Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
He sent me an explanation as to why the interest rate changed....
"Sure - the state of maryland has a mortgage law in place that puts a cap on the total fees a borrower can pay in a mortgage transaction. It considers every fee that goes to the lender. The combination of the points to get a lower rate, the single premium mortgage insurance and origination fee puts you over the allowable amount of fees by over $2000. In order to get you the best deal possible I cut my commission by $1000 but it was still over so we had to increase the rate by. 125% so that we could reduce the amount of points we were charging you"
But what I don't understand is how he didnt pick up on this.. Why was i promised and locked into an interest rate MONTHS ago when it sounds like I never could have had that rate. And isn't it his job to know about state regulations? I just dont understand why it was never picked up on until the day before closing. My response:
"I thought these fees had already been established, so how come we didn't know about this til yesterday? And why do I have so many fees that are putting me so far over the limit? Sorry, I'm just trying to understand"
He sent me an explanation as to why the interest rate changed....
"Sure - the state of maryland has a mortgage law in place that puts a cap on the total fees a borrower can pay in a mortgage transaction. It considers every fee that goes to the lender. The combination of the points to get a lower rate, the single premium mortgage insurance and origination fee puts you over the allowable amount of fees by over $2000. In order to get you the best deal possible I cut my commission by $1000 but it was still over so we had to increase the rate by. 125% so that we could reduce the amount of points we were charging you"
But what I don't understand is how he didnt pick up on this.. Why was i promised and locked into an interest rate MONTHS ago when it sounds like I never could have had that rate. And isn't it his job to know about state regulations? I just dont understand why it was never picked up on until the day before closing. My response:
"I thought these fees had already been established, so how come we didn't know about this til yesterday? And why do I have so many fees that are putting me so far over the limit? Sorry, I'm just trying to understand"
And no, there were no changes to our loan.
Sounds like a load of horseshi$ to me. Tell him to cut his commission to nothing.
I am curious to mortgage people. Is this an example of stupid government regulations that have unintended consequences?
Underwriter or closer found the problem with that loan. It is not your problem and a talk with management should fix that situation. The lock in rate is binding.
Yes he did tell me that it was found by the underwriter. Here is his next reply...
"When the underwriter tried to finalize the loan it triggered an error message about the fees which is how we discovered it. We had to structure the loan that way to meet your monthly payment requirements while keeping in mind the total amount of cash you had available towards the transaction"
This is out of my realm of expertise, but it just doesn't make sense to me. I dont understand how I was ever promised and locked in to this interest rate if it wasn't possible to obtain due to these state regulations.
I am not sure where to go from here.. Should I just suck it up and settle next week with the new interest rare as planned?
Yes he did tell me that it was found by the underwriter. Here is his next reply...
"When the underwriter tried to finalize the loan it triggered an error message about the fees which is how we discovered it. We had to structure the loan that way to meet your monthly payment requirements while keeping in mind the total amount of cash you had available towards the transaction"
This is out of my realm of expertise, but it just doesn't make sense to me. I dont understand how I was ever promised and locked in to this interest rate if it wasn't possible to obtain due to these state regulations.
I am not sure where to go from here.. Should I just suck it up and settle next week with the new interest rare as planned?
When they structured and locked your loan they didn't check that the fees were in compliance with state and federal regulations. This happens fairly often when PMI is paid up front because it adds several thousand dollars to the closing costs. However, this is not your fault, and they need to honor the written lock commitment you signed, no matter what it costs them. Talk to a manager and you might have to threaten attorney involvement. You have a binding contract with them, and they need to follow it.
He sent me an explanation as to why the interest rate changed....
"Sure - the state of maryland has a mortgage law in place that puts a cap on the total fees a borrower can pay in a mortgage transaction. It considers every fee that goes to the lender. The combination of the points to get a lower rate, the single premium mortgage insurance and origination fee puts you over the allowable amount of fees by over $2000. In order to get you the best deal possible I cut my commission by $1000 It is highly likely that This is a lie - unless the lender has Lead Tiers (we'd have to get into how you found this lender, or how they found you, but lenders don't just cut commissions, it's not legal if done as described. but it was still over so we had to increase the rate by. 125% so that we could reduce the amount of points we were charging you"
But what I don't understand is how he didnt pick up on this.. Why was i promised and locked into an interest rate MONTHS ago when it sounds like I never could have had that rate. And isn't it his job to know about state regulations? I just dont understand why it was never picked up on until the day before closing. My response:
"I thought these fees had already been established, so how come we didn't know about this til yesterday? And why do I have so many fees that are putting me so far over the limit? Sorry, I'm just trying to understand"
And no, there were no changes to our loan.
What is your loan amount?
Your lender is trying to describe a HPML Red Flag (High Cost Mortgage Loan) - - while it is true that there is a threshold in regard to the calculation of fees relative to loan amount, this should have been caught at Lock.
No its a conventional loan, not FHA. Honestly, you are talking over my head lol I'm a nurse and know NOTHING about all of this.
So I have contacted the regional manager and she basically fed me the same crap about state regulations. I told her how upset I am, and told her i have talked to multiple people who have said once the interest rate is locked, its binding and they need to stick to it. She is supposed to be "looking further into it" and calling me back.
If I dont like what she has to say when she calls back, I have the number of a lawyer that I will be contacting (who was highly recommended to me by both my uncle and a co worker). Will keep you posted!
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
