Mortgage Brokers: is There a Fiduciary Duty to Borrowers?

A debate is simmering in the mortgage industry about whether mortgage brokers who arrange loan transactions act as agents of potential borrowers, or whether they are merely middlemen without agency responsibilities. The compensation structure by which mortgage brokers are paid fees by both borrowers (origination fees) and lenders (yield-spread premiums) has fueled the fire of this debate. [??] When brokers are paid commissions by both parties to a loan transaction, confusion results about whom the brokers actually “work for.” Unfortunately, there is little legal guidance to answer the question “Whom do mortgage brokers work for?” There is some case law, and a few states have enacted laws on the issue, but for the most part, the law is unclear about whether mortgage brokers represent borrowers, lenders, or neither. [??] As a result of the ambiguity in this area, mortgage bankers, brokers and mortgage industry regulators (including lawmakers) should familiarize themselves with the existing laws and cases that have considered brokers’ duties and responsibilities. Understanding the law is crucial in light of recent economic events in the mortgage market (e.g., the spike in foreclosures and subprime market meltdown). It is also important because of increasing media criticism of mortgage brokers, (see, for example, James Hagerty, “Mortgage Brokers: Friends or Foes?,” The Wall Street Journal, May 30, 2007; and Ruth Simon and James R. Hagerty, “Debt Bomb: Inside the ‘Subprime’ Mortgage Debacle–The Middlemen: Mortgage Mess Shines Light on Brokers’ Role,” The Wall Street Journal, July 5, 2007).

Finally, greater understanding is needed in light of the high number of consumer complaints about the activities of mortgage brokers (see, for example, the State of Maryland’s Regulatory Guidelines for Mortgage Lender Licensees, dated June 2005, which cites noncompliance with the state-mandated broker agreement as being the No. 1 regulatory violation). More…

Subprime Bankruptcies: Fertile Ground for Lawsuits

Legal issues have become a growing concern for many involved in the subprime industry. Claims from distressed borrowers against loan originators have begun to increase, as have actions pitting business partners against each other and claims against purchasers of subprime mortgage-backed securities that did not honor an agreement in some way, according to participants in a recent conference on subprime law sponsored by the American Bar Association.

The most common types of lawsuit emerging in the wake of the sunprime implosion are borrowers filing individual and class claims against mortgage lenders. Claims include allegations of federal disclosure law violations, unfair and deceptive trade practices, breach of duties or breach of contract, misrepresentation, usury, and unlawful collection practices.

Assignee liability is also a major focus for business lawyers as lender and Wall Street cunduits try to protect their assets from future lawsuits. (Inside B&C Lending)

Mortgage Debt Forgiveness? The IRS Will Want Its Share

(MCall.com):

For homeowners around the country who are seriously delinquent on their mortgages and hoping for relief, the IRS has bad news: If your lender agrees to modify your loan and forgive any part of your debt, you could owe federal income taxes on the amount forgiven.

Think of it as the tax code’s ”kick-em-while-they’re-down” rule. When personal debts are canceled by a creditor, the amount forgiven is treated as ordinary income under the Internal Revenue Code unless the taxpayer is insolvent or bankrupt. Worse yet, the lender is required by law to report the amount canceled to the IRS.

Ouch! This is especially bad news for the growing numbers of subprime, or credit-impaired, borrowers charged a higher rate of interest, who find themselves ”upside down” in the current real estate market: They owe more on their mortgage than the value of their house, thanks to noxious combinations of zero down payments, declining property values, and hefty payment increases they can’t afford.

Diane Thompson, an attorney with the Land of Lincoln Legal Assistance Foundation in East St. Louis , Mo. , tells of one client who learned about the tax code’s Catch-22 the hard way. After the homeowner negotiated a loan modification agreement with her lender, she assumed that she was done with the matter. But a year later, the IRS came after her demanding a large tax payment on the amount the lender forgave — a tax bill that was equal to her annual income. Her lender had dutifully submitted a Form 1099-C to the IRS, alerting the agency to the woman’s extra ”income” from the loan modification.

The homeowner never had actually received that income in any tangible way; she couldn’t deposit it in her bank account. But under federal law, the IRS had every right to come after her for unpaid taxes.

Similar situations are likely to pop up around the country in the coming year as lenders bend over backward to modify thousands of troubled loans before they go to foreclosure. Proposed new, bipartisan legislation on Capitol Hill could soften some of the impact on financially stressed homeowners, however. The Mortgage Cancellation Tax Relief Act of 2007 (HR 1876) would amend the tax code to exclude debt forgiveness on principal home mortgages from treatment as income.

Introduced in mid-April by Reps. Robert E. Andrews, D-N.J., and Ron Lewis, R-Ky., the bill would allow lenders to restructure delinquent mortgages without worrying about income-tax hand grenades hitting their borrowers the following year. The legislation potentially could assist many other homeowners in financial trouble who negotiate pre-foreclosure ‘’short sales,” deeds-in-lieu-of-foreclosure or whose foreclosure proceeds are insufficient to pay off their mortgage debt.

Short sales are increasingly commonplace. Say you are seriously behind on your mortgage payments and a loan modification or rate reduction won’t solve the problem because you’ve just lost your job. As an alternative to foreclosure, your lender might suggest a quick sale of the house, often to an investor who’ll buy it as-is at a discounted price. If the short sale proceeds are $10,000 less than the outstanding mortgage balance, and your lender agrees to forgive that amount, the Andrews-Lewis bill would allow you to obtain that relief tax-free.

Under current law, by contrast, your lender would be required to report the $10,000 in phantom income to the IRS. Ditto if you went to foreclosure and the sale proceeds yielded $10,000 — or $50,000 — less than the outstanding debt owed to the lender.

Proponents of the debt-relief reform bill argue that short sales, mortgage delinquencies and foreclosures are painful situations for most homeowners, and there’s no public policy purpose served by smacking them with tax penalties that make things even worse. In the case of below-market short sales, for example, most homeowners have already suffered sizable capital losses that are not tax-deductible.

They’ve lost thousands of dollars in equity.

Why pile on?

The outlook for the bill: It’s currently before the House Ways and Means Committee, Congress’ primary tax legislative body. Since most of the majority Democratic housing and banking committee leaders have called upon banks and mortgage companies to work out solutions to keep troubled homeowners out of foreclosure, a bipartisan tax fairness bill like this one should have a reasonable chance of passage.

Few lenders willing to make mortgage modifications, survey says

Carolyn Said, Chronicle Staff Writer

Thursday, October 11, 2007

 

Mortgage lenders rarely help homeowners struggling with rapidly increasing adjustable mortgages, according to a survey of 33 California housing counseling agencies released on Wednesday.

Only one agency responding to the survey said that loan modification – adjusting a mortgage’s terms to make it more affordable – is among the most common outcomes for its clients.

Instead, foreclosures were the most common outcome for agency clients overall, according to the survey by the California Reinvestment Coalition, a statewide alliance that promotes access to credit. The second-most-common result was a short sale, selling a home for less than is owed on the mortgage.

In recent months, attention has focused on loan modifications as one solution to the subprime loan crisis, in which about 2 million homeowners nationwide have mortgage payments that are due to skyrocket within the next two years.

Politicians, banking regulators and consumer advocates have urged lenders to avert foreclosures through loan modifications. Banks in turn have publicly embraced the concept but have not provided statistics to show how common loan modification actually is.

“Lenders are all saying the right things: ‘It makes no sense for us to foreclose, we don’t want to foreclose, we lose money when we foreclose, we want to keep borrowers in their homes, we know we have to do workouts and loan modifications,’ ” said Kevin Stein, associate director of the coalition.

“The most striking thing that came out of this (study) is that there is a huge chasm between what the lenders are stating, which very well may be their policies, and what’s happening on the ground. That clearly works to the detriment of homeowners and their communities.”

The San Francisco coalition surveyed 33 of the state’s 80 mortgage counseling agencies. The surveyed agencies had counseled about 9,800 consumers in August.

A study from Moody’s Investors Service released in September also showed that loan modifications are rare. After looking at 16 loan servicers that handle $950 billion of subprime mortgages – accounting for about 80 percent of the market – Moody’s said only 1 percent of people with loan rates that reset higher in January, April and July received help from their lenders to make their payments more affordable.

Katrina Vizinau, senior homeownership counselor at Community Housing Development Group of North Richmond – one of the surveyed agencies – sees about 50 clients a month with mortgage problems. She agreed that loan modifications are rare. It takes a frustratingly long time to get an answer from lenders, she added.

“When they do (offer a loan modification) the terms are unrealistic for the homeowners; the payments would be a hardship for them,” she said.

Often lenders refuse to discuss loan modifications until a consumer has missed payments, Vizinau said. Because missed payments hurt a consumer’s credit, that creates a catch-22.

Paul Howard, who has an adjustable-rate mortgage on his Sacramento home, said seeking a loan modification was frustrating.

Howard, who works in Berkeley’s human resources department, bought his house for $274,000 with 100 percent financing in April 2005. The in-law who arranged his adjustable mortgage told him it would stay at 5.75 percent for five years (a $1,400 monthly payment).

“I was shocked when after just two years, it adjusted,” he said. “I should probably have paid closer attention to details.”

In May the ARM rose three percentage points, adding $550 to his monthly payment. It was scheduled to continue rising every six months. Meanwhile, the house had declined in value to about $225,000, ruling out a refinance or sale for enough to pay off the mortgage.

Howard contacted his servicer, Litton Loan Servicing, in April, notifying it that he could not afford the higher payments and asking for relief. He stretched to continue covering the mortgage.

After leaving numerous voice messages and e-mails, Howard said that Litton eventually told him he did not qualify for a loan modification, although he has good credit and a relatively high income.

By this month, Howard said he was so desperate to get the company’s attention that he planned to withhold his mortgage payments, hoping it would negotiate with him.

Instead, after The Chronicle contacted Litton, it called Howard within an hour, offering to roll his interest rate back to 5.75 percent for two years and forgive his October payment.

Larry Litton Jr., president and CEO of the company his father founded, said that Litton had recently implemented a new loan modification program and it turned out Howard qualified for it. The new program extends interest-only customers’ original payment level for 24 months.

“We’re trying to do everything in our power to drive down these foreclosure levels, which are really going up in the state of California,” Litton said.

Howard initially was denied “because the loan product we had available at the time would not have given him the relief he needed,” Litton said. “Since then we have created some new modification products for borrowers. We’re trying to keep them in the houses, continue to pay, and review the financials in 24 months.”

Litton handles 300,000 mortgages totaling about $56 billion.

Litton said the company did more than 2,000 loan modifications in September, 1,500 of them for people who had already missed payments. This month it expects to modify more than 3,000 loans, he said.

The coalition is urging lenders to be “more aggressive, creative and flexible in dealing with borrowers to keep them in their homes,” Stein said. Among its recommendations: Offer loan modifications across the board; freeze interest rates; require lenders to report how many loans result in modifications, foreclosures and other outcomes; develop a procedure to sell foreclosed homes to nonprofit groups for affordable housing; and increase funding for counseling agencies.

 

Housing Collapse: You’ve Ain’t Seen Nothing Yet

But the Fed can stop the hemorrhaging

By Eric Forster

Almost daily, mortgage lenders notify me by e-mail that they are pulling out of the market. Some, like American Home, are already in Chapter 11. Others, like Indymac or National Home Equity, are revamping their lending philosophy. All dread in next two years.

In the next two years, many Neg-Am loans will be coming home to roost. Those with low-threshold triggers – the loans that do not allow the accumulated Deferred Interest to exceed 110% or 115% of the original loan balance – will see monthly payments that double and triple, sending the loans into default.

Let me be gentle here: You’ve seen what the Chinese government did to the FDA official who’d allowed the export of poisonous food products. Following a very short trial, Zheng Xiaoyu was executed. My suspicion is that the people who came up with the brilliant idea to lower the Neg-Am trigger from 125% to 115% and then 110% would probably meet a similar end had they done it in China. Their folly will cause hundreds of thousands of homeowners to lose their homes in the very near future.

The situation can be remedied in two ways: The Fed can lower interest rates, thus decreasing the payment shock to Neg-Am homeowners; the lenders, on their end, can change the terms of those loans and increase the allowable deferred interest to 125%.

As of today, the banks and the Fed act like a deer in the headlights: while some lenders are filing for bankruptcy, the rest seem to be in a terminal state of shock.

New Yorkers pay highest closing costs

Bankrate.com survey finds nationwide dip of nearly 10%

Wednesday, July 18, 2007

Inman News

A nationwide survey of lenders by Bankrate.com found that while closing costs are lower than last year, residents of some states continue to pay considerably more than others.

The Bankrate.com survey — conducted by obtaining six to nine good faith estimates for a $200,000 loan from online mortgage lenders — found closing costs averaged $2,736 nationwide. That’s down 9.5 percent from 2006, when closing costs averaged $3,024.

But average closing costs varied widely from state to state, from a high of $3,830 in New York, to a low of $2,339 in Indiana.

Closing costs, which include lender origination fees, third-party title insurance and settlement fees, and taxes and other prepaid costs such as homeowners insurance, vary by region according to taxes, custom and regulation, the survey noted.

Factors that explain New York’s place on top of the survey for the second year in a row include a mortgage tax levied on lenders, and a mortgage recording tax, Bankrate.com said in reporting the survey’s results.

Origination fees averaged $1,637 in New York, while title and closing costs were $2,193. That compares with an average of $1,268 in origination fees in California, and $1,511 in title and closing costs.

Costs may be higher when closings are conducted by lawyers, rather than title agents or escrow officers, the report said. While it’s customary for lawyers to conduct closings in New York and other Northeastern states, the report said attorneys are less likely to be involved in other states, especially in the West.

In general, the survey found that closing costs tended to be higher in the most populous states. The five states with the most expensive closing costs — New York ($3,830), Texas ($3,413) , Florida ($3,175), Pennsylvania ($3,169) and Ohio ($3,047) — are among the nation’s seven most populous.

The two other seven most populous states — California and Illinois — were ranked further down on the list. Thanks to below-average lender fees, California had the 17th-highest closing costs ($2,779). It also helped that the study broke down California into two regions, north and south, and Northern California, where closing costs of $3,101 were higher than all but four states, was excluded from the rankings.

The low price of title insurance helped Illinois achieve the third-lowest closing costs in the nation. In Illinois, title insurance averaged $441, compared with $1,248 in New York.

The states with the lowest costs were Indiana ($2,339), Wyoming ($2,390), Illinois ($2,401), Nevada ($2,467), and North Carolina ($2,487).

From the FBI: All You Need to Know About Mortgage Fraud

MORTGAGE FRAUD INDICATORS

Inflated Appraisals
• Exclusive use of one appraiser

Increased Commissions/Bonuses – Brokers and Appraisers
• Bonuses paid (outside or at settlement) for fee-based services
• Higher than customary fees

Falsifications on Loan Applications
• Buyers told/explained how to falsify the mortgage application
• Requested to sign blank application

Fake Supporting Loan Documentation
• Requested to sign blank employee or bank forms
• Requested to sign other types of blank forms

Purchase Loans Disguised as Refinance
• Purchase loans that are disguised as refinances
requires less documentation/lender scrutiny

Investors-Short Term Investments with Guaranteed Re-Purchase
• Investors used to flip property prices for fixed percentage
• Multiple “Holding Companies” utilized to increase
property values

COMMON MORTGAGE FRAUD SCHEMES

Property Flipping – Property is purchased, falsely appraised at a higher value, and then quickly sold. What makes property illegal is that the appraisal information is fraudulent. The schemes typically involve one or more of the following: fraudulent appraisals, doctored loan documentation, inflating buyer income, etc. Kickbacks to buyers, investors, property/loan brokers, appraisers, title company employees are common in this scheme. A home worth $20,000 may be appraised for $80,000 or higher in this type of scheme.

Silent Second – The buyer of a property borrows the down payment from the seller through the issuance of a non-disclosed second mortgage. The primary lender believes the borrower has invested his own money in the down payment, when in fact, it is borrowed. The second mortgage may not be recorded to further conceal its status from the primary lender.

Nominee Loans/Straw Buyers – The identity of the borrower is concealed through the use of a nominee who allows the borrower to use the nominee’s name and credit history to apply for a loan.

Fictitious/Stolen Identity – A fictitious/stolen identity may be used on the loan application. The applicant may be involved in an identity theft scheme: the applicant’s name, personal identifying information and credit history are used without the true person’s knowledge.

Inflated Appraisals – An appraiser acts in collusion with a borrower and provides a misleading appraisal report to the lender. The report inaccurately states an inflated property value.

Foreclosure Schemes – The perpetrator identifies homeowners who are at risk of defaulting on loans or whose houses are already in foreclosure. Perpetrators mislead the homeowners into believing that they can save their homes in exchange for a transfer of the deed and up-front fees. The perpetrator profits from these schemes by remortgaging the property or pocketing fees paid by the homeowner.

Equity Skimming – An investor may use a straw buyer, false income documents, and false credit reports, to obtain a mortgage loan in the straw buyer’s name. Subsequent to closing, the straw buyer signs the property over to the investor in a quit claim deed which relinquishes all rights to the property and provides no guaranty to title. The investor does not make any mortgage payments and rents the property until foreclosure takes place several months later.

Air Loans – This is a non-existent property loan where there is usually no collateral. An example of an air loan would be where a broker invents borrowers and properties, establishes accounts for payments, and maintains custodial accounts for escrows. They may set up an office with a bank of telephones, each one used as the employer, appraiser, credit agency, etc., for verification purposes.

Mortgage Fraud Prevention Measures

General Fraud Tips

Mortgage Fraud is a growing problem throughout the United States. People want to believe their homes are worth more than they are, and with housing booms going on throughout the U.S., there are people who try to capitalize on the situation and make an easy profit.

Tips to protect you from becoming a victim of Mortgage Fraud

• Get referral for real estate and mortgage professionals. Check the licenses of the industry professionals with state, county, or city regulatory agencies.
• If it sounds too good to be true, it probably is. An outrageous promise of extraordinary profit in a short period of time signals a problem.
• Be wary of strangers and unsolicited contacts, as well as high-pressure sales techniques.
• Look at written information to include recent comparable sales in the area, and other documents such as tax assessments to verify the value of the property.
• Understand what you are signing and agreeing to–If you do not understand,
re-read the documents, or seek assistance from an attorney.
• Make sure the name on your application matches the name on your identification.
• Review the title history to determine if the property has been sold multiple times within a short period–It could mean that this property has been “flipped” and the value falsely inflated.
• Know and understand the terms of your mortgage–Check your information against the information in the loan documents to ensure they are accurate and complete.
• Never sign any loan documents that contain blanks–This leaves you vulnerable to fraud.
• Check out the tips on the Mortgage Bankers Association’s (MBA) website at http://www.StopMortgageFraud.com for additional advice on avoiding mortgage fraud.

Mortgage Debt Elimination Schemes

• Be aware of e-mails or web-based advertisements that promote the elimination of mortgage loans, credit card and other debts while requesting an up-front fee to prepare documents to satisfy the debt. The documents are typically entitled Declaration of Voidance, Bond for Discharge of Debt, Bill of Exchange, Due Bill, Redemption Certificate, or other similar variations. These documents do not achieve what they purport.
• There is no magic cure-all to relieve you of debts you incurred.
• Borrowers may end up paying thousands of dollars in fees without the elimination or reduction of any debt.

Foreclosure Fraud Schemes

Perpetrators mislead the homeowners into believing that they can save their homes in exchange for a transfer of the deed, usually in the form of a Quit-Claim Deed, and up-front fees. The perpetrator profits from these schemes by remortgaging the property or pocketing fees paid by the homeowner without preventing the foreclosure. The victim suffers the loss of the property as well as the up-front fees.

• Be aware of offers to “save” homeowners who are at risk of defaulting on loans or whose houses are already in foreclosure.
• Seek a qualified Credit Counselor or attorney to assist.
Predatory Lending Schemes

• Before purchasing a home, research information about prices of homes in the neighborhood.
• Shop for a lender and compare costs. Beware of lenders who tell you that they are your only chance of getting a loan or owning your own home.
• Beware of “No Money Down” loans–This is a gimmick used to entice consumers to purchase property that they likely cannot afford or are not qualified to purchase. Be wary of mortgage professional who falsely alter information to qualify the consumer for the loan.
• Do not let anyone convince you to borrow more money than you can afford to repay.
• Do not let anyone persuade you into making a false statement such as overstating your income, the source of your down payment, or the nature and length of your employment.
• Never sign a blank document or a document containing blanks.
• Read and carefully review all loan documents signed at closing or prior to closing for accuracy, completeness and omissions.
• Be aware of cost or loan terms at closing that are not what you have agreed to.
• Do not sign anything you do not understand.
• Be suspicious if the cost of a home improvement goes up if you accept the contractor’s financing.
• If it sounds too good to be true–it probably is!

Is Taxpayers Bail-Out Necessary?

(Riverside Press-Enterprise editorial, April 26, 2007)

Good intentions don’t justify state taxpayer subsidies for risky borrowing and poor financial choices. Cracking down on lending abuses would offer a far better correction to the state’s slipping mortgage market.

Legislators should reject AB 1538, which would create a fund to help first-time homebuyers refinance their mortgages. The bill by Assemblyman Ted Lieu, D-Torrance, would aid homeowners trapped in high-cost loans by tapping the $2.85 billion housing bond voters passed last year.

The bill targets high-risk loans known as subprime mortgages, which lenders offer to people who can’t qualify for standard mortgages. Such loans offer the chance of homeownership to people who otherwise couldn’t afford it, but they also invite abuse. The slumping real estate market has exposed the dangers of these mortgages, prompting a spike in home foreclosures. For the full article…

Properly Recorded Lis Pendens May Have No Legal Effect Until Indexed

From the California Association of Realtors:

A properly recorded lis pendens may have no legal effect against a subsequent buyer until it is indexed by the recorder’s office. That was the decision of the Court of Appeal in the recent case of Dyer v. Martinez (2007 WL 549108) decided on February 23, 2007.

On June 9, 2003, Kristina Dyer entered into an agreement to buy a home in Mission Viejo. About a month later, the sellers instructed escrow to cancel because Kristina purportedly failed to obtain a loan and timely close escrow. Over a year later, the sellers listed their property for sale again, and entered into a contract to sell to a new buyer named Exon Martinez. Kristina, however, claimed she was “ready, willing, and able” to perform on her contract. On September 9, 2004, Kristina sued the sellers for specific performance and filed a lis pendens against the property.

A lis pendens is a notice of a pending lawsuit that, upon proper recordation, informs subsequent buyers and lenders of a piece of real property that their acquisition of interest will be subject to the outcome of the lawsuit. A buyer suing a seller for specific performance will record a lis pendens to dissuade the seller from transferring or encumbering the property before the lawsuit is resolved.

In this case, Kristina recorded the lis pendens on September 9, 2004. However, due to a delay at the recorder’s office, the lis pendens was not indexed in the seller’s name until September 14, 2004. During the interim, on September 10, 2004, the sellers closed escrow with Exon.

Kristina added Exon to her lawsuit seeking to quiet his title to the property. She argued that, even though Exon had no actual notice of Kristina’s lawsuit, he received constructive notice when she recorded the lis pendens under section 405.24 of the California Code of Civil Procedure.

The court disagreed. The court pointed out that section 405.24 must be read in harmony with another statute. Under section 1213 of the California Civil Code, constructive notice requires an instrument to be recorded “as prescribed by law.” In the court’s opinion, the law in California for over a century has been that a recorded document provides no notice unless it can be located by title search. Otherwise, a buyer in good faith who has conducted a diligent search would be charged with knowledge of documents no one can find. The court therefore awarded the property to Exon.

A Qualified Acceptance of Offer or Counter-Offer Does Not Form a Binding Contract

Roth v. Malson (1998)
67 Cal. App. 4th 552

A buyer’s qualified response to a seller’s counter-offer in a real estate transaction does not operate as an acceptance of the counter-offer, and no contract is formed as a result. In this case, a buyer offered to buy a seller’s property for $41,650 in cash. The seller countered, increasing the purchase price to $44,000. The counter-offer form had a signature area labeled “Acceptance” and, below that, an area labeled “Counter to Counter-offer.” There was also a section labeled “Changes/Amendments.” The buyer signed in the “Counter to Counter-offer” area instead of the “Acceptance” area and wrote the following in the “Changes/Amendments” section: “Price to be $44,000 as above. Escrow to close on or before December 6, 1995 all cash.” The seller never accepted the buyer’s counter to counter-offer and the buyer sued for specific performance, claiming that he intended to accept the counter-offer and mistakenly signed in the wrong place.

The court of appeal affirmed the trial court’s grant of summary judgment in favor of the seller, pointing out that contract formation depends on objective manifestations rather than subjective intent, and the buyer’s qualified response was not an acceptance even though the buyer did not vary the terms of the counter-offer. Thus, because the buyer signed under “Counter to Counter-offer” and inserted language under “Changes/Amendments,” his acceptance was not the absolute and unqualified acceptance needed to form a binding contract, even though the substance of what he wrote did not alter the terms of the seller’s counter-offer.