Recourse limited against last-minute home-loan fees

DEAR BOB: I recently sold my home. The buyers made it known they needed 100 percent mortgage financing. We agreed to pay $13,000 in closing costs to help the buyers. The lender gave them a so-called "good faith estimate" that showed this amount would pay their closing costs. But on the day of closing, the loan officer showed up and informed the buyers they owed $4,000 more than expected to buy the home. He was very clear the lender had just raised the fees to make more profit. The buyers didn't have the $4,000. Everyone felt helpless. But the listing agent ended up cutting his fee to allow the sale to close. This seems dishonest, dirty and illegal. What is the possible recourse against the mortgage lender? --Matt C.

DEAR MATT: Welcome to the sometimes-corrupt world of home mortgage lending where bait-and-switch tactics are very much alive, as you and your buyers discovered.

Purchase Bob Bruss reports online.

Most mortgage lenders are honest. Some are not. The "bad guys" know when they have a vulnerable situation, especially when the home buyer has zero cash available.

That mortgage lender knew he could squeeze $4,000 out of somebody, perhaps the listing agent who would lose far more than $4,000 in sales commission if the sale fell apart.

Since the extra $4,000 didn't come out of your pocket, you have no legal recourse against that lender. Neither does the buyer. The realty agent who volunteered to pay the $4,000 to save the home sale probably also has no legal remedy. That dishonest lender should be reported to the regulating state or federal agency, but don't expect any action.

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

Copyright 2006 Inman News