Q–When we started our mortgage refinance process in early January with a mortgage broker, we received a good faith estimate of our loan costs. The fees all seemed reasonable, such as for recording and lender’s title insurance.
But when the loan closed at the end of January, the mortgage broker included all sorts of weird fees, such as: a $275 legal fee (although we never saw or heard from any attorney); a $150 escrow impound waiver fee; a $350 documentation fee (presumably for typing the mortgage papers); a $500 loan origination fee (it was supposed to be a no-points loan); a $372 warehousing fee; and a $100 processing fee.
Since the mortgage broker was not present at the closing, we tried to phone him, but he was not available. We reluctantly paid the fees from the loan proceeds. Do we have any recourse against the crooked mortgage broker who now refuses to return our phone calls?
A–As millions of home loan borrowers and mortgage lenders have discovered, violations of the good faith estimate of costs go unpunished. Last-minute “garbage fees” such as you list occur frequently. Lenders know their borrowers are vulnerable during closing and will probably feel pressured to pay unexpected fees such as you encountered.
Every time I hear from readers like you, about these 100 percent pure-profit charges inflicted on borrowers, I am amazed at the creativity mortgage lenders have in devising new fees.
If I were in your situation, I would write a demand letter to your mortgage broker insisting upon immediate refund of the previously undisclosed fees you were charged. Set a deadline for payment, such as two weeks.
If you don’t receive a refund check, take the mortgage broker to Small Claims Court and let the judge decide. Presuming you win, file a complaint against the mortgage broker with the appropriate state agency that licenses the broker.
Q–A Realtor sold my house to a buyer who is getting an FHA mortgage. Just a few days ago, before the closing, I phoned two mortgage companies, and was told FHA loan points (which I agreed to pay) are “zero to one point.” But my Realtor tells me the sale price of my house has to be raised to cover a four-point FHA loan fee.
I questioned my Realtor and he said, “Points are a matter of business and you shouldn’t be concerned.” My buyer and I are in tears because everyone involved appears to be bandits with smiles. What should we do?
A–It sounds like your Realtor and/or mortgage broker is trying to take advantage of you. Before signing anything further, get everything in writing.
Ask why the mortgage broker is charging much higher loan points than his competitors. If necessary, switch to another FHA mortgage broker who won’t gouge you. Also, report the attempted swindle to the state real estate commission and the agency regulating the mortgage lender.
Q–I’m writing in behalf of family members who recently filed bankruptcy. They lost their family business where their combined income was almost $100,000 annually. Now, both work as employees, making only about $40,000 total per year.
They are very close to losing their home, which has $2,000 monthly mortgage payments. The husband has taken a second job to pay the property taxes.
The house is worth about $250,000 and the mortgage is $190,000. But the area is depressed for older homes because there is too much new construction.
When they contacted their mortgage holder, they were told refinancing is out of the question now. They need to reduce their mortgage payment by $500 per month. Any suggestions?
A–Lack of adequate income and the recent bankruptcy filing make refinancing at a lower interest rate unlikely at this time. Selling the home to salvage the $60,000 equity seems like the best alternative.
Surely your relatives can rent a similar home for less than the $2,000 per month they are now spending, until they can increase their income and buy another house.
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Have a question about real estate? You can write to Robert Bruss in care of Tribune Real Estate Features Service, 435 N. Michigan Ave., Suite 1400, Chicago, Ill. 60611. Answers will be provided only through the column. Please note that laws vary from state to state and area to area. Consult an attorney for specific legal advice.
