Mortgage company screwed us over do I have rights?

Question

My husband and I locked in a rate of 4.25% on a 30 year loan with a mortgage company. We paid the $495 fee and the senior loan guy told us this was an easy loan to do because of my husbands excellent credit score, his debt to income ratio and all the other factors. Our house appraised for the amount it was supposed to also. So another few weeks went by and he said it usually takes 30-60 days to close. The holidays came and went and  we didn't hear from them...so I called, left messages, e-mailed and then he finally gave us a call back saying the loan didn't close because the lock expired. He said he tried to get us another extention but he couldn't! We said what??? We said how could this happen? The only thing he could say was it was the "big banks fault ...the chases and the wells fargos". He said the rates went up to 4.8% and that we can either get a refund or they can hold our app until the rates go back down. We said a refund. We were supposed to save $400 a month with this new interest rate! That's a ton of money for 30 years! I am so angry and furious. So get this...we then get this e-mail with a form we have to sign to get our money back. In the form it states we can't bad mouth them or complain after we get our money. Are you kidding me??? My husband called the president of the company and the guy said  he has to sign it. We now received a new form to sign titled settlement form...to sign in order to be refunded our money. We still haven't signed it and feel like we were totally screwed over by these people. I can't understand what went wrong and how on earth couldn't this guy close such an easy loan?  The only thing I'm starting to wonder is if he received a kickback from our original mortgage company so our loan wouldn't be taken from them so they can keep making money from us paying our mortgage. Is that possible? I can't understand what else could do this. What are my rights I'm so mad! We had asked them to pay us the money we would have saved over the life of the loan but they didn't agree. What jerks!! No wonder they have no complaints because of this crap they're pulling. I even found them on Bankrate.com

Andy More · Answer

I am a mortgage broker as well and can tell you there are a million random things that could keep a loan from closing. I'm suprised though they didn't give you more details than "it was the big banks fault". Did they not send you a denial letter which is supposed to say why loan was denied?

If you were saving $400 at 4.25% I would think you would still be saving something at 4.8%??? Did they give you the option of closing at 4.8%

RESPA(Real Estate Settlement Procedures ACT) got revamped last year and has caused many delays on many loans because of all the red tape that has to be complied with. Its a nightmare!

Darryl Dahlen · Answer

What an incredibly ignorant statement to make! As a broker, I take offense to your comment and couldn't disagree with you more.

J Scott · Answer

Good lessons here:

1. Never pay an upfront fee for a mortgage or refi (other than appraisal fees which may be required at the time of appraisal);

2. Don't use a broker unless you have great references...as you now see, a broker can screw you over in multiple ways, even if they don't have any of your money;

3. It's YOUR responsibility to ensure that you stay on top of the broker and know at all times the status of the loan.  The broker I use sends out weekly updates on the status of the loan (including detailed specifics about what the underwriter is asking for, etc).  And if I called him everyday, he'd be happy to provide a status on what was going on that day.  If you go a week without it sounding like anything new has happened, it's probably because the broker is sitting on his *ss being lazy;

4. It's most likely *NOT* the lender/bank's fault.  While brokers want you to think it takes 30-60 days to get a loan closed, in my experience, it only takes 2-3 weeks, even for FHA.  Any additional time is just time where the broker wasn't working on the loan because he was busy with other stuff or just being lazy.  If you can't get a loan closed in 4 weeks, you need to start asking hard questions and consider that your broker is not working as hard as he could/should be.

5. Refuse to sign the agreement, demand your money back, and let them know that if they don't give it to you, you will be filing a complaint with the BBB, the attorney general, and going to the media.  If they still don't cooperate, do those things.

I seriously doubt your mortgage company interfered with the refi in order to keep you (not sure it would even be legal).  Most likely, your broker just didn't work fast/hard enough, and the rate expired...it's most likely his fault...

The one exception here would be if you have any credit or application issues that may have held up the loan...if that's the case, and the broker was trying to help work around your financial issues, that can take (much) longer...

Bryan Hancock · Answer

Unfortunately I have been burned by this same maneuver too and have had to order more than one appraisal because the first bank wouldn't "release" the appraisal.  The counterbalance is to find a broker that is working with multiple lenders for your loan type and making sure that the appraisal doesn't have to get released to switch banks if one doesn't live up to their lock.

Another counterbalance is to look at "lock jumping" to another lender.  As you can see the banks will ignore their lock if it is advantageous for them to do so in some instances.  In my experience this isn't always the fault of the broker.  A short lock period also gives the lender the ability to drag their feet if rates move in their favor.

Here is a FANTASTIC article by The Mortgage Professor that describes dirty tricks by lenders and some great things to get up front to protect yourself:

QUESTIONS TO ASK THE MORTGAGE BROKER

Here are some other great articles of his on locking and the ethics involved:

Is the Borrower Committed by a Mortgage Lock?

What's Covered By a Mortgage Lock?

Is the Lender Obliged to Extend a Mortgage Rate Lock?

Changing the Loan After You Lock

What Happened to My Mortgage Rate Lock?

IMO this is the best article for you to read though:

Questions About the Failure of Mortgage Locks

Bill Gulley · Answer

It's easy to hate the things you don't understand.

Bill Gulley · Answer

Most likely, your loan was not processed by your originating loan officer to get it to the underwritters during the holiday schedule, but that is no excuse.

You originator can not make any stipulation about what you might say, but they do need a release stating that you are pulling your loan request. I suggest you draw one line through the part restricting your speech, sign it and send it to them.

Your actual loss would be the amount of interest over the term of that loan.

You can file a complaint with the Department of Finance in the state you made the loan request. You can also file with the Department of Real Estate, the BBB, the Chamber and the local Prosecutors Office as a bait and switch tactic.
If the lender is an insured bank, you can file a complaint tothe FDIC, and state Banking Department, National Banks would go to the Comptroller of Currency.

You can also speak to an attorney. A simple letter to the lender will probably get you your money plus the attorney fee. Banks know they are not popular now and that any award might be much more than what they could cut a check for today. Good luck!

I'm not saying that any of that would yield any satisfaction.

Darryl Dahlen · Answer

I am sorry this happened to you Mary. I don't agree with the way this company handled things, and it is these type of people that give us a bad name.

I can't help but think that if the broker kept the lines of communication open things might not have ended like they have. Too often, people shy away from giving bad news so they don't do anything and leave their client hanging.

No matter what the reason is why your loan didn't close is, the fact remains you shouldn't have been kept in the dark to what reason is nor have to be forced into a corner to get your your money back.

David Beard · Answer

I just heard a similar story.  The big mortgage wholesalers (Wells Fargo, etc.)have been inundated with refinance volume.  Purchase transactions, which have contractual close dates, receive priority, and refinances have been generally slow.  I'm sure the full documentation requirements, and the appraisal reviews, these days have also contributed to the back log on refinances.  With rates now spurting up, there are bound to be LOTS of angry borrowers like yourself.

James Hiddle · Answer

You're only half right. You also have to blame dumb borrowers who should have known that you can't afford a $500,000 home on $10,000 a year salary.

Mary M · Answer

Since I don't really have my full name on here...is there a way it can be traced back to me if I give the name of this mortgage company that did this to me? I just don't want anyone else to get screwed over by them like I was. Or should I give the initials of the company at the state they're in?

Mortgage company screwed us over do I have rights?

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