Escrow wants to be paid additional $$ after closing

Asked by SinLA, West Hollywood, CA Fri May 21, 2010

The HUD docs were signed, the final deposit money transfered, the loan funded, the deed recorded, buyer has keys in hand. However the escrow company is claiming they forgot to list a $750 lender processing fee on the documents. There was already a $300 "pad" for overages, but they want to receive an additional $400. The fee is apparently a genuine lender fee that they forgot to include, but there were at least 4 back-and-forth's over the HUD docs because escrow kept messing up. At no point was this included, and they had ample time to go over and make sure everything was correct.

Would you advise the buyer to pay the remaining dollars to the escrow company or fight the escrow company on it?

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11
Sam Guillen, , 92108
Sat May 22, 2010
Yes, you should report it.
Web Reference:  http://www.samguillen.com
0 votes
Jeremy M. Ga…, , Santa Monica, CA
Fri May 21, 2010
As a real estate agent and former mortgage broker you definitely do not have to pay. The lender or escrow company ultimately will end up "eating" this fee. Lenders should never send out loan docs without first reviewing the final estimated HUD. Furthermore, after they are signed all loan documents in California are reviewed before funding occurs. This isn't a "wet" state meaning that the loan funds upon signature. It would surprise you just how often banks and escrow companies actually do end up paying for clerical errors and shortages. Now, if your original loan documents include this fee and you didn't end up paying it at the end, let your conscious be your guide. Incidentally there are brand new laws that protect buyers from fees being added to the original good faith estimate at closing.

Jeremy M. Garn
The Stand-Up Broker
Broker #01228644
Integrity Real Estate Partners
Santa Monica
310.881.4038
jgarn@integrityfl.com
0 votes
I recently purchased a home and at signing with Nevada title company i was told i would be getting a refund. So we sign and escrow closed, a week went by and i had not recieved any money so i called my lender and i asked about the refund. He said they added some fees and that his mortgage company was keeping the money.
Can they really do that after i signed and closed escrow?
Flag Sun May 21, 2017
Mr. Garn,
The City of Snohomish, WA furnished a FINAL FEES document in March 2011 showing fees due for our Escrow/Title Company. Now in 2013 they say they forgot to add some $19,400 in additional fees and want us to cut them a check or they will place a lien on our property and/or sue us for the fees. Title Company says their "fine print" excludes errors related to fees. WHAT LAWS protect us from a City coming back nearly four years later saying they messed up the ESCROW FINAL FEES document? By the way… the city is claiming this on 25 homeowners.
Flag Fri Nov 22, 2013
SinLA, Home Buyer, West Hollywood, CA
Fri May 21, 2010
I thought I would give everyone an update. I asked the Escrow company for the new HUD form to compare before I agreed to pay anything. In addition to adding the $750 fee, they also added in a ~$400 HOA-fee charge which was never my responsiblity to pay (seller had agreed to pay it). We went back and forth numerous times during the first rounds of discussion with them continually charging me until finally they took it out of the HUD I signed. But now they tried to add it back in (in addition to the $750 seller fee).

When I added up all the changes of old to new, including the $750 fee, they said I owed them ~$400. When I pointed out that in fact they put back in that one incorrect charge, so really they ended up owing me like $6 they THEN told me "ok, we'll now we are not going to pay your June HOA fees as was agreed to."

At this point I threatened to report them to the attorney general. They again insisted that I had to pay the $750 charge, I pointed out I had already acquiesced to that charge, but I wasn't willing to pay for a seller-agreed-to-pay HOA fee. 5 emails back and forth later (including my realtor sending them two emails from the listing agent saying the seller agreed to pay the HOA-related fee), they agreed I was in the right and didn't owe them anything else.

Now just waiting on copies of the final HUD doc so I can file for the tax refund!

I am thinking of reporting them anyway. This goes beyond being careless, I really think they will do this to other buyers as well...
0 votes
Deborah Brem…, Agent, Los Angeles, CA
Fri May 21, 2010
John;

It is our responsibility to protect our client by READING every document they are supposed to sign. There are several sets of eyes that look at loan documents BEFORE they are sent out to the client for signature. It is not unrealistic for the buyer to expect the lender and escrow company (who each create a HUD1) to be thorough and professional on their behalf.

As I said in my summary, 'You can do the generous thing, and pay it, or you can have the lender and/ or escrow absorb the cost."

I would pay it because that's who I am. I don't believe in fighting for a fee that I should have paid. But that's irrelevant. I must advise my client of what his duties are under the contract and escrow, and as I said, the HUD1 prevails.

This question by WeHo just points out, again, the need for REAL professionals in this business, who take their jobs seriously, and own up to their errors.

Deborah Bremner
REALTOR, 00588885
(D) 818.564.6591
TheBremnerGroup@gmail.com
Blogging at: http://TheBremnerGroup.com/blog
0 votes
Marcelina Mc…, Agent, Duvall, WA
Fri May 21, 2010
Hi Weho,

Wow they made a mistake and call you to fix it.

Since there was no harm/foul beyond $, as a business owner I would have eaten it just so I didn’t have to lose face in front of clients. Just my two cents.
0 votes
Deborah Brem…, Agent, Los Angeles, CA
Fri May 21, 2010
You got a good group of answers. To sum up, the charge is probably legitimate, and it was a mistake on the part of the lender and/or escrow. But the protections afforded by the HUD1 are built in to keep you from any after-the-fact charges levied against you. You can do the generous thing, and pay it, or you can have the lender and/ or escrow absorb the cost.
Debbie Bremner
0 votes
John Barry, Agent, Eagle Rock, VA
Fri May 21, 2010
Weho,

Looks like my opinion has been overruled by my colleagues... Do whatever you feel is right - I guess I am a maybe a bit too forgiving, but I just feel people are only human and mistakes happen. I agree that you should have your agent talk to the lender and see if they can work it out, and hopefully it will be waived and become a non-issue. If you feel you don't owe it & it is not a legitimate charge then by all means dispute it & don't just pay it.

Good luck with your situation!

John Barry
DRE #01856079
Coldwell Banker Residential Brokerage
Cell: 323-810-7976
Email: john.barry@coldwellbanker.com
Facebook: http://www.facebook.com/RealtorJB
Twitter: http://twitter.com/RealtorJB
0 votes
Mario Villag…, , Burbank, CA
Fri May 21, 2010
Weho,
They have to eat it. They should not put you through the inconvenience of coming up w/ the money when it wasn't on the HUD. Tell your agent to talk to the lender and escrow and have them take care of it amongst themselves. If the $750 is on top of any origination or rebate then they have enough $ to eat it. This is ridiculous when a bunch of professionals try to punish a client for a mistake that was clearly their fault.
0 votes
Monique & Joe…, Agent, Beverly Hills, CA
Fri May 21, 2010
Hello Weho,

I would fight over the fee with the lender and or escrow. If it was there goof up and they missed it they should pay for part of it if not all of it.

Best,

Monique Carrabba
The Carrabba Group
Keller Williams Hollywood Hills
mcarrabba@kw.com
(323) 899-2900
0 votes
Deborah Brem…, Agent, Los Angeles, CA
Fri May 21, 2010
The HUD1, signed by all parties, is the prevailing document. Check all loan documents and ask to be pointed to the loan fee. If the docs were prepared in error, the HUD1 prevails, and the lender and escrow company will have to dispute the $750.00. (The padding is not theirs to use wherever they want, at their whim. If the fee does not show up, you need not pay it.)
Deborah Bremner
REALTOR, 00588885
(D) 818.564.6591
TheBremnerGroup@gmail.com
Blogging at: http://TheBremnerGroup.com/blog
0 votes
John Barry, Agent, Eagle Rock, VA
Fri May 21, 2010
Hi Weho,

In my opinion, as long as this was a legitimate lender charge and the buyer does truly owe it to the lender, I would not fight the escrow company on it and recommend the buyer pay it. If it is a lender charge, I would think it must be disclosed somewhere in the loan documents that the buyer agreed to & signed, whether or not it was mistakenly left off the HUD prepared by the escrow company. If it was simply a clerical error on the escrow officer's part and the charge is legitimate, the escrow company will end up taking the loss and may be able to pursue the buyer legally for the funds (which may be hard to fight if it is disclosed in the loan documents that the buyer signed). Now if the escrow company was asking for a fee to be paid to themselves that was not previously disclosed, that is a different story, but if it was a legitimate lender fee I would not fight it as a buyer, as much as it hurts to pay.

Hope this helps - please speak to an attorney for advice if you are not sure what to do. Good luck!

John Barry
DRE #01856079
Coldwell Banker Residential Brokerage
Cell: 323-810-7976
Email: john.barry@coldwellbanker.com
Facebook: http://www.facebook.com/RealtorJB
Twitter: http://twitter.com/RealtorJB
0 votes
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