Recently, I was refinancing my home and spoke with a mortgage loan consultant, who initially, told me he could do my refinance for $3000 in closing costs, had locked in my rate at 5.7% and could do a stated income loan. He got approval for the loan and we had 30 days to complete it. He told me to not pay my mortgage for the month and we would have the loan closed by the end of the month. In the third week of the month, all of a sudden he told me the lender had not let him lock in the rate and interests rates were now high so wanted to wait and see what the market would do before we actually signed at the end of the month. When there was 3 days left , he set up the loan signing for the next day. I had asked for a good faith estimate but was never sent one on the premise he hadn't locked in the interest rate. What I had discussed with him was a 30 year fixed loan combining my 1st and 2nd and car payment, with a monthly payment of $1500 a month, and closing costs of $3000, which he said was doable. What I ended up with was a 5 1/2 year adjustable, at 5.7%, $1600 monthly, and $14000 in closing costs, which he said was because of rising interest rates and doing a stated income which were hard to come by these days. I found the closing costs to be outrageous, $895 application fee, $995 processing fee and another $600 administration fee, plus a $10,000 origination fee. I'm wondering if being a stated income loan, I should have expected this and why would a lender not let you lock. When I asked about it , he said I was lucky to get the loan approved at all because no one was doing stated income anymore. He also said that they'd do another refinance, a retread, and there would be no closing costs. I would appreciate any feedback on this.

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Originally Posted by Ladylulu

Recently, I was refinancing my home and spoke with a mortgage loan consultant, who initially, told me he could do my refinance for $3000 in closing costs, had locked in my rate at 5.7% and could do a stated income loan. He got approval for the loan and we had 30 days to complete it. He told me to go ahead and not pay my mortgage for the month and we would have the loan closed by the end of the month. In the third week of the month, all of a sudden he told me the lender had not let him lock in the rate and interests rates were now high so wanted to wait and see what the market would do before we actually signed at the end of the month. When there was 3 days left , he set up the loan signing for the next day. I had asked for a good faith estimate but was never sent one on the premise he hadn't locked in the interest rate. What I had discussed with him was a 30 year fixed loan combining my 1st and 2nd and car payment, with a monthly payment of $1500 a month, and closing costs of $3000, which he said was doable. What I ended up with was a 5 1/2 year adjustable, at 5.7%, $1600 monthly, and $14000 in closing costs, which he said was because of rising interest rates and doing a stated income which were hard to come by these days. I found the closing costs to be outrageous, $895 application fee, $995 processing fee and another $600 administration fee, plus a $10,000 origination fee. I'm wondering if being a stated income loan, I should have expected this and why would a lender not let you lock. When I asked about it , he said I was lucky to get the loan approved at all because no one was doing stated income anymore. He also said that they'd do another refinance, a retread, and there would be no closing costs. I would appreciate any feedback on this.

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Ladylulu -

sister, my heart really goes out to you. This man really tricked you. A stated income loan is basically a "paperless" loan in which the mortgage consultant does not verify your income. It really shouldn't affect you personally, per se, but it reveals that the consultant is not very straightforward and honest. A good lender would have you submit W-2s and credit card account #s, bank account #s, etc. But for you, this is all moot.

It sounds like you got stuck with an ARM, which allows you to pay interest only for 5.5 years. I bet he told you couldn't lock in at a fixed rate because a fixed mortgage didn't yield him the best commission but an ARM did. What it comes down to is that you have to be firm with what you want and stick to that. If on the closing for the refinance, while you are sitting with your lawyer you had decided to walk away from the deal, you were entitled to do so... BUYER'S remorse clause.

If you are into this mortgage already, I would not do business with that consultant anymore. Work with a reputable bank like Wachovia... you might not get the best rate if your credit and loan to value aren't so great but you'll rest easy knowing you are working with a straightforward lender. Always try to work with the bank directly, not a mortgage consultant or broker as this is an unnecessary layer in the process anyway.

RESPA requires that certain disclosures including a Good Faith Estimate be presented at application so you should have been given closing information from the beginning. If he had locked your rate he should have given you that info in writing. The GFE is a estimate based on a "quoted" rate. Then it has to be revised once the rate is locked. However it's still required whether locked or not. Where I work the application fee is $175 and the processing $275 so yes his fees are outrageous. We strive to make our money from the bank so most of our loans do not have an origination fee and if they do it's certainly not 5% which is what it sounds like yours was. To put it bluntly this person raked you over the coals. I hope you walked away instead of signing.

Thank you. I was pretty certain I was being taken but with the housing market the way it is, I wanted to make sure my expectations weren't unrealistic. Thanks again.