Originator pushing loans through different states to avoid laws??

[Tyler H.]

I have a client who was in contract on a small investment property in which he found a company that would "broker" the relatively small 50K loan. (80%) There was a number of red flags and horrible communication.... To make a long story short, my client was strung along and not only did the rate "change" 3 times, but there were so many last minute "conditions" that came up, my client cancelled it all. This was a conventional investment loan on a property in CA. The rate quoted was first 4.5%, then the loan app had 4.9%, then the first CD had 5.1%. (supposedly rate locked huh?) All along no points were being charged on any disclosures.... But then on the very last CD, he slipped in an origination charge of 1.5%, and we could also see that he was being paid around $1800 from the lender. Now I am told that originators can no longer make money on the front AND back end in CA for conventional mortgages.... So how in the world could this originator be pulling this off? Shadyness aside, the only thing I noticed was the the bank he was putting the loan through was in TX. So by putting the loan through a TX bank, can he legally avoid CA laws? Or is he just pulling off some major fraud? Oh and the appraisal fee?... $700 with a $300 reinspection fee!!! Maybe the appraiser drove from TX? :)