I got a call from a young lady in Oregon today who asked me a simple question:
“Hello, I am about to close my loan tomorrow on a FHA loan and I think something is wrong. Throughout the whole process, my loan officer told me that I was going to get a 5% fixed rate and just today he told me that I could only get a 5/1 ARM at 5%, but that because it was an FHA loan, I could refinance with the FHA streamline program 3 months from now with no cost. Is it true that I can refinance in 90 days with no cost at 5%?”
A siren went off in my office and a red flashing light turned on.
I was on the phone with a potential victim.
Someone who had not-yet-been-taken-advantage-of, but was about to.
Now was my moment!
Forget about the FHA streamline program, this poor young lady needs to get the rate she was promised!
“Maam, I don’t know a nice way to say this, but you just need to put your foot down. You were promised a rate and you might have to work a little bit to get that rate. The good news is that I can pretty much promise that if you do what I am about to tell you, you will get a 5% 30 year fixed rate and not have to worry about the future of whether-or-not you can do an FHA streamline.”
What To Do If You Have Been Promised A Rate But Are Getting Something Else:
- Ask to speak to the manager. Explain to the manager what has happened and that you were promised one rate and now that it is close to closing you are getting something else. Be nice, but firm. Do not, do not, do not back down.
- If the manager won’t help you get the rate that you were promised, ask to speak with the company owner. Yep, the company owner. The company owner will be able to help you.
- If the company owner won’t help you - it is time to call in the government. Each state has some form of governing authority over mortgage lending and now is the time to find out who this is and how to contact them. Hint: Google can help you. Call them, tell them that you wish to file a complaint and see if they can help you. Chances are that they will just take your information for now - but depending on what state you live in, they may be very actively involved in investigating claims like yours.
- Call your local tv station and ask them for their “XYZ news channel on your side” reporter. Tell them how you have been taken advantage of by a mortgage company and there is a good chance that they will not only help you, but maybe you will even get the “bad mortgage company” on tv for promising you something that they refused to deliver.
The above scenario is just one of the many reasons to use Zillow’s Mortgage Marketplace. If this poor young lady would have used ZMM to start with, she could threaten her loan officer with something way more powerful than any of these 4 items — she could just threaten him with negative feedback.
Will my friend from Oregon get the rate at the table that she was promised?
I don’t know.
But I do know that her loan officer isn’t all that worried because she didn’t use Zillow Mortgage Marketplace to find him, so she can’t leave any negative feedback.
I bet that with the recent jump in mortgage rates, there are many people in this same situation.
Last 5 posts in Finding a Loan on Zillow
- Home Refinancers Save $3 Billion - November 2nd, 2009
- Zillow Mortgage Marketplace: Changes Make It Better For Consumers - October 22nd, 2009
- New Refinance Break-Even Point and Savings Graph - October 1st, 2009
- Plain Vanilla Protection vs. Consumer Education - September 24th, 2009
- Low Rates Cause Surge in Refinance Loan Requests - September 23rd, 2009
- Stumble it!
- Categories: Finding a Loan on Zillow
Comments
4 Comments so far
Bob Lepore
not enough info to suggest numbers 1 through 4. Did she sign a lock agreement? Promised and signing a lock agreement are 2 different things. Did she blow out a lock by not being responsive? Get my point? Your suggestions may be appropriate, or they might not be. Gather the facts first.
Besides, you didn’t answer the original question.
Justin McHood
@Bob,
Thanks for stopping by and leaving a comment.
You make a great point about lock agreements. It is very important for people to know when they are floating and when they are actually locked. It has been my experience that each company has their own way/method of disclosing to the client when their rate is officially locked.
So excellent point made.
That said, when you are supposed to close on your first home tomorrow and your loan officer pops up and says “sorry, you get this and not that”, my first impression is usually to give the consumer advice on how to get THAT and not THIS.
Because after all, it all just really comes down to money.
Is a 5% rate still available? Sure - it just means that someone is going to have to pay for it.
And if the loan officer is enough to mis-manage an expectation of a first time home buyer like that, it is time for him to get his checkbook out.
Just my .02.
And you are correct in that I did not answer the original question — either to the person who called me with this or in this post. The reason? If I went ahead and said “yes” or “no”, I worry that I would be doing her a disservice to anyone who is in this boat.
I would much rather coach anyone who is in this situation on how to get THAT and not THIS if they are in the boat where they have been surprised because of someone not setting their expectations correctly rather than give them the technically right answer.
Call me crazy, but when rates go up if you have sat down with your borrower and explained to them they are *floating* and what that means, they usually have no problem with getting a higher rate/different program. They knew the risk they took.
Same if they blew a lock by not being responsive. If a borrower has difficulty getting a condition or whatever and a lock has to get extended (or even broken), the time to let them know what happened as a result of their actions is not one day before closing — it is at the exact time that the actions happened.
“Ms. X - you know our lock is only good for Y more days, so if you can’t get it to me by then, we are going to have to extend or change programs…”
Is much different than:
“Ms. X, it is one day before close - remember when you drug your feet and didn’t get me what I needed, well that resulted in you getting THIS not THAT”
But if you have left the impression/promised a first time home buyer that “X was their rate” and “Y was their program” throughout the loan process then I think you could reasonably expect them to freak out when you try to pitch them something different one day before they are supposed to close.
Which leads them to do strange things like look up strangers on the web who ramble about mortgage related topics, call them up and ask them questions like “does this seem right?”
Hope that gives more info — and if the young lady (I never did even get her name…) who called me from Oregon happens to read all of this — good luck! I hope it all works out for you today.
Justin
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Al
I got caught this bait and switch tactics by a broker who promised me a 4.875% for a FHA Loan and then he switched at the last minute when the escrow is about to close and the sellers getting really annoyed on how it is taking so long for the loan to close.
I had no other choice but to close the escrow or else I have the risked of losing the house to another buyer.
He did promised a streamline “NO COST” loan, but I don’t even know what that entails. Is that mean no processing fee, appraisal fee, no documentation fees and etc.? I feel like I have been raped and on top of that he charges me 1.25 points on a freaking 5 year fixed for 4.75. Then I got charged for two apppraisals for $450.00 on the first appraisal and then 250.00 for the second appraisal. Is there anything I could do, even if I closed the escrow and they transferred the loan already?
Al