This Mortgage Broker Spells T-r-o-u-b-l-e

Q: I went through a mortgage broker when I purchased my house. I just closed on July 30. A week after I closed, I received a letter stating that the company that they sold my loan to went out of business. My mortgage broker asked me to send my first payment to them while they looked for a new company to service my loan.

Yesterday (August 24), I received a call from my mortgage broker. They said that they just needed me to sign one more document, which they sent as an attachment to my e-mail address. The body of the e-mail didn’t explain the document, just asked me to sign it and return it to them asap. The document is called a “Mortgage Broker Fee Agreement”. The document lists all of the fees that I paid directly to the broker at the closing. However, it also lists a new 2% YSP that has not been on any of my paperwork until now.

When I chose to work with this broker, I asked questions about the YSP right away and was assured that there would not be one on my loan. I checked my paperwork again last night and could not find any mention of this 2% YSP.

My mortgage broker already dated the document that they are asking me to sign for July 27, 2009. My feeling is that they are trying to get this extra 2% commission from whatever new company they sell my loan to. While this is unethical, it doesn’t effect me directly. However, I’m wondering if it can somehow effect me directly if I sign it. Is there any way that this can change what I owe and require me to pay more?

I’m really confused. What is your take on this? Thanks for your help!

A: You shouldn’t send payments to anyone other than the lender or the new servicer. What your mortgage broker has asked you to do – send the payment to him – is as close to a felony as you can get.

The same thing applies to the mortgage broker fee agreement, which you should have received when you first applied for the loan. The 2% YSP is an underhanded attempt by the broker to make an additional commission on your loan.

This mortgage broker spells t-r-o-u-b-l-e, and I’d stay away from him.

Tooting My Horn

Marlys Harris, she of Money Magazine, has interviewed me for my views on the proposed changes to RESPA. Be sure to read her article in the December issue of Money. This comes on the heels of my interview with NPR’s Marketplace.

Have RE/MAX and First American Title Violated RESPA Regs?

Talk about RESPA violations:

A legal dispute between RE/MAX International Inc. and First American Residential Group Inc. over a $600,000-a-year marketing agreement has attracted the attention of Colorado regulators, who want to know more about how First American benefited from the deal and why it decided to pull the plug on the agreement last year.

According a lawsuit filed by RE/MAX in March, First American paid the real estate franchisor more than $2.4 million over four years for the exclusive right to market its title insurance and related services to RE/MAX franchises and agents.

RE/MAX sued after First American terminated the agreement in April 2007 and allegedly failed to make a scheduled payment of $693,000 the following July.

The lawsuit caught the attention of the Colorado Division of Real Estate’s director, Erin Toll, known for her past investigations of kickbacks paid by title insurers to win business from real estate agents, developers and lenders when Toll was the state’s deputy insurance commissioner.

Toll said she wants to know exactly what First American was getting for the more than $600,000 a year it paid RE/MAX under the agreement and why the company pulled out.

(Inman)