HM lender & broker EACH charged me, points and lender fees (?)

Developer · Chicago, IL · Member since 2016 · 65 posts · 11 votes

Would SO appreciate feedback -

The mortgage broker states all along the way: the fees consist of his points, appraisal, inspection, closing fees - other than the interest rate and LTV etc.

The night before the closing he mentions the lender's fee ALSO, only the morning of the closing is full quote provided with a higher than previously quoted int rate, AND $8500 lender fee AND broker's 2.5 points - none of this disclosed. I was stuck, I had to close or I'd lose the property.

I'd appreciate any and all thoughts/feedback - other than 'Michelle you idiot' :(

Thanks!

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Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

@Michelle DeWoskin

I am a hard money private lender, and most of our loans are brought to us by mortgage brokers. We require all applicants whom we issue a Letter of Interest, to sign a term sheet that specifically addresses all loan terms, fees, etc. This is done before the borrower spends any money on appraisal, environmental, etc. On this same form the mortgage broker who brought us the loan is required to disclose all his fees.

The fact that the both the mortgage broker and lender charge fees is common; both are in business to make money. The fact that these fees were not disclosed to you until closing is unethical. All fees should be disclosed at the time you sign a letter of interest, so if the fees, terms, etc., are not acceptable to you you can seek alternative financing.

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Dante Foreman
Investor · Owensboro Ky · Member since 2018 · 183 posts · 68 votes
7y
I haven't done my first deal or anything like that,but you definitely shouldn't feel like an idiot. As long you got the property that's all that matter. Mistakes are lifes best teachers you know what to be prepared for next time.
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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
7y
@Michelle DeWoskin
I am a hard money private lender, and most of our loans are brought to us by mortgage brokers. We require all applicants whom we issue a Letter of Interest, to sign a term sheet that specifically addresses all loan terms, fees, etc. This is done before the borrower spends any money on appraisal, environmental, etc. On this same form the mortgage broker who brought us the loan is required to disclose all his fees.
The fact that the both the mortgage broker and lender charge fees is common; both are in business to make money. The fact that these fees were not disclosed to you until closing is unethical. All fees should be disclosed at the time you sign a letter of interest, so if the fees, terms, etc., are not acceptable to you you can seek alternative financing.
Private Mortgage Financing Partners, LLC
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
@Don Konipol Don your too kind.. this was classic bait and switch.. and one and done lender .. I am sure this borrower will never use them again and will now be wiser in the future....
OP just for reference Brokers broker lenders money.. lenders charge fee's and brokers charge fees as Don said that's how the business works.. so either hook up with a direct lender and this could save you some fees.
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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
7y
Originally posted by @Jay Hinrichs:

@Don Konipol Don your too kind.. this was classic bait and switch.. and one and done lender .. I am sure this borrower will never use them again and will now be wiser in the future....
OP just for reference Brokers broker lenders money.. lenders charge fee's and brokers charge fees as Don said that's how the business works.. so either hook up with a direct lender and this could save you some fees.
You are the only one on this forum who ever described be as kind! LOL
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Michelle DeWoskin
OP
Developer · Chicago, IL · Member since 2016 · 65 posts · 11 votes
7y
@Dante Foreman, @Don Konipol and @Jay Hinrichs - thank you. I know as much, so ultimately I can only blame myself.
In the rush at the end to get this done, and not being presented with any different quote than the one previously given, it didn't occur to me to think something like this could happen - until it was hours before closing, I felt blindsided and thought maybe I'd missed something, and .... history.
Brokers I've worked with in past, conventional, were paid by the lender. The prior quote he gave me stated that broker's fee was already included in base pricing and not additional (which was also far lower than what was charged at closing). I asked twice for confirmation of any other fees than what had been laid out, and responses did not include the lender fee to me.
I'm talking with my lawyer today, the said broker is probably reading this, I met him here.
Thanks again.
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Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
7y
Originally posted by @Michelle DeWoskin:

@Dante Foreman, @Don Konipol and @Jay Hinrichs - thank you. I know as much, so ultimately I can only blame myself.
In the rush at the end to get this done, and not being presented with any different quote than the one previously given, it didn't occur to me to think something like this could happen - until it was hours before closing, I felt blindsided and thought maybe I'd missed something, and .... history.
Brokers I've worked with in past, conventional, were paid by the lender. The prior quote he gave me stated that broker's fee was already included in base pricing and not additional (which was also far lower than what was charged at closing). I asked twice for confirmation of any other fees than what had been laid out, and responses did not include the lender fee to me.
I'm talking with my lawyer today, the said broker is probably reading this, I met him here.
Thanks again.
This all should have been disclosed on the Loan Estimate early in the process. If you look through the stuff you docusigned, what appears?
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Michelle DeWoskin
OP
Developer · Chicago, IL · Member since 2016 · 65 posts · 11 votes
7y
It wasn't, I know this is weird. I signed all related to a different lender, then last minute I'm filling out application and SOW for new lender, asking for real quote, he says it's coming, it doesn't till hours before closing. I signed nothing with them with solid quote of terms.
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Marc Dube
Lender · Augusta, ME · Member since 2014 · 55 posts · 21 votes
7y
@Michelle DeWoskin
It sounds like the broker didn’t have a good hard money lender lined up initially and was shopping around then never disclosed the extra fees. There are many very good hard money lenders nationally and unfortunately some
Independent brokers who just don’t know what they are doing. If you can find someone you can trust who comes recommended to you that has brokered hard money before then I would stick with them from now on. Or maybe just go direct to a hard money broker. There are websites out there you can use to find good hard money lenders.
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Stephanie P.Pro Member
Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
7y
Originally posted by @Michelle DeWoskin:

Would SO appreciate feedback -
The mortgage broker states all along the way: the fees consist of his points, appraisal, inspection, closing fees - other than the interest rate and LTV etc.
The night before the closing he mentions the lender's fee ALSO, only the morning of the closing is full quote provided with a higher than previously quoted int rate, AND $8500 lender fee AND broker's 2.5 points - none of this disclosed. I was stuck, I had to close or I'd lose the property.
I'd appreciate any and all thoughts/feedback - other than 'Michelle you idiot' :(
Thanks!
That lender fee is sick.
Full disclosure, we broker loans.
The real value brokers bring to the table is knowledge of a variety of lender's guidelines, rates and fees. Saving a borrower the time of searching for the right direct lender is extremely valuable to many many borrowers. I've seen a lot of answers that tout the virtues of "direct lenders" and can say while going with a direct lender does work for many borrowers if they fit into that specific lender's box, there are just as many that get jacked around by direct lenders who say "We're direct lenders, we make the rules" when they really don't. Having a mortgage broker who is a professional that can answer your questions, who can place your loan with a lender that will actually close on time (without wasting your time) at a reasonable rate/fee structure that was disclosed up front works as well.
I'm sorry the broker you used wasn't up to par. He/She makes us all look bad.
Stephanie
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Michelle DeWoskin
OP
Developer · Chicago, IL · Member since 2016 · 65 posts · 11 votes
7y
Thank you, Stephanie and Marc. Oy yoy yoy....
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Nghi Le
Investor / Lender · Seattle, WA · Member since 2014 · 1k+ posts · 730 votes
7y
Yikes, those are some horrendous numbers. I've personally borrowed from a couple dozen HMLs and talked to over a hundred others, and now I also broker for a few of them (the ones I've vetted), so I've seen just about everything. I've also been taken a few more times than I'd like to admit, although much more in the beginning of my investing days than lately. I always have a back-up lender now, i.e. a tried and tested lender, whenever I try a new one.
Reputation is really important these days, whether you're an investor or lender. If you meet someone who doesn't seem to care much about their reputation, tread carefully. And please mention their name so that anyone considering using them for the first time and searching on BP will hear this experience; that helps the community.
A lot of lenders have reps, either internally or a broker, whose job is to only get the client in the door. That's where you encounter a lot of these bait-and-switch scenarios. The rep/broker doesn't know the lender's terms and underwriting criteria enough, and they don't care about properly qualifying a deal/borrower. At least it sounds like you're still able to close, albeit at a much more expensive price. Others have had deals die at the last hour, mainly because the rep didn't know how to ask the right questions to disqualify a loan upfront.
Look for lenders/brokers who care about having a long-term relationship with a client, and ones who care about their conversion rates. This usually erases a lot of the problems. They're not trying to make a quick/big buck off the first (and only) loan you do with them. They'll also look out for you and tell you to walk away from a bad deal, which I don't think I've ever heard any big national lender say (although I guess indirectly they do when the valuation comes back low).
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Michelle DeWoskin
OP
Developer · Chicago, IL · Member since 2016 · 65 posts · 11 votes
7y
Word, Nghi, I live the consequences of my actions. You were very informative and offered me a very fair and competitive situation. In a rush I pounced on what I thought was the best offer. He seemed just as trustworthy as you and others I'd talked with - till the final rushed moments when it was too late.
Man down.
JJ Bliss, BD Capital, winner of $14,250 ish of my son's college savings. Hope he's enjoying it.
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Gina Carter
Realtor · Sandy, UT · Member since 2015 · 14 posts · 2 votes
7y
@Michelle DeWoskin Hi Michelle, didn’t he supply you with a signed good faith estimate? You can request a copy of the closing documents 24 hours prior to closing for review, and ask them to fix that amount prior to going in to close.
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Gina Carter
Realtor · Sandy, UT · Member since 2015 · 14 posts · 2 votes
7y
@Michelle DeWoskin I just read the above posts but had already posted the one below. Hopefully, there is something you can do to get some of the money back since it was NEVER disclosed and when it was, It was hours prior to closing. Seems fraudulent
1 Reply
Michelle DeWoskin
OP
Developer · Chicago, IL · Member since 2016 · 65 posts · 11 votes
7y
Hi Gina, thanks so much. I was asking constantly in a 100 different ways. He kept putting it off, responding to everything but the figures. And I guess I trusted by then, as nothing different was said after the last quoted terms and figures.
Late the night before the next morning's closing, LimaOne submitted it into my account on their portal. I saw it with my attorney at the closing. I knew I wasn't going to risk the closing, I know I should've had the final quoted terms from the lender. We all were rushed, JJ just never provided, and ever since, and still, berates me for not being empathetic to his plight of rushing the loan for me (though the 2 wk time frame was one of his big selling points).
By the time of the closing, again, I couldn't delay the already impatient sellers, and thought in the rush of it all I had overseen disclosure of all, so didn't want to make waves. Hard lesson, just when I think I'm hardened enough.
JJ Bliss isn't licensed, apparently that's not required for a "commercial" broker, that's the information I've been able to find anyway. Otherwise I would've complained. So I've done it here.
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