Wednesday, March 24, 2010

Part 2: The New and Improved GFE? How to Protect Yourself

In my last post, I began to tell you a little about my adventure with the "Good Faith Estimate" or GFE for my home loan.  Here, as they say, is the rest of the story:

So I called my friendly Chase consultant AxA.  Knowing that this was not the final GFE, I also knew that it could still be changed and we were not locked in to these fees.  I left a message and sent an email.  Shockingly, I got no response.

Here is where it gets interesting.  Life happens to us all, and time passed with me assuming that it would be taken care of.  After all, I DID send an email.  

The "final" GFE arrived in the mail.  I opened it with curiosity, fully assuming that everything would be correct.  

Bottom line?  "Total Estimated Settlement Charges:  $4,015.47.

What. In. The. FLYING HELL?
(Actually, at this point I might have used stronger language, but this is a family show.)

When I called my good friend AxA, he said "Oh.  Yeah.  That's wrong, but it's no big deal.  It'll be correct at closing.  Just sign the paperwork you get and we'll schedule it."  
No, I said, Nothing will be signed until we have corrected paperwork.  Re-do this and send out a correct GFE and we will review it and schedule closing when it is correct.

Here's where he challenged me. First, a BIG, annoyed sigh.  Then: "What's not correct?"  Was this arrogance?  Ignorance?  I suspect a combination of both.  So, I went-line by line- down the page to tell him what was not kosher.
1.  In our initial phone conversation, he said there would be no points.  Lo and behold- there's an 1/8 of a point charge.
2. In our initial conversation he had claimed no origination fee.  Guess what?
3. Hazard insurance:  $1400.  First of all, we already spoke of this and he knew that insurance was not escrowed on our loan.  Secondly, $1400??!!!  Even if we didn't already have (less expensive) insurance, I might want to shop around for a better rate.
4. Title Insurance: $894.95.  Not!   This is a reissue of title insurance, first of all, so the rate should be greatly discounted.  Secondly, you can check rate cards that are publicly available from any title insurance company, and for the amount of our loan, the highest rate I found was about $500.

He challenged me as much as he could until I said: "Listen.  I happen to be a Realtor, so I know how to read a GFE, and this one is WRONG.  This is not acceptable."

THEN- and this might be my favorite quote- he told me: "Don't worry about it.  You won't have to bring this to closing, it'll just get rolled into the loan."

This got me thinking.  Not too many people are aware that they have options when it comes to these things.  This is part of the reason that the mortgage industry is such a mess.  Many people would be so relieved to get out of their ARM and into a fixed rate that they might just accept what he said as the way things are.

But, think about this:  if I didn't question him, we would be paying interest over 30 years on over $2000  worth of charges that shouldn't even be there.  

You do not have to be "in the business" to shop your rates for title insurance.  But how many people know this?  And title insurance is just one example of the services that the consumer may choose.  Interestingly, after this conversation, my husband got a call to schedule our closing time.  "We're all set to close!" said the chipper voice from the title company.  
Well, believe it or not, my husband and I communicate regularly (!).  AxA was planning on just going around me to close out our file rather than do his job and fix the problem.

A few tips if you are going to Refinance or shop for a new loan: 

  • Take copious notes.  Write down names, dates, time called, details discussed.  Do not be afraid to ask the person who answers the phone to spell their name for you or to repeat what was said so that you can write it down.  This was good info for me to have when I spoke with AxA.  When I told him I took notes, he backed down and took off the points charged.
  • Follow up with email.  Better still, if you can follow up phone conversations with email, then do it.  Just a simple "Per our conversation today at 2pm..." and then what you have in your notes.  It's also a good idea to set your email to have a "return receipt" so that you know it was received and opened.  KEEP all emails that go back and forth.
  • Don't be afraid to ask questions and challenge the answers!  So many of us are reluctant to question the bank because we assume they know what they are talking about and are telling us the truth.  But, as in my situation, paying for a couple thousand dollars over 30 years (plus interest) that should not even be charged is ridiculous.  Suggesting "rolling it into the loan" is just stupid when it doesn't even belong there in the first place.
  • Do NOT sign anything until you are satisfied that your loan paperwork is correct.  If I had just waffled and signed the loan docs stamped "sign and return", then we would have been locked into all of those erroneous charges.  
Bottom line:  my friends, if you need assistance understanding your GFE, Call me!  Or call any licensed realtor to help you understand what you are reading.  You have the right to know what you are signing and agreeing to, and what charges you do and do not have to pay!

Tuesday, March 23, 2010

The New and Improved GFE?

A “Simplified” GFE?
Making the Good Faith Estimate More Transparent May Make it More Difficult to Close
pastedGraphic.pdfI have been living in the same home for almost 8 years now.  It is cozy and has enough room for my family.  We have designed it to suit our needs and updated or upgraded paint, bathrooms, basement.  
When we bought our home, we got a great deal on it (for the time!), and we were able to put down a pretty decent downpayment after selling our previous property.
So, our loan isn’t big.  It was originally with ABN-Amro and along the line it was purchased by WaMu.  We had no problems with that, and in fact, when  we were sent a mailer about doing a re-fi several years ago for a flat fee of $495, we decided to go for it.  We were smart- we got an adjustable rate (not the smart part...) mortgage, took a little cash out, and went on with our happy lives.  
We are thankfully nowhere near being upside down on the house (that’s the smart part), but one of these days it IS going to adjust.  Mind you, this won’t happen for at least another year.  With interest rates being low, we decided now would be a good time to lock in our rate.  If we could do that now, we would drop the interest rate down over a point, without changing our payment.  Score!
pastedGraphic_1.pdfEnter Chase Bank
In the meantime, Chase acquired WaMu.  (Cue the music: Duh-duh-DUHHHNNNN!)  People have many different stories to tell about their experience with Chase Home Loans.  This is mine:
It started with a call to the 800 number on my loan statement to try and get the right department.  This was an adventure in its own right and might even be worth another blog.
Once I got through to the correct department, I spoke with a very nice man whom I’ll call AxA.  AxA was very informative.  Per the notes I took during this first call, he told me that it would be no problem, we might even be able to lock in a rate without an appraisal!  Because we are already Chase customers, there is no origination fee!  There won’t be any points!  We have great credit!  He! was! very! Enthusiastic!!!  In double time, with me furiously taking notes, he said that there would be a processing fee of $750, but we would get some of this back at closing.  It turns out that we would need a full appraisal, but that was to be expected in this market.

pastedGraphic_2.pdfThe Good Faith Estimate Arrives
Per the new regulations and Truth in Lending, a Good Faith Estimate is sent when you originate a home loan, and then a final one is sent just before closing.  There are certain fees that a consumer is able to “shop”- among them title insurance, home inspection and a couple of others.  Because we are not purchasing a different home, inspection is not necessary.
I tore into the paperwork to see what lay inside.  This document is dated January 15- the new Truth in Lending went into effect January 1, so this would be my first glimpse.
I glanced down the page.  At the bottom, “Summary of Charges:  $2560.47”
What.  The.  Hell?
Origination charges 1510.59.  “All other Settlement Services” 1049.88.  I don’t think so.  
Next:  RealtorJenn gets to the bottom of it...