Author Topic: possible bait and switch with a mortgage broker. what to do next...  (Read 1134 times)

clarkfan1979

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I got estimate one from a mortgage broker about a cash-out refinance about 10 days ago. The rate was 4.75% and I told her that I wanted to hold out for 4.625%. The rate on my current loan is 4.75% and I am only willing to do it if the rate is lower.

I got estimate two about 3 days ago with a 4.625% rate, but many of the fees were higher. I asked her about it and she told me to reference the fees on the first estimate. She claims that she manually entered the fees the first time, but the second time she did a quick "auto-fill" for the fees and that's why they look higher. However, when it's time to close, the fees will be consistent with estimate one.

I got the final loan estimate yesterday and the fees are $800 higher than estimate one. The fees are the same as estimate two, plus a few more higher fees.

I called her out on it and she said it was an honest mistake. I don't really believe her, but she went back and fixed all the fees to be consistent with the first estimate, except for one. There is one fee that is $67 higher than estimate one and she claims that she cannot fix it. However, a few days ago she told me that it was a mistake and she was going to fix it.

I want to ask her to pay for the $67 out of her own pocket.   Is that a dick move? I feel like it's a reasonable request. 

I'm looking at $3200 in  fees and $1800 in pre-paid escrow accounts for a $262,500 loan that is a cash out refi on a rental property. Their lender fees are about $1000 less than other comps. Most people charge at least 1% for the origination fee. Their origination fee is $1600, instead of $2600.

     

Cwadda

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #1 on: October 06, 2017, 02:39:51 PM »
I would look around at other lenders and it's perfectly fair to tell her you're doing so.  She wasn't straight with you.  Not what I would want in investments.

My lender hit me a $1000 appraisal fee and had I not been so far along in the process, I would've dropped their asses. Yes, you read that right.  $1000 for an appraisal.

tralfamadorian

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #2 on: October 06, 2017, 03:13:56 PM »
There is one fee that is $67 higher than estimate one and she claims that she cannot fix it. However, a few days ago she told me that it was a mistake and she was going to fix it.   

Do you have her prior comment via email or was it over the phone?  If it was via email, I would forward her own message back to her and see what she does.  It sounds like either she is dishonest or incompetent. 

Regarding looking elsewhere, how wide of a net did you throw before moving forward with this lender?  Ie: how confident are you that you would be able to find the same or a better deal?  I've received three different "we'll match or beat any other offer" mailing re mortgages in the last month (SoFi, Ally and little local bank) so there's money looking for loans, at least in my market. 

sokoloff

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #3 on: October 06, 2017, 03:20:27 PM »
I want to ask her to pay for the $67 out of her own pocket.   Is that a dick move? I feel like it's a reasonable request. 

I'm looking at $3200 in  fees and $1800 in pre-paid escrow accounts for a $262,500 loan that is a cash out refi on a rental property. Their lender fees are about $1000 less than other comps. Most people charge at least 1% for the origination fee. Their origination fee is $1600, instead of $2600.
What's your time worth? Are you more interested in the principle of the matter or in getting the loan closed and moving on with your life? (I have dropped a business after they clowned a customer service issue that would have taken them about $0.73 to address. I have also grimaced and paid hundreds of dollars to get something done over my principles.)

It sounds like they're on the inexpensive side overall, so you're perhaps gaining $933 by going with them (gain $1000, lose $67). I don't like rewarding shady behavior, but I'm not sure that I'd start all over with a new broker and new application process over $67/-933.

clarkfan1979

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #4 on: October 07, 2017, 11:48:33 PM »
I want to ask her to pay for the $67 out of her own pocket.   Is that a dick move? I feel like it's a reasonable request. 

I'm looking at $3200 in  fees and $1800 in pre-paid escrow accounts for a $262,500 loan that is a cash out refi on a rental property. Their lender fees are about $1000 less than other comps. Most people charge at least 1% for the origination fee. Their origination fee is $1600, instead of $2600.
What's your time worth? Are you more interested in the principle of the matter or in getting the loan closed and moving on with your life? (I have dropped a business after they clowned a customer service issue that would have taken them about $0.73 to address. I have also grimaced and paid hundreds of dollars to get something done over my principles.)


It sounds like they're on the inexpensive side overall, so you're perhaps gaining $933 by going with them (gain $1000, lose $67). I don't like rewarding shady behavior, but I'm not sure that I'd start all over with a new broker and new application process over $67/-933.




I don't like to reward shady behavior either. I kind of feel like their business model is to come in low and then try to increase fees at the end hoping that people won't notice. However, I did notice the increased fees at the end and now I get to reap the rewards. They will make money, but not as much as normal.   
« Last Edit: October 07, 2017, 11:50:18 PM by clarkfan1979 »

ender

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #5 on: October 08, 2017, 08:32:46 AM »
Those numbers seem really high to me.

Our mortgage origination fee for a ~180k mortgage was I think $675 through a local credit union type of bank. There were other fees but our total cost for all them (appraisal, title stuff, etc) was still only around $1500.

powskier

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #6 on: October 08, 2017, 10:06:53 AM »
I am curious about the actual cost benefit of the refi itself, just to give this other detail some better perspective.

Wells Fargo dicked us with a similar move  7 years ago the day before closing, higher fees, higher interest rate. Because the bigger picture was still of value we went with it and refinanced 5 years ago for 2 percentage points less with a local credit union.

Again, it depends on the big picture of the refi.

afox

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #7 on: October 08, 2017, 10:38:13 PM »
When shopping for a mortgage I found that its best to start things off right and get straight to the point by requesting only two pieces of information: total closing costs, and interest rate.  I do not care if they are charging $1000 for an appraisal and $500 origination or $1000 origination and $500 appraisal.  Lenders love to play games.  Asking for only the rate and closing costs weeds out the shadiest lenders straight from the start.  The ones that do respond will know that you are comparing closing costs and rates to other lenders. 

Shopping or negotiating by comparing itemized closing cost fees is likely to result in game playing by the lender and to drive you mad.  Just take the total closing costs  from the lower estimate and say you want those, tell them they can reshuffle the fees however they want, they will get the point, the fees are mostly imaginary as evidenced by what your lender said about how they are calculated.

ender

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #8 on: October 09, 2017, 08:41:31 AM »
When shopping for a mortgage I found that its best to start things off right and get straight to the point by requesting only two pieces of information: total closing costs, and interest rate.  I do not care if they are charging $1000 for an appraisal and $500 origination or $1000 origination and $500 appraisal.  Lenders love to play games.  Asking for only the rate and closing costs weeds out the shadiest lenders straight from the start.  The ones that do respond will know that you are comparing closing costs and rates to other lenders. 

Shopping or negotiating by comparing itemized closing cost fees is likely to result in game playing by the lender and to drive you mad.  Just take the total closing costs  from the lower estimate and say you want those, tell them they can reshuffle the fees however they want, they will get the point, the fees are mostly imaginary as evidenced by what your lender said about how they are calculated.

Another benefit of this is you avoid the "great rate... but you have to pay for X points!" problem, too.

clarkfan1979

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #9 on: October 10, 2017, 01:07:00 AM »
Those numbers seem really high to me.

Our mortgage origination fee for a ~180k mortgage was I think $675 through a local credit union type of bank. There were other fees but our total cost for all them (appraisal, title stuff, etc) was still only around $1500.

Many local credit unions only do mortgages on primary residential. This is a cash out re-fi on an investment property. I got 3 estimates total. They were about $1,000 cheaper than the other two estimates.

clarkfan1979

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #10 on: October 10, 2017, 12:08:15 PM »
I am curious about the actual cost benefit of the refi itself, just to give this other detail some better perspective.

Wells Fargo dicked us with a similar move  7 years ago the day before closing, higher fees, higher interest rate. Because the bigger picture was still of value we went with it and refinanced 5 years ago for 2 percentage points less with a local credit union.

Again, it depends on the big picture of the refi.


We are going to pull out 145K as a result of the re-fi. The total mortgage, taxes and insurance will increase from $985 to $1575. Rent is $2200/month.

We will use about 65K to purchase a primary residence in Hawaii. We will probably use the 80K to buy another rental. We have another 32K in cash reserves.

CptJack83

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #11 on: October 10, 2017, 02:36:36 PM »
$67?  Cut her a break. I'm assuming that is for a 3rd party cost anyway (title, recording etc)  Lenders are in a hard spot where they need to quote multiple 3rd party costs to a client that they don't control.  This wasn't malicious on her part.  Honestly if she was only off by $67 from her back of the envelope quote to what the Loan Estimate said, that is pretty good.  I would hardly classify this as bait-and-switch.


clarkfan1979

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #12 on: October 11, 2017, 01:52:55 AM »
$67?  Cut her a break. I'm assuming that is for a 3rd party cost anyway (title, recording etc)  Lenders are in a hard spot where they need to quote multiple 3rd party costs to a client that they don't control.  This wasn't malicious on her part.  Honestly if she was only off by $67 from her back of the envelope quote to what the Loan Estimate said, that is pretty good.  I would hardly classify this as bait-and-switch.

She was off by $800 in fees from her first estimate. If I didn't say anything or notice, I would have been a victim of bait and switch. 

EricL

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #13 on: October 11, 2017, 02:13:00 AM »
She's either an idiot or she's dishonest.  Both are perfectly valid reasons to take your business elsewhere.
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CptJack83

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #14 on: October 13, 2017, 10:06:27 AM »
But was the $800 lender fees or 3rd party fees?  A lot of times a broker will quote you what the actual 3rd party costs are in their preliminary quote based on their experience.  However due to the way the laws are set up (lenders have to pay the difference between a disclosed fee and the actual fee if the actual fee is higher, or a % of the difference based on the fee) most lender will "over disclose" various 3rd party fees, title, appraisal etc.  Or a lot of times a lenders system pulls in "average" title fees for that area on their disclosures, but a lender might be able to get a discount on those fees.  They likely quoted you the actual lower cost but disclosed the "average" higher cost.  In the end when they actually get the title invoice the final disclosure has the actual cost on there.

So to me it sounds like she told you the 3rd party fees were going to be X, which was the correct amount, you got your disclosures and they were stated as more.  You brought this to her attention and then in the end the fees were back to their original (or $67 higher) amount. 

She wasn't going to pocket those extra title fees, and they weren't going to be that high, that is just what that bank disclosed to you.  In the end the fees likely would have been the same regardless.

Now if they were lender fees that is a difference.  A bank should know what their origination costs are.  Unless it was a lender credit associated with the rate you were locking in.  Those credits do vary and change with the market every day so she could have told you a rate with a certain lender credit on Monday and on Tuesday that could be totally different.  That isn't bait and switch that is just the market...very similar to stocks.   That is why you have to shop lenders on the same day.  Getting a quote from someone on Monday and comparing it to another lender any other day that week is useless. 

clarkfan1979

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Re: possible bait and switch with a mortgage broker. what to do next...
« Reply #15 on: October 13, 2017, 02:56:58 PM »
But was the $800 lender fees or 3rd party fees?  A lot of times a broker will quote you what the actual 3rd party costs are in their preliminary quote based on their experience.  However due to the way the laws are set up (lenders have to pay the difference between a disclosed fee and the actual fee if the actual fee is higher, or a % of the difference based on the fee) most lender will "over disclose" various 3rd party fees, title, appraisal etc.  Or a lot of times a lenders system pulls in "average" title fees for that area on their disclosures, but a lender might be able to get a discount on those fees.  They likely quoted you the actual lower cost but disclosed the "average" higher cost.  In the end when they actually get the title invoice the final disclosure has the actual cost on there.

So to me it sounds like she told you the 3rd party fees were going to be X, which was the correct amount, you got your disclosures and they were stated as more.  You brought this to her attention and then in the end the fees were back to their original (or $67 higher) amount. 

She wasn't going to pocket those extra title fees, and they weren't going to be that high, that is just what that bank disclosed to you.  In the end the fees likely would have been the same regardless.

Now if they were lender fees that is a difference.  A bank should know what their origination costs are.  Unless it was a lender credit associated with the rate you were locking in.  Those credits do vary and change with the market every day so she could have told you a rate with a certain lender credit on Monday and on Tuesday that could be totally different.  That isn't bait and switch that is just the market...very similar to stocks.   That is why you have to shop lenders on the same day.  Getting a quote from someone on Monday and comparing it to another lender any other day that week is useless.


$522 was a lender fee that was not on the first 2 estimates. If I didn't say anything that would have gone directly in her pocket.

Another $300 was 3rd party fees.

In reference to the 3rd party fees, I understand that they will not go in her pocket. However, mortgage brokers quote low 3rd party fees on purpose in order to get your business.

She told me verbally twice that the 3rd party fees would be a specific number. When I got the final bill it was $300 higher. She ended up lowering the 3rd party fees by $233.

You don't think they try to help out their friends at the title company with higher fees? Those 3rd party fees would be in her friends pocket. Mortgage brokers and title companies have strong relationships. They need to in order to get deals done.

It's a dirty business and I hate it, but I just need to get over it. It sucks that I don't trust anyone.