.
3/ A fee sheet from the bank is given to the broker for them to sign off on. On that fee sheet the terms of the loan are on for the broker to sing off on......So for some STRANGE reason no one contacted the broker to inform them about the change, they would see it here before the bank authorized the closing.
So there are pretty much 3 fail safes before the closing. Something smells fishy.
I'll tell you exactly why the broker didn't contact you to inform you about this. Because she knew you wouldn't walk away if you were at the table, and if you knew before hand, they would have a lot more work to do to get you what you want. I GUARANTEE it....I've seen and heard this exact situation MANY times before.
Also, she is lying about them "calling" in the loan if you complain. They wouldn't and couldn't do that. She just doesn't want you to make trouble for her.
I will also say, I am going to assume she did not even secure a 20 year term for you. Oddly enough, 20 year terms are not offered by every bank for some reason. She probably just sent you her mortgage company good faith, you signed off on that. ((Just assuming this part--probably right though))
I would stop using her if I were you. She is either incompetent or a sneak. Either way you loose.
Geeze......... What is the world coming to when you can not do an honest mutually agreeable transaction without having to resort to bait and switch tactics? I mean ,, whats the point of HAVING to do things this way ? Sadly this sort of thing seems to hapen to me each and every time I make a transaction ,do all these underwriters and brokers have multiple personalities ? What is their point ? And if they MUST be so very diabolical ,so be it ... I have made millions of dollars without having to resort to this sort of thing so I dont feel much worse for their wear.
NJtaxliens is right. I'm also a broker, and some brokers out there are worse than used car salesman (no offense). There are plenty of mortgage companies out there, let alone on this website. I would find someone near you that you feel comfortable with and see how it works. Ask someone you know that has recently refinanced or bought a new house and see how their experience was.
Did you ask to see the Wholesale Rate Sheet? This give the amount of the secret rebate paid to the Broker after the close. He/She probably got a bigger bribe by switching you to a 15 yr. loan. Send me an email and I will send you the sheet from a national lender for your review and education.