Complaining About High Closing Costs

Q: I just wanted to thank you for your very informative website and the information I found on good faith estimates.
 

I was working with a lender on a refinance and he kept dodging my questions regarding costs associated with the loan and would not provide a good faith estimate.

It was not until I got papers from the title company showing the loan amount and deducted out my current loan payoff (plus their fees) and my cash-out amount that I was able to see that the lender was charging closing costs somewhere around $11,000-$13,000 -- or about 3 times what they should be.

No wonder he wouldn't provide the disclosure! I withdrew the application today. Fortunately for me I did not pay any cash to the lender.

In this situation, should I file any RESPA violation complaint because the lender failed to produce a good faith estimate? I've been working with this guy for weeks and I'm not exactly sure when the application was submitted, but I know that 6 days ago the appraisal was submitted to him and he locked in the rate and I still didn’t get that good faith estimate I was owed.

A: Good for you for pursuing enough information to arm yourself against a bad-apple lender. You've not only saved yourself as much as $13,000, but you've probably saved yourself from solving a host of other problems down the line.

You can file a complaint with the commission or agency that regulates mortgage lenders in your state. You can also file a complaint online with the Better Business Bureau. The Federal Trade Commission might like to know about this company’s bad business practices. You can file a complaint online at www.ftc.gov. I’m sure your state attorney general would also like to know about this lender's bad behavior. You should call their office and file a complaint.

I'm glad you didn't pay anything upfront to this lender. But even if you had paid $500 in an application fee, it would have been well worth losing the cash to get out now.

To find a better lender, always interview at least four or five different types of mortgage lenders at the same time, and try to compare the loan programs on an apples-to-apples basis.

For example, I'd talk to a well-respected mortgage broker, a local bank, a credit union (if you belong to one or can join one, they usually have inexpensive home loan options), a top national lender like Countrywide Home Loans or Washington Mutual, and an online lender. Start your search at www.BankRate.com.

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