Don't Worry About the Bold Print. We're Not Trying to Hide Anything!

Ann Guy wrote a post yesterday about Jerry Seinfeld having to pay his realtor commissions on a house that he purchased without her help. Apparently, the judge ruled in favor of the realtor.

Well, this topic brought to my mind a topic that most consumers may not be aware of and it never really is disclosed to them. In the State of Florida, there is a special addendum added to the end of each and every mortgage brokerage business contract. Here is what it says: (The following is supplied from Florida Statute 494)

"You are entering into a contract with a mortgage brokerage business to obtain a bona fide mortgage loan commitment under the same terms and conditions as stated hereinabove or in a separate executed good faith estimate form. If the mortgage brokerage business obtains a bona fide commitment under the same terms and conditions, you will be obligated to pay the mortgage brokerage business fees, including, but not limited to, a mortgage brokerage fee, even if you choose not to complete the loan transaction. If the provisions of s.494.00421, Florida Statutes, are not met, the mortgage brokerage fee can only be earned upon the funding of the mortgage loan. The borrower may contact the Florida Department of Financial Services, 101 E. Gaines St. Tallahassee, Florida, 32399-0350, regarding any complaints that the borrower may have against the mortgage broker or the mortgage brokerage business. The telephone number of the department as set by rule of the department is 850-410-9805."

Yes, it is even in bold print just as you see here. It is that important to the state to bring this to your attention.

So, the State of Florida is stating that if you, as a consumer, hire a mortgage brokerage business to obtain a mortgage and that business does in fact obtain a bona fide commitment under the terms and conditions of the application, you are obligated to pay the business fees due to it.

But don't worry, you have several things that are in your favor.

1. The broker has to fullifill certain provisions of the statute that govern the business. Sounds easy, but I will tell you that many brokers that I have come across still cannot accurately and completely fill out the 1003 mortgage application or the mortgage brokerage business contract.
2. The commitment has to be a bona fide one under the same terms and conditions of the signed agreement and application. The shady companies that do the "bait and switch" method (most likely the ones that would try to collect the fees) cannot because they would have been trying to obtain a mortgage for the "bait and switch." In other words, these "bait and switch" companies give up their rights to this by not even going for the correct terms and conditions.
3. The good businesses that do complete everything accurately and entirely and do obtain a bona fide commitment with the correct terms and conditions will more than likely not enforce this clause because they do not want to obtain a bad image as one going after fees. Plus it costs time and money to enforce the clause. Something the good businesses do not want to waste. Besides, if you get the terms of what you ask for, why would you really want to cancel.

There is another added protection that is included in the statues outlining this clause: the clause does not apply to nonresidential mortgage (typically commercial mortgages) in excess of $1 million.

So, if you are signing papers and you see this bold print, you now know what it says even if the broker says it is not important and they're not trying to hide anything. This clause protects not only the broker, but also the consumer from brokers trying to enforce the clause without a leg to stand on.

Now, do not assume that you are safe. If a deal is worthwhile to the business that does the job right and meets the criteria of this clause, the business may just go after you just as Seinfeld's agent went after him. Consumer beware... you have now been educated, so use this knowledge to protect yourself.