DISHONEST MORTGAGE BROKER HAS BORROWER TIED UP

DEAR BOB: I am a first-time home buyer who is having trouble with my mortgage broker. With only two weeks left until the scheduled closing date, she just submitted my loan application to a lender. Although she assured me there would be no loan origination points, I finally received her good faith estimate of loan costs, which includes a loan fee of $8,369. She is getting a kickback from the lender for $2,109, plus charging me a $495 processing fee. I have personally known this mortgage broker for many years. Is that $8,369 loan fee unreasonable? What recourse do I have? --Amadeo A.

DEAR AMADEO: Face the facts. You are dealing with a very dishonest mortgage broker who is swindling you by leaving you with virtually no other mortgage finance alternative if your home purchase is to close on time in just two weeks.

Within three business days of your submitting your completed loan application, your mortgage broker was required to provide you with a written "good faith estimate" of your loan costs. Although she broke that rule, unfortunately there is virtually no penalty for her.

She is setting you up for a "take it or leave it" closing situation. Not only is she being very well compensated by that $2,109 "yield spread premium" paid to her by the lender for charging you a higher-than-market interest rate, but then she is asking you to pay an unexpected $8,369 loan fee for her horrible service to you.

Unfortunately, with the closing date fast approaching, you probably don't have time to obtain a mortgage from another lender unless your seller will give you a written extension of your closing date.

It's worth a try to negotiate with your dishonest mortgage broker to eliminate or reduce that outrageous unexpected $8,369 she wants to charge you. Thankfully, bad mortgage brokers like yours are the exception rather than the rule.

(For more information on Bob Bruss publications, visit his
Real Estate Center).

Copyright 2006 Inman News