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Goof Faith Estimate--does broker & lender need to give me the deal as promised?

Broker sent me the Good Faith Estimate and this is on page 1
1. The interest rate for this GFE is available through 8/30/12
2. This estimate is available through 8/16/12
3. AFter you lock your interest rate, you must go to settlement within 30 days (your rate lock period) to recive the locked interest rate.
4. You must lock the interest rate at least NA days before settlement

*The deal is 3.875% for 30 years.  Block 1 has 5950, block 2 has credit of 7920, and Block A has -1970.  BUT, broker called and said something about who knows what that went wrong--that they misunderstood the rate lock terms or something like that and that the rebate was incorrect.  The rebate was .75%, and 1000 of that went to lender and 1970 went to me.  Now, he is saying that the rebate is only .34%.  Does he NEED to give me the deal as promised on the GFE?
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August 07 2012 - Chino Hills
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Profile picture for user001052
I have a situation the broker and I agree to lock for 3.4% he sends me the gfe and disclosures.... I get home before 4pm, I print  and when I go to sign I noticed they don't belong to me , he sent me forms that belong to some one else soIi call him,and let him know, so he can send me back new ones. Now it  is after 4pm he says they closed he will turn them over in the morning. Next day he call and says he can only offer me 3.658 because the forms did not get in on time to lock.  does he have to honor our agreement ..
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November 09 2012

Is there some reason that you think they are giving you a better deal than you can get anywhere else?  (any why continue working with them if they can't get the initial disclosures correct?)

It sounded like you where expecting to get $1970 credit to cover your closing costs.

If your home is worth over $480,000 and you have a 740+ FICO, you should be able to go to just about any lender and get a credit to cover all origination and closing costs and get 3.875% 30yr fixed.  (with those terms you should get a credit of about $2000 to cover all the 3rd party costs after all lender fees are paid)

I agree - the 30 day lock is what would worry me the most.  Refiances generally take about 45 days from the time you get your documentation in and appraisal ordered. 

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August 08 2012
Profile picture for Go Huskers
" Fewer believe that Box 2 must always be honored and never disclose a credit there.  Many believe that Box 2 can change and don't mind disclosing a lender credit there.  I have never heard anyone's interpretation of how binding Box 2 is on a locked GFE. "

I'm curious who these people are. There is nothing vague about the GFE and RESPA. 

Check the FAQ at HUD and it will clear up any questions. Whomever these people are that are "interpreting" it differently will get a big surprise should they get audited!

An example from HUD that makes line 2 very clear on what can happen after a lock.

 http://www.hud.gov/offices/hsg/rmra/res/resparulefaqs422010.pdf

"Q:  The regulation states that while the borrower‘s interest rate is locked, the credit or charge for the interest rate chosen and the adjusted origination charge may not increase from the amount shown on the GFE. On a ―no-cost loan that covers third-party costs where the rate has been locked, the GFE should show a credit for the interest rate chosen, in an amount sufficient to cover the estimated loan originator and third party fees. If the actual third party fees at closing are 
lower than stated on the GFE, may the loan originator reduce the amount of the credit to match what is needed to pay the actual third party and loan originator fees?

A:  No, the amount of the credit may not be reduced. The loan originator may choose to: 1) have the amount of the credit remain the same as stated on the GFE to cover additional closing costs previously not anticipated to be included in the ―no-cost‖ loan; 2) apply a principal 
reduction to the principal balance; 3) reduce the interest rate and the credit accordingly; or 4) have the credit remain the same, resulting in cash to the borrower."
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August 08 2012
Many lenders interpret the new 2010 GFE rules differently.  All agree that Box 1 can never increase.  Fewer believe that Box 2 must always be honored and never disclose a credit there.  Many believe that Box 2 can change and don't mind disclosing a lender credit there.  I have never heard anyone's interpretation of how binding Box 2 is on a locked GFE.  Logically, it would seem that it would have to be binding, but remember I'm using logic on a form created by our Federal government.

In reality the lock is for 30 days on a refinance and as Norm called it, "criminal".  It's negligent and irresponsible at the very least unless you're one or two lenders in all of California who can and would want to push a refinance through in 30 days--it's not going to happen.  You can demand that this lender honor their GFE, they can agree and when it comes time to extend your lock, they can make up for the difference by charging you the correct amount then.  

I, too, recommend pursuing your options with your current lender and see what they are willing to do for you in light of their admitted mistake with the lender credit and their obvious mistake of only locking for 30 days on a refinance.  If they are difficult or unwilling to help, the threat of bad reviews on Zillow, Yelp and any other online site you can find may help them see the light.  If that doesn't, a call to RESPA, DRE, DOC or your local news is something you should also let them know you're willing to do.  

Before the 2010 GFE, every broker or lender agent who was worth anything honored his or her GFE and paid for theirs or others' mistakes.  How many of my fellow agents have done way too many free loans in order to do what's right?  Even in this day of "forced" compensation, the broker or lender (if a bank) has the ability to pay for their mistakes and should.

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August 08 2012
Profile picture for Go Huskers
" If the broker disclosed an incorrect GFE to you, they must also include this GFE in their GFE history to the lender.   The lender then has the decision of accepting it (and paying a cure to YOU for the broker error), or rejecting the GFE."

The problem is, this broker is not going to do that. They are trying to change the GFE and I would bet the original never makes it's way to the lender. No lender would accept this GFE. This is exactly why this needs to be called out. 

RESPA Violations
You may either call 1-202-708-0502 or you may send your complaint to:
Director, Office of RESPA and Interstate Land Sales
US Department of Housing and Urban Development
Room 9154
451 7th Street, SW
Washington, DC 20410

For more information: http://www.hud.gov/respa or email hsgrespa@hud.gov.
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August 07 2012

Great subject line - The GooF Faith Estimate.   Appropriate.

To answer the question, the lender is NOT required to honor the broker submitted GFE.  If the broker disclosed an incorrect GFE to you, they must also include this GFE in their GFE history to the lender.   The lender then has the decision of accepting it (and paying a cure to YOU for the broker error), or rejecting the GFE.

Your amount of credit makes it clear you have a "Lender Paid" transaction, this means only the lender can pay the cure, the broker cannot make any contribution to the cure.

The broker is bound to their GFE.

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August 07 2012
Profile picture for Go Huskers
"  I was told that lowering my loan amount because I wanted to pay money at closing was a valid change of circumstance...."

This is untrue unless the LTV put you into a different pricing tier. You are lowering the loan amount so it would be impossible for the LTV to go up. Lowering the loan amount does not change the percentage of rebate you should get. If you were getting .75% before you should still get .75% after; (or possibly MORE if it put you into a better pricing tier) it cannot be worse. They are not being honest with you.
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August 07 2012
Kind of a Catch 22..... you have legal rights but your lock expires on the 30th. I would suggest you get competitive quotes (there are competant loan originators in CA on Professionals tab above and some are contributors on this forum) and see if you can beat or match rate you received. As mentioned by Norm, I would stay away from a 30 day lock to avoid same thing happening.
If you go with another lender it does not eliminate your right to pursue action against other lender. Mistakes are made though, and they likely learned a lesson as to how serious it is to try to reverse a sent GFE.
Timing is important as market is in upward mod today.....
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August 07 2012
Profile picture for user3204793
Actually, the loan amount was 396000 and I wanted that lowered to 391000 because I'm willing to bring that money to closing.  Broker added the property tax escrow account to the loan and other amounts.

He sent a 30+ page document....which I guess was all the documentation required to continue with the loan.  The lender he is working with came to see him twice and promised the 30 day loan.

Let's say, he tells me that we can't continue with the locked GFE he sent me, how to I report this to RESPA....or what else should I do?  I think he MIGHT go with it and then somehow delay the application or find some change in circumstance (not sure what that can be). I was told that lowering my loan amount because I wanted to pay money at closing was a valid change of circumstance....I'm afraid he'll find something to delay the loan or not give it to me.

Obviously, if he doesn't give me the same deal as promised, then I will not go through him as my broker.  I'm already in the process of applying elsewhere, but I know rates went up!
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August 07 2012
They have to honor the deal if it closes and the closing is under the terms of the application...  (LTV/TLTV, loan amount, etc)

They could also just deny the application, or since this is a refinance and there is a change to LTV they could exercise the changed circumstance.

A  30  day lock (if locked the day you applied) on a refinance is criminal in itself, not enough time.


 Do not sign the information I sent you." 
=================

???? The GFE doesn't require signature anyhow. 
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August 07 2012
Profile picture for Go Huskers
Marc is absolutely correct. Since January 1, 2010, there is no OOPS in lending! They gave you the GFE and purported that it was locked. Once they gave it to you, it became binding. 

" I don't want to come off as being difficult or rude, because then I'm afraid that they will delay and not close my refinance within 30 days as promised. "

You SHOULD be difficult and exercising your legal right is not being rude. I'm not sure why you think they would honor a 30 day closing and rate lock anyway given what they have done so far. You need to hold their feet to the fire and make them accountable for this. 
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August 07 2012
Dear user 3204793,

The purpose of these new laws is to protect you as a consumer once the GFE is disclosed. If we, as a lender make a mistake on your Good Faith Estimate then we have to eat those costs.  Based on your statement they have to honor their agreement with you or it is RESPA violation. If their disclsoure department cannot or did not disclose correctly that is not your problem.

Make sure they honor what they disclosed to you or you can report them.

I hope this helps, Marc
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August 07 2012
Profile picture for user3204793

So, now what do I say when the broker calls me?  This is what he wrote in the e-mail he sent me:
 
"The documentation I sent you is completely incorrect. The interest rate lock that was provided to us was incorrectly interpreted. I need to discuss your loan with you. Please contact me when you can. Do not sign the information I sent you."

Should I say that I want to proceed with the GFE since it was locked?  I don't want to come off as being difficult or rude, because then I'm afraid that they will delay and not close my refinance within 30 days as promised.  They still need to schedule an appraisall.

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August 07 2012
Profile picture for Go Huskers
" broker called and said something about who knows what that went wrong--that they misunderstood the rate lock terms or something like that and that the rebate was incorrect.  "

That's a locked GFE. "I don't know" or "I misunderstood" or "My dog died" are not valid change of circumstances thus the original GFE is binding. Any changes will require a cure from the lender or it's a RESPA violation. Without a valid changed circumstance, the rebate originally quoted to you is what you should receive, the lender will have to eat it if they misunderstood it. I suspect it won't taste very good which is why they are trying hard not to do so.
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August 07 2012
 
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