Being a Mortgage Broker in South Florida (Palm Beach Gardens) for so many years and before that being a Loan Officer I have built up a loyal following of clients. Today I received an e-mail from one of my clients to please review a Good Faith Estimate(GFE) that her retired Mother and Father IN-Law received from a company in Nottingham, Maryland.
I have spoken to this retired couple last month about refinancing their current mortgage and explained to them at the present time I would wait until their ARM is due in March. In addition, I explained that they are at an extreme Loan-To-Value. (what the home is worth versus what they owe) and that in March they may have to come to the table with money. However, because the loan was not that large of a Mortgage they may just want to keep what they have. Either way I would wait until March and review it then.
Well as many people know you can buy mortgage list (leads) for all kinds of information. This company contacted this very nice retired couple and from my understand was extremely pushy and promised them everything under the son. Of course just sign here.
This couple maybe retired and enjoying the South Florida Sunshine but they are not stupid. They sent a copy of the Good Faith Estimate to me. Below is some of the charges that where attempting to charge my clients.
Please Keep In Mind the Loan Amount was $120,000
- Loan Origination Fee $1,990
- Mortgage Broker Fee $ 990
- Processing Fee $ 795
- Loan Setup Fee $ 425
- Yield Spread Premium of $3,600
Total amount of Fee's they would of collected on a $120,000 Loan was $7,800.
Best Part of the Good Faith Estimate
Please keep in mind their fee's where all listed but the following was left off the Good Faith Estimate and would actually make their closing costs even higher
- NO Title Charges Where listed
- NO Title Policy was Listed
- No Lender fee was listed (Unless the Lender does not charge anything..which they may in some cases)
- No Escrows where listed when the client requested that
- No Tax Certification
- No Flood Certification
Now the way the total fee's would have been this loan would of been a Section 32 (high cost loan) Loan which most Lenders and Brokers including myself will never do. In defense of the company this loan did not close so we really don't know what the end fee's would of been. However, all we can go by is what is listed on the Good Faith they provided the client.
People like this really upset me. How would they feel if this was their Grand Parents or Parents in this situation. I am very tempted because I have the Good Faith Estimate which list the name of the company and phone number to call this Loan Officer. The only problem is when they are that slimy they don't even care they just move on to their next victim.
So in closing, NOT EVERYONE IN FLORIDA IS STUPID!! Do Us All a Favor and Stay Out!
* The Yield spread Premium was listed on the Good Faith Estimate as 0-3% and with my knowledge of the current rates and programs the rate that was listed would of paid them 3% or $3,600.
**For the Record you cannot separate the Orgination fee and broker fee. This is going to the same person and by doing it this way it is illegal. This is a sales tactic by the company
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thats a lot of fees
Cristina, Making money is not a bad thing and I have always gone by Profit is not a 4 letter word. However, Being a pig is just wrong! Trying to make that much money on this deal is horrible. Thank you for your comment
Matt, Talk about rape! And the unfortunate part is that people like them give you and others in the mortgage industry a bad name. You questioned "How would they feel if this was their Grand Parents or Parents in this situation?" The sad part is that to a person like that it probably wouldn't make a difference because there pockets are getting lined.
Let me get this straight...this was a LO and not a MB...would the situation still have been the same or is that illegal?
Marc, Very true.. Thanks
Neal, In this case it does not matter who wrote the loan or what type of license they have. The Fee's they are trying to get is what makes the loan illegal.
Neal - the answer is
1) it doesn't matter... predatory practices are predatory practices
2) it does matter because ALL Mortgage Brokers have education and training in acceptable practices with fees etc... we are trained what limits are allowed under Florida and Federal Laws and this obviously violates the law.
LOs have no such requirements... especially out of state LOs....
It would be WORSE if it was a Mortgage Broker because they would lose their license in all states they practice!
then they couldn't even work for a lender as an LO... unless the company that produced this GFE is hiring
I've found many older people to be both more trusting and more uninformed -- therefore easily preyed upon. Its scary to think of these crooks making a business out of people's lack of sophistication.
David, You are right it really would be worse if they where licensed as a Mortgage Broker.
Marsha, True. Hopefully by doing posts like this it will help the consumer and be like turning on the lights at night and watching the roaches run away.. because in my opinion these poeple are just that roaches
Matt: Good thing they came to you! I run across the same thing all of the time here in Vegas. There are some true slime balls that ONLY care about lining their own pocket and not about the client. Luckily people are more dependant on referrals nowadays and those scumbags won'e EVER get a repeat or referral client!
Rey, Thank you. I can just imagine what you see out in Vegas.
The Sad part is these scumbags which is really what they are don't care about repeat business they just look for their next victim.
Matt - This is a blatant example of Predatory Lending and I would love to see (nudge, nudge) that firm reported for such behavior. Holy Section 32 (High Cost Loan) Batman!
Yeah...they know a good loan guy...that's why they RAN to you!
Jason, You are right it really is.. Hey if you want I could always email you the name and you could send it into the state.
Sally, Thank you..:-) <blush>
Matt...... what ticks me off more than the fees is that this is so misleading. .. the GFE!!! not showing the other costs is way beyond misleading. In regards to the the costs that you show... you are just preaching to the prior. And I just want to throw this out there. Would you say then that a realtor makes too much then at 6% which would be $7,200???? How does this compare to the lender making $7,800? Should they be allowed to make $7,200 then?
On another note.... Neal, a banker can hide the yield spread premium which would not be calculated into the APR or section 32. And maybe hide is harsh... but a banker doesn't disclose YSP.
Jeff, I understand your comparison however keep in mind most of the time the listing agent and the buying agent are different people and that would be split to two different companies.
As far as them making to much money...."No Comment" :-)
Hi Matt, its a good thing that they had you to turn to. I bet now the whole family will be clients.
Matt: This is exactly "EXACTLY" why Realtors like me have a gut reaction and say "I hate out of town lenders". Loan Professionals like YOU.....are why Realtors need to "get to know" their area lenders and consider them "preferred lenders". Lenders like you are the Good Guys! It's great you saved their day. We as Realtors should never "push" a client to use specific lenders, but all of us should be professional and ethical. We have to advise the client/consumer the importance of reviewing a GFE with a microscope. As much as people shop for a home, they should shop for a GFE. I recently had a client use a "friend of the family" as their lender.....the fees were horrific, and the loan had a 5 year prepayment penalty.
Matt: This is exactly "EXACTLY" why Realtors like me have a gut reaction and say "I hate out of town lenders". Loan Professionals like YOU.....are why Realtors need to "get to know" their area lenders and consider them "preferred lenders". Lenders like you are the Good Guys! It's great you saved their day. We as Realtors should never "push" a client to use specific lenders, but all of us should be professional and ethical. We have to advise the client/consumer the importance of reviewing a GFE with a microscope. As much as people shop for a home, they should shop for a GFE. I recently had a client use a "friend of the family" as their lender.....the fees were horrific, and the loan had a 5 year prepayment penalty.
Matt,
So ....because they left out some of the fees that was what was wrong with this picture I presume. I usually see those other fees on good faiths such as the title estimates.
Matt,
Your post brings up some good points. Consumers are told all day long to review the GFE, but most are not educated enough to know what they should be looking for. Eliminating escrows and calculating 1 day of prepaid interest are just some of the "tricks" I have seen. Then when a competent MB or LO prepares a "real" good faith estimate, it looks like our fees are higher, because we include everything that they will see at the closing table. And what the heck is a "loan set up fee" :)
Thanks to Professional brokers like yourself...FLoridians are getting smarter all the time!!
Keith & Robin, Thanks... I always tell my clients even if they aren't going to go through me and they just want to bounce anything off I am always available.
Christine, Ouch a 5 year pre pay. The most I have ever seen is a 3 year. I have seen brokers do a pre pay even when the arm goes into the adjustment period. That is something I have never done. I do agree with you about out of town lenders. It is so important to read everything and ask questions. This person told them if they did not sign by 12 today the deal was off the table.
Neal, My number i s(561)294-3202... I want to do your next mortgage..:-)..just kidding..know the problem is the amount of fees that they would be collecting. I placed a link on the section 32 part. I would recomend you take a look at this. This becomes a High Cost loan after you add all the real fees plus the brokers fees together.
An estimate is just that. However most professionals should come pretty close especially when the loan is only 120K.
Cheryl, You caught that to.. Don't you just love Loan Setup fee...lol...The other trick I have seen is the L/O tells them just look at the bottom number don't worry about the middle part because it is the bottom is what they all add up to...Plus as you know our great state of Florida allows us to be off as much as 1% on GFE.. and I am sure know L/O or Broker made sure they where at the 1%..lol
Susie, Thank you... I just get so tired of people thinking that just because these people are older and they live in Florida they can take advantage of them.
Matt, I love that one..don't worry about the middle part....and now you've inspired me to write a series of posts breaking down the line items in the GFE...I'm lucky I had competent people to work with when I bought my first home, I didn't have a clue back then. I hope this post gets read by lots of consumers
Matthew- This is disgusting and they need to get out of here! I hate it when they prey on old people too! They do think people are stupid and they must just laugh when they get them to sign. Katerina
Interesting story...sounds like these people in MD are wolves out looking for an easy kill...
Cheryl, Don't you love that one?..lol Don't worry about the middle just the bottom..
Katerina, These people are lower than dirt.
James, You are 100% correct they really are.
Matt, I'm glad there are good people like you folks can trust to keep the balance somewhat even. Thank you!
Lysa, Thank you...:-)
Matthew - Good blog! I have had former cleints send me GFEs from other lenders to review as well. I almost always tell my clients or potential clients that if they want me to review a GFE or settlement statement before closing from another lender or broker to just give me a call. Another group I have seen preyed upon is the just out of college, first time homebuyer, twenty-somethings. Many of them have no idea what is involved in a home purchase and what to expect along the way. It is our obligation and the obligation of their realtor to represent their best interest, and equip them with the necessary info. You are to be commended for your professionalism and the good light it reflects on our often maligned industry.
Rich, Thank you. You are right about the first time home buyers. Thank you for your kind words