Financing in Cumming>Question Details

jh_becker, Home Buyer in Cumming, GA

Can a broker add points right before closing?

Asked by jh_becker, Cumming, GA Mon Mar 4, 2013

I received a GFE, sent the broker all materials requested, signed all the forms and the appraisal has been completed. We are set to close in days so i requested an updated GFE. It was $6000 greater due to him adding points. Is this legal? What is my recourse.

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Hank Miller - Broker/Appraiser’s answer
Legal or not, it's not right but that won't stop some folks. Cut bait and get a new lender - then visit the GA Banking Commission and drop them a note or phone call - http://dbf.georgia.gov/

if you want a few solid lenders, contact me -
Web Reference: http://www.hmtatlanta.com
1 vote Thank Flag Link Mon Mar 4, 2013
I agree with Hank on this one. The loan officer should have called you and told you of this increase. Unfortunately, sometimes the loan officer doesn't even know what's going on with the file after it goes to processing. Depending on who your lender was, you might want to talk to a manager and find out why the increase.

Points can only be charged if the rate went up. You may have requested the rate lock, but sometimes, loan officers will float the rate in hopes that the rate will drop and they can get a little something on the back end called yield spread. Back in the day, the loan officer was allowed to put this in their pocket. Since 2010, that stopped. So, the loan officer can keep the fee in their bank to use on the next person who wants a competitive rate.

In order for $6000 to be added in points, you had to have been offered a rate of 2.5% at one time and it jumped to 3.5%. Also, the percentage depends on the loan amount and we don't know what that is.

Another thing that causes "points" to increase could be a miscalculation of mortgage insurance if going FHA or taxes and insurance due extra at closing among other fees (Attorney, appraisal inspection, flood insurance, days added to closing. If your debt to income ratio was tight, then the lender cannot increase your rate to get that yield spread to cover your increase in fees Because you won't qualify with a higher interest rate, you end up paying points instead.

I would find out why first before killing the deal. The seller may not allow you to go out further. Whenever anything is changed on the GFE that affects the APR, the lender is required to give you 3 business days to think about it before moving forward (Rodney, correct me if I'm wrong). Use that time to find out what happened and get your Realtor involved. Lenders rely on business from them and they have some leverage if needed.
0 votes Thank Flag Link Mon Mar 4, 2013
I just double checked and the exact amount was $5330 he is adding for points. the rate was always 3.75. We specifically stated that we would not accept points early in the process. There has only been 3 weeks since from start to today. He claimed last night that the points were always supposed to be on the GFE but their computer generated system defaulted to a lower value and he didn't catch it. Sounds 100% like bait and switch. He didn't even call me about the change, just sent me the paper work to sign for the actual loan.
Flag Tue Mar 5, 2013
Was your interest rate locked in or was it floating?

Just because you received a GFE and sent everything back, that does not "lock in" a particular interest rate. The Mortgage Bond Market has steadily worsend over the last few weeks. This means that borrowers who did not opt to lock in at the time of their loan application will see an increase in fees to maintain that same interest rate.

If you did not commit to a rate lock, then you would really have no recourse since there was not a particular interest rate committed to you.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia with over a decade of mortgage lending experience.

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.
0 votes Thank Flag Link Mon Mar 4, 2013
More information is needed to determine if it's legal or not.
Was your rate locked? If your rate was not locked then of course the points can change. If your rate was locked and the lock did not expire, then that's a different story.
0 votes Thank Flag Link Mon Mar 4, 2013
I hope you have a Strong Realtor who can provide you with a mortgage broker who can get this closed for you in a timely fashion....also need to be on top of the contractual impacts....personally I would tell the mortgage broker that adding points was not part of loan program you expected and to remove them or otherwise you will find a new mortgage broker to fund the transaction
0 votes Thank Flag Link Mon Mar 4, 2013
No fire them and file a better business complaint against them. Talk to the government body that regulates their license too. I would tell the loan officer and the bosses your plan of action. They may change their mind about adding points
0 votes Thank Flag Link Mon Mar 4, 2013
Fire them and get a new loan officer!

Rick Musto, Realtor®, ABR®, SRES®
Managing Broker
Buckhead Home Realty
Serving the Atlanta Metro Area
Cell: 770-480-7699
Work: 404-419-1004
Fax: 770-783-3119
rmusto@BuckheadHomeRealty.com
0 votes Thank Flag Link Mon Mar 4, 2013
No its call bait & switch under the new laws is illegal since you did not sign up for it. I would suggest you high tail it now. When do you need to close. I have a guarranty GFE including all 3rd party fee that if any changes by any of the parties involved in the process without the written consent of the buyer that party will have to render the services for free and this occure once the property is identified.
I can also close you loan within 10 days if you would like.


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0 votes Thank Flag Link Mon Mar 4, 2013
Tell me this --- and I bet I know the answer, is it an online lender you are dealing with? I have heard this before. The online outfits suck you in and do this. Most Realtors tell buyers to avoid them. Your option is to move the loan to another lender and hopefully one more up front.
0 votes Thank Flag Link Mon Mar 4, 2013
With the new disclosure it is legal. Change brokers. I have one that can close on time with no funny games. I have not seen this in a long time. Call me directly if you want an honest broker
0 votes Thank Flag Link Mon Mar 4, 2013
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