Q: My wife and I have purchased a house in Florida this past April. This past weekend we received a letter and an invoice from the law office that acted as the parties’ closing agent, informing us that we owed additional fees due to “additional endorsements requested by the lender after the closing.”
Our question is: Is this legal? Only the invoice was produced and no official request from the bank was presented. We are, of course, contacting the bank for more information but we would like to know if this normal or more specifically if the bank did not request all endorsements in time for the closing, why do we have to pay for the additional cost?
Wouldn’t this be the bank’s responsibility to pay for not asking for all endorsements at the closing time?
A: This is a great question on so many different levels.
When you closed on your purchase, your lender gave you certain government-required disclosures relating to your loan. One of these disclosures was a good faith disclosure of fees for your closing.
At your closing, the bank was required to give you a final disclosure of all fees for your purchase. If the disclosures included these fees, but you somehow failed to pay them, you would be obligated to pay them now. However, if the lender failed to disclose these fees, the lender may be out of luck and may not be able to come back to you to request these fees.
The purpose of the good faith estimate of closing costs and the truth in lending law that was recently changed was to give more certainty to the disclosure of fees given by lenders. If your lender made a mistake, the lender might have to eat the cost.
Now, it’s possible that the closing agent received instructions from the lender to include these fees and the closing agent failed to include the fees on the documents delivered to you. However, the closing agent may have been acting on behalf of the lender and the closing agent’s mistake may require the closing agent to resolve it after closing. Your closing statement would change if you pay those additional fees and your lender would be required to issue you new closing documents relating to those fees.
When you purchased your property, the lender required you to obtain and pay for a title insurance policy to protect the lender’s mortgage interest in the property. Your lender may also have requested that the lender title insurance policy include certain endorsements to the coverage. Some of these endorsements might relate to the type of loan you received or the type of property you purchased.
But the net effect of the lender’s request for title insurance and endorsements is that those fees must have been disclosed to you in advance of the closing and those fees and costs must have been disclosed to you at the time of the closing.
If it’s true that the lender failed to disclose these fees to you and now wants these endorsements, those fees might need to be paid by the lender and not you. If you had known of these fees, you might have chosen a different lender. The purpose of these disclosures is to make the system more transparent and assist buyers in choosing a lender.
(Unfortunately, the new law has improved some things but has made the process of reviewing title company charges and fees more difficult in many situations.)
If you still have trouble with the closing agent or the lender, you might need to escalate the matter by talking to a supervisor at the lender’s office or by contacting the Department of Housing and Urban Development (HUD) and filing a complaint against the lender for a violation of the truth in lending law.
But first you might need to talk to a real estate attorney to go over your documents and make sure that you have all your facts covered.