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.

Lender Tricked Her Into PMI

Question:

I have been tricked into refinancing to a new loan that has PMI.  My loan prior to refinancing did not carry a PMI but I had two loans, a first loan w/ 80% and the second loan w/ 20%.  I decided to refinance to combine two loans into one. My mortgage broker told me that I was paying PITI.

None of the closing documents from the lender indicate or disclosed any PMI.  THey used the word ‘Escrow’  instead of PMI.  A month later I got a bill for my insurance and taxes. I called the mortgage broker and she told me that she was going to check and the letter did not make sense. She never contacted me. Her assistant called back and told me that it is not Escrow, rather it’s PMI.

I already lost the ability to compare loans but I also lost the 3 day period where I could have canceled the loan if I had known that it will carry a PMI.  My loan interest rate is fixed and I recently receive a letter from the lender that my monthly payment is going up. When I called, even the customer service agent was confused and she thought I have an escrow account. I had explain to her everything. Then she took the time to review all my documents to find out the reason for the increase in monthly payment. After reviewing, she told me that I have a negative PMI account. That some type of money should have been collected upon closing to go the the PMI account and it was never collected.  With that, I have a negative balance and they need to adjust the amount of PMI that I would have to pay monthly.

This explanation even reinforced to me that there was an intent or malicious act to hide the truth about the PMI on my account, both on my mortgage broker and at the same time the representative from the lender who should have reviewed the documents before closing. What are my options?  This unscrupulous practice should not be tolerated in any way, shape or form.

Answer:

Even though the 3-day rescission period has expired, you can still rescind the loan if:

1. You did not refinance with the same lender who held the previous loans.

2. There was a Truth-in-Lending violation in the disclosures you received from the lender, such as non-disclosure of PMI.

3. The property is owner-occupied.

Most real estate attorneys will offer a free consultation to review your situation. If it turns out that your loan can be rescinded, you will receive back from the lender all interest you’ve paid to this point, as well as the loan fees you paid to obtain the loan; however, you will have to go through another refinance to replace the current lender with a new one.