Hello, everyone. I'd be grateful for any insights you could offer on this problem... 72 hours before close of escrow on our new home, our loan broker suddenly changed our loan terms. We went from 5.625%, no points (30 yrs fixed) to 5.75% and 3/8th point. When I told him I wasn't going to accept the change--we had the rate lock and the no-points condition in writing--he told me I was free to back out of the loan. Of course, I wasn't free to back out of the loan: We had a huge earnest money deposit at stake, and had already sold our old home. So I had no choice but to sign off on the new terms, and let the loan go through. I consider this a clear-cut bait-and-switch, and I think I can make a strong argument that I signed the new terms under duress. Other than the obvious route of suing, can anyone offer any advice? My initial battle plan is to contact the broker's manager, explain what the situation is, and ask him to work with me on a quick and easy resolution. (I'm demanding roughly $10K, which is the overall increase in the cost of the loan.) If this fails, I intend to send letters to: The broker's state atty-genl The broker's state banking regulator The atty-genl and banking regulator in my own state (California) Federal banking regulator BBB (they're a member, and have a clean record...for now) Lending Tree (which introduced me and the lender) My lender Thanks for any helpful thoughts! Dave
I had ther *exact* same thing happen to me with a lender that was referred to me through Lending Tree. My situation was different because I was able to back out. I don't have any advice for you, I only wanted to let you know that you aren't alone. batgirl
This sounds like an example of "predatory lending practices". Lots of states have now begun to pass laws regulating these practices. Use that term -predatory lending - when contacting the various agencies you mentioned, perhaps your state is one that already recognizes this
Thanks for your replies, everybody. I got a pretty good outcome. Long post: apologies in advance. After waiting 'til the loan had gone through, and my home purchase was safely recorded with the county, I phoned the loan broker yesterday. Specifically, I phoned the manager of the loan officer I'd done business with. Very politely, I gave him the outline of what had happened, and he called me back a little while later after investigating. He admitted that they had made a procedural mistake and hadn't locked the rate properly. He said they would learn from the mistake. Which was nice, but I told him that I objected to their "learning" coming out of my pocket. So he said he'd see what he could do. About ten minutes later, I get a call from the original broker, asking me about an e-mail from his boss to Accounting, on which he was cc'd. Having never seen the e-mail (which was internal to them), I told him I couldn't really respond, and that he needed to talk to his manager directly. He repeated the question several times; I gave him the same response each time. Finally, he pressed the issue, wanting to know "if someone's trying to take money out of my [the broker's] pocket." At that point, I told him he really needed to talk to his manager. Manager called back after about an hour, saying there was nothing they could do. At this point, I told him that I had retained an attorney (true), who felt comfortable with the paper trail we had. I added that if he really wanted to, I'd be happy to go down dual paths of litigation and request for regulatory relief. I added that I would concentrate my efforts on my home state of CA, where consumer protections are strong, and a house costs 5x (or more) what a house costs in his locale. At that point, he said he'd call me back later that evening, or else no later than 9a today. True to his word, the phone rang at 8:30a today. Manager offered me 2/3 of the amount in question ($900 out of $1,350). I figured this was the best I could do without actually going into litigation, and accepted. We're still stuck with the slightly higher interest rate (5.75%, or an extra $37/mo.), but we can live with that--still not bad for a 30-yr fixed loan with an interest-only period. Thanks to all for your support and interest (no pun intended). It's worth noting that almost everyone I bitched to (my dad, et al.) told me I was stupid for pursuing the matter, and not just chalking this one up to experience. Also, a final note: The attorney I consulted was a freebie (but very good) whom I got through my company's EAP (employee-assistance program). Many people don't even know that their company offers this (my friends at work said it would never have occurred to them). If you need legal help, don't forget about this avenue--it probably saved me a few hundred bucks (the difference between this being worthwhile or not). d
Re: Unscrupulous loan broker: recou You are not responsible for subsidizing their criminal activity and were very gracious by accepting their settlement. Had you pursued it legally you would have gotten way more than what they gave you. I'll bet even money they do this on a regular basis and use the same excuse over and over. Also, whether you know it or not a portion of the extra $37 you are paying each month is going back to them. In effect they really did not lose anything by giving you the $900. Congratulations on the new house. At least you did not lay down and let them get away without penance. Most people are too passive in situations like this. Good work!
Re: Unscrupulous loan broker: recou Thanks for your kind words. I considered holding out for more, but I'm just so ready to be done with this whole thing. My wife's and my life have been consumed by the whole real estate thing for some four months, now. I was actually tempted to just let the whole thing go, as you mentioned most people would. But that would have just been *too* wrong. At least, now, I feel like I've recovered a bit of my manhood. d
Re: Re: Unscrupulous loan broker: r I would say that unfortunately most people never take this up in court and therefor there really is not a charted path of results to see. In CA mostly what happens is the the ca dept of real estate investigates and slaps the lender or broker on the wrist. which is like reporting to mcdonalds that big macs are fatning. The thing to remember is that an application does not set your interest rate in stone and the good faith estimate is worthless. Even the RESPA packet you should have recieved means nothing. Most brokers and lenders have disclosures that rates can change at any time with out notice. Nothing is set in stone until your loan is locked and approved. (many loans are also locked wrong). it pays to work with a good broker or lender questions that should always be asked of brokers: what is the duration of the rate lock? (usually 30 days) do you lock in rate at time of application or loan approval? (many brokers will let loans float until approval because a broker can earn more on a 15 day lock than a 30 day lock) what is the rate lock expiration policy? (for most it is a .25 cost) I will check the disclosures for florida and post them and you can tell me if you signed the correct ones.. you may still have some recourse.. i would call what ever dept. there handles real estate a nice phone call to the local bbb and chamber of commerce. and maybe a letter to the local paper just to get the story out. but i will have to check. real estate law is very complex and confusing most counsel i know are not that familiar even though they may be good litigators or good business lawyers. da kustomkat back after a few years in hiatus
Re: Re: Unscrupulous loan broker: r kustomcat: Thanks, but don't go to any trouble. As I noted upthread, the issue is resolved. d
