Q: I was trying to refinance my townhome. I paid $300 when I applied for the loan. The mortgage broker told me what would be in the good faith estimate, but didn’t give me a copy.
Based on what she told me, I locked the rate during the first week of September, and decided to close on the refinance on September 28th.
As the days have passed, the mortgage broker has never given me the official good faith estimate and is now dragging her heels. In the first week of October, she told me she cannot deliver on what she promised when I applied.
Although she has backed away from the terms that were promised, and has not given me the good faith estimate, she sent an appraiser to appraise the property. I told her to wait until we had agreed to terms, but she sent him anyway.
I feel like this mortgage broker is taking advantage of me and I want my $300 back. What should I do?
A: As I’ve said many times before in this column, any lender who does not produce a good faith estimate within three business days of a borrower signing an application for a loan is violating federal law.
The Real Estate Settlement Procedures Act (RESPA) requires lenders to provide the good faith estimate in 3 days. By not doing that, your lender has signaled that she is unable to comply (for whatever reason) with the law. From your point of view, that can only mean one thing: big-time trouble. You should NOT do business with this lender, so your instinct to get out of the deal is on the money.
Here’s how to get your money back: You should point out to your mortgage broker that she is in violation of RESPA and that you will report her if she does not return your cash to you immediately. Give her 24 hours to produce a check. If the check is not forthcoming, call your state’s commission that regulates the mortgage banking industry and file a complaint. You should also file a complaint with the Better Business Bureau against this lender so other people will be aware of their bad practices.
If the lender suddenly promises to make it all better, I would still walk away and find a more reputable lender who can live up to his or her promises. You’re far better off walking away from the $300 than trying to make a deal with a lender who doesn’t think it’s necessary to follow federal law.
By the way, you’re right: You are being taken advantage of because you don’t know your rights under federal law. You can brush up by going to the Department of Housing and Urban Development’s excellent website, www.HUD.gov. Click on Search/Index at the top and then scroll down to RESPA. Click through and read about your rights as a borrower.