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Legality of delayed GFE

I was dealing with Ditech on two refi loans. They gave me a good rate and credits of $2k back. Did appraisals and they came at $729k which above my stated value. My LTV was below 60%. Instead of my declared value of $720K, they put an inflated value of $950k on the application. I brought it up and they said not to worry about it. Two-three weeks later they said that they have to take away the credits of that $2k and charge for the loan and my rate would go up because my appraisals did not match the value of their inflated figure. They admitted it was typo, but there is nothing they can do about it. Double that for both loans and I told them that it is bait 'n switch. As added pressure they said it will cost more as each day goes by to extend the 30 day lock. They gave me no option and I went to another lender (Wells fargo). I've lost money on appraisals. Is this legal that they told about the change of terms well beyond two weeks and not the 3 days that HUD stipulates? Your advise is appreciated. ThanksGreg
By g.spalek561 from CA Apr 21st 2015
Reply

That typo does appear to show at least some incompetence on the loan officer's part. Sadly, particularly on so many lending companies, the loan officers have to be sales people and sometimes that trumps the meticulousness and due diligence of the very best of loan officers. Sometimes they are new and they are not looking at all possible mistakes they may have made. Normally, an experience and highly competent loan officer will go over these numbers very carefully and make sure they are entered in properly as discussed. Whenever anticipating a high value (i.e. $950,000) they should inform you how much less of a rate, and increased cost could occur if the appraisal comes in considerably lower. However, you say that you have below 60% ltv with the value that came in ($729,000) so the inflated value on the application would not affect the rate generally on most loans since you had the best loan to value to make a difference...60% loan to value. You may have a case wherein the loan officer got the rate and pricing wrong to begin with. I tell borrowers it is their responsibility to request proof of the locked loan early on when they get these quotes! The good faith estimate then must match the lock and you can ask for a revised one if the loan was locked after an earlier one received to make sure all is as anticipated. My guess is that you never had the loan locked and you did not realize the price and rate change until it was too late. Yes, the loan officer could have kept you informed at rising rates/pricing but they did not. I suspect their is nothing you can do except maybe place a comment onYELP and other websites in response to your experience to help others.

Apr 21st 2015
by g.spale...

I did have the loans locked and have received two subsequent GFEs and signed load disclosures. They changed the terms about the time I was told that I would be signing the loan docs. It seems illegal to do this at the 11th hour.

Apr 21st 2015
by g.spale...

They used the wrong value despite me telling them, locked the loan for 30 days, got the appraisal which was spot on with my declared value and them two weeks later when all was peachy came at me to the tune of lost $4k for each of two loans and claimed that it is because of my higher (their typo inflated value) the terms have to change and I must pay pay pay. Two days later we were close to 30 day lock expiration so they said that I will need to pay for the extension. This sounds like bait 'n switch to me.

Apr 21st 2015

If the loan was locked and you had the terms (GFE) you had requested per the lock you should have some recourse. I would think you would want to presentyour case to DiTech as they do not want their reputation hurt and suffer any possible fines as a consequence. They can not always keep track of the accuracies of every loan officer on every loan. I suspect they will want to resolve this with you. The appraisal coming in lower and affecting the pricing and rate can be addressed per the lock but it does not sound like that is the problem. The problem is you have a lock and a good faith estimate to go with the lock that should have been honored based on the information you give me. Some expenses are allowed such as extensions but you need to be informed. Let me know how it goes with them!

Apr 21st 2015

If Ditech will not clarify what happened to you to your satisfaction and/or come to some resolution (i.e. compensate you for your appraisal costs perhaps)the National Mortgage Licensing Service can be reached and you might launch a complaint with them

Apr 21st 2015
by g.spale...

Thank you very much for you prompt reply and feedback. I will reach out to Ditech again for a resolution.

Apr 21st 2015

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