Change in Lender Credits after committed to Loan

11 Replies

I've been working with LoanDepot on a cash out refi for one of our rentals (a duplex).  I've locked in the rate, paid for the appraisal (which was completed today), paid for my credit check and submitted all the paperwork.  Basically, they're just waiting on the appraisal price to be within a certain amount and they can move to get the closing documents.  

HOWEVER, today I just received an updated Loan Estimate with a $1260 reduction in the lender credits.  Basically they were providing a lender credit of -2352 and today they updated that to -1092.  How is this even fair at the late hour in the game?  I expect the appraisal to be received tomorrow and was just talking with the loan officer today about potentially scheduling closing in the next 10 days.

Love to hear your thoughts on such an infuriating 'bait and switch' move.

As a lender, I see this as completely bait and switch unless they provided you a solid reason regarding the approval.  With no explanation I would email them and get one.  The only thing I can think of is that they provided you a credit when giving you your rates and then the market moved against them and when you actually locked it was less.  But still, they should have fully disclosed whatever situation it is.

Promotion
Apartments.com
List, Screen, Lease, Get Paid, Manage.
No Better Place to Lease Your Place
Owners rely on the #1 rental site to get the best results from their rental properties.
Get Started Now

Something is wrong here. You should have received an revised loan estimate when you locked. Mine come directly from the lender, so are correct (because I am a mortgage broker, not a direct lender). But some companies do it themselves, and I guess have the ability to make mistakes or do bad things.

I would fight this. Threaten to turn them over to the state and the nmls. This is a bid deal. 

And loan depot is being sued right now for lying about loan. Allegedly, they approved loans that should have been denied, to pad their numbers for their IPO. Is it true? Time will tell.

So brought this up with them today.  It was so shady, since the new Loan Estimate in their system just needed me to view it in order to confirm it.  

I told the loan officer about the potential 'bait and switch' scenario (not a good idea since now I gave them information on how to back up their actions).  The initial Sales lead who started the loan called me back and apologized for their mistake and said there was nothing he could change stating the property was not documented correctly when he took the property information.  I countered by telling him that I also provided insurance information and 2 rental contracts for the property which evidenced this for the past 3 weeks.  He still held his ground.  

I just cancelled the loan and am now reporting this.  

What is the best way to make a complaint about this?  I'm not really sure what agencies to make my complaint that would actually help others from falling to this type of treatment?

Thanks for ALL your help.

Originally posted by @Jerome S. :

So brought this up with them today.  It was so shady, since the new Loan Estimate in their system just needed me to view it in order to confirm it.  

I told the loan officer about the potential 'bait and switch' scenario (not a good idea since now I gave them information on how to back up their actions).  The initial Sales lead who started the loan called me back and apologized for their mistake and said there was nothing he could change stating the property was not documented correctly when he took the property information.  I countered by telling him that I also provided insurance information and 2 rental contracts for the property which evidenced this for the past 3 weeks.  He still held his ground.  

I just cancelled the loan and am now reporting this.  

What type of property was it originally (when you started the process), and what type of property is it now?

For example if you said upfront it was a SFR w/ an ADU, and it's now coming back (according to the appraiser, according to title work, etc) that it's legally a duplex, that would be considered a valid change of circumstances. Another example would be a house that's actually legally a condo, etc.

It's also possible the rate/fees weren't locked. The disclosures will tell you if the rate/fees are, or aren't, locked.

FYI it's illegal for that LO at LD to get paid $1 more, or less, because of your rate, fees, lender credits, etc. So intentionally screwing you over to enrich themselves is fairly improbable. The news about LoanDepot pertains to getting as many loans done as possible (cutting corners where necessary), it's not about screwing specific borrowers over (https://www.nytimes.com/2021/0... ). 

@Jerome S.

I am a cpa, realtor and MLO (loan officer). 

Each company has its fixed profit margin that they aim to make, off each client. When they make more money, they have room to give you more lender's credit, verse versa. Did the interest rate go up? That might be why they cant afford to give you as much lender's credit.

Thanks for the advice all.  The property was purchased as a duplex in March and had previously been so for over 5 years.  Nothing has changed about it and I was very upfront when getting the loan about it being a duplex with two units and each unit being rented out (which I provided the current leases for during the document drill).  

It does not make any sense to me that there is no incentive for them to make this change right before the appraisal shows up and closing is imminent.  Just the fact alone that the LO admitted it was their fault and he was going to still move forward with the adjustment, even after he knew it was his fault. 

Either way, I'm going to tell my story to the NMLS and BBB.  Please let me know if there's any other agency I should inform?  I don't really care about my situation anymore, I just don't want others to be suckered by these tactics in the future.  

Thanks again for all your help.  


  

Originally posted by @Jerome S. :

It does not make any sense to me that there is no incentive for them to make this change right before the appraisal shows up and closing is imminent.  Just the fact alone that the LO admitted it was their fault and he was going to still move forward with the adjustment, even after he knew it was his fault. 

 It's also illegal for the LO to take a pay cut to 'make things right.'

Do your thing and all, but FYI this looks more like incompetence than malfeasance. 

Does the person's NMLS number start with a 0, a 1, or a 2? The 2 series is the folks that were baristas until March 2020.