topic Re: Upfront fees not disclosed on GFE in Mortgage Loans

Upfront fees not disclosed on GFE

Anonymous — Tue, 12 Mar 2013 22:59:10 GMT

Greetings,

We are presently in underwriting with our current lender for a rate/term refinace to lower the monthly payment. The servicer is Citi and the loan is owned by Fannie so it meets the HARP guidelines.

This is our second loan request with Citi in the past two months. We cancelled our first loan (although they agreed to waive all upfront fees, which included the appraisal fee) because the first "mortgage consultant" sent us a grossly inaccurate GFE, hadn’t contacted us promptly when questioned, and ordered an appraisal without our knowledge, despite our telling them we were still looking at other lenders GFE's. Needless to say, the appraiser (and my wife) were upset when he just showed up in town wanting to do the appraisal a few days later.

The second "mortgage consultant" from Citi offered us an APR .25% less than the first right off the bat, which was an interesting development. However, although I explained that the first mortgage consultant had waived all upfront costs, he said that this waiver was basically unheard of (homeowners need to have some “skin-in-the-game”), but that he would ask his supervisor at my request. The supervisor claimed the same, and no upfront costs were waived; however, nor were they specified as to the amount to be charged, when they would be charged, what specific items would be charged for, or what method of payment would be used to pay for them (i.e., credit card).

The mortgage consultant then called us to confirm that it was time to make an appointment with the appraiser, which we promptly did. Unfortunately, we received “additional conditions” from the underwriters at Citi the same day (no one told us this was coming) - one of which included that our house would appraise out at least $160,000 – which is almost $20,000 higher than the estimate I gave them regarding comparable sales in our area. The appraiser can’t tell me outright that it will appraise out to meet Citi’s requirement (which seems excessive given that our new loan would be only for $95, 654) but I sensed that he was concerned as well.

The appraisal was done a few days ago, and now they want to charge the upfront fees which the underwriters say “were disclosed to you on your Good Faith Estimate (GFE) within your Welcome Package. The upfront fees come to $525.50 and the breakdown for that is as followed: $100.00 application, appraisal $420.00, $3.25 flood certification, and $2.25 credit report.”

After my questioning this breakdown with the actual GFE numbers ($420.00 - Appraisal, $77.00 - Tax Service, $3.25 - Flood Certification, $2.25 - Credit Report = $502.50 Total), the underwriter responded that “The $100 application fee is taken out of the origination fee found in the first section, and I don’t collect the Tax Service fee.”

After I questioned the specifics again, the mortgage consultant chimes in and says “The upfront expense that you list is almost correct. You would take out the Tax service fee of $77.00 and add in the $100.00 application fee. The application fee will show as a line item at closing on the HUD-1 Settlement statement. The application fee is actually part of Citibank’s origination charge of $815.00. We used to breakdown all fee’s into a single line item so that the client could see each individual charge but the government made all lenders have the same Good Faith Estimate and they wanted a more streamline form because they felt that client were getting overwhelmed when viewing the old format.”

Well, the GFE doesn’t have anything that says $100 about an application fee, and I’ve never heard of it mentioned until now. Also, the fees that are listed on the GFE in boxes “A” and “B” include adjusted origination charges, appraisal, tax service, flood cert., and credit report and a few others, all of which are tallied up and included in the final number “Total Estimated Settlement Charges.”

In other words, it’s seems to us that we ARE already paying for the application fee, appraisal, and the rest of the fees in the settlement charges, and due to this, we do not have to pay any “application” or any other fees because the GFE says what it says, and because the interest rate has been locked.

My apologies for the long-winded post, but I wanted to have all of the information available to allow for a sensible answer.

Thanks in advance,

Adrian

Re: Upfront fees not disclosed on GFE

Anonymous — Wed, 13 Mar 2013 02:15:09 GMT

Anyone?

I would like some advice as to whether these previously ill-disclosed "upfront" fees are now actually being funded in the loan (which is fine with us and what the first mortgage consultant did), thus making the payment of upfront fees now moot.

Secondly, since the origination fees, appraisal fees, etc... are all included in the "Total Estimated Settlement Charges," and the rate has been locked for 90 days, doesn't it mean the items on the GFE in box ‘A’ - “Adjusted Origination Charges” (which is the origination fee of $815, minus a $500 credit for a total of $315) cannot increase at settlement?

The same question for box ‘B’ on the GFE, which has the appraisal fee of $420 – this cannot increase more than 10% at settlement?

Thanks again.

Re: Upfront fees not disclosed on GFE

IOBA — Wed, 13 Mar 2013 15:25:28 GMT

My experience when I closed last year.

The GFE had listed all of the monies I would need for closing. I had already paid 1k in good faith ernest money. This was not reflected on the GFE. I just clarified with the title company and the mortgage company that the money I had already paid would be "Credited" towards what I had to bring to closing. They assured me it would be.

The lender had said no upfront fees. The cost for the appraisal and credit fee, etc was collected at closing. It was all disclosed before hand by the lender, on their website. The title company came back with the actual appraisal cost (which was higher than anticipated).

I have only dealt with CITI on a short sale and I ended up walking away from that deal.

What specifically are you concerned about?

The GFE being accurate? It may never be 100% accurate becuase there are a few variables that are unknown until close to closing (like taxes, actuall appraisal cost, etc).

Upfront fees? If CITI has already told you in writing and had you sign, you should not have to worry about paying anything prior to closing. Some lenders will ask for a good faith (skin in the game) charge to go on your credit card that covers the cost of the appraisal, credit report, etc. But again, they have to tell you up front. AND you have to agree up front.

Closing costs - will be determined by the attny or title company the day before closing. They should tell you over the phone if you need to bring any money to closing.

I hope this helps you. If not, please ask more questions. I will try to check this site/this forum a few times a day.

Re: Upfront fees not disclosed on GFE

Anonymous — Wed, 13 Mar 2013 18:32:29 GMT

Thank you IOBA,

There was no written agreement to pay these upfront costs; in fact the first mortgage consultant at Citi waived them easily. The second consultant provided a GFE (which we locked the rate on for 90 days) that included all of these costs in the loan (we would be paying them in the final settlement as a part of the loan) but then later requested that we give them a credit card number to pay the as yet unspecified fees, after which the GFE would be changed to reflect these payments and the loan funding process could continue.

Below is my reply:

"Mr. xxxxx,

We have been told that “The upfront fees were disclosed to you on your Good Faith Estimate (GFE) within your Welcome Package.”

This is not correct. If this were the case (nothing says “upfront fees” or “$100 application fee” on the GFE) there would not be a problem.

As far as the explanation that “Due to the situation that you had with the other employee I extended you the courtesy and did not make you supply a debit or credit card at the time of application,“ this was not mentioned to me at all, nor do I have anything in writing showing a specific break-down of what the upfront fees would be, hence my questioning it.

Looking at it from my, the customers point of view: I have been told by one mortgage consultant at Citi that the upfront fees can be waived (and they were, although the GFE was inaccurate on other items) and as a result that first loan was cancelled.

I then receive a GFE with the items in question being shown as being funded and ultimately paid for by my wife and I in the loan that you are offering, which is completely fine with us, and actually makes sense.

The second loan also included additional requirements that in order for the loan to be funded, the appraisal is to be valued at a minimum of $160,000, which is $15,000 more that the layman’s home valuation that I gave to both the first mortgage consultant and yourself.

The first loan showed this lesser amount, but the second did not. When I asked you why it was changed I was told that it was only an estimate and therefore didn’t really matter. However, we now have a required appraisal amount of $160,000 (received the same day as the appraisal) that has been arbitrarily changed and is likely to affect the funding of the loan due to comps in the area not reflecting home values at this level at this time.

In short, the process from the beginning has not been complicated by us, and all of the funds required are being paid for in the loan described in the GFE we last received.

Since we are paying for those charges previously discussed in the GFE that you have provided to us, there is no issue now, and we will be providing the remaining additional documentation as soon as possible to facilitate the funding of the loan.

Regards,"

Thanks again for any and all input.

Re: Upfront fees not disclosed on GFE

IOBA — Wed, 13 Mar 2013 20:57:54 GMT

I would keep it simple. Something to the effect of...

To Whom It May Concern:

* I am confused the changing terms and miscommunication regarding the refinance.

* One of the changing terms was that the house had to appraise for $160k. Did it? If the house did not appraise for that amount, or higher, then this refi is stopped right now.

* If the house appraisal was high enough to continue the refinance, then we need to be on the same page - there are no upfront fees and no need for a credit or debit card number.

* I request an updated GFE emailed to me by close of tomorrow.

Thank you,

****

To me, it states the problem, and it states the next step.

Re: Upfront fees not disclosed on GFE

Anonymous — Wed, 13 Mar 2013 22:42:59 GMT

Okay..not going to make this long...

The GFE has been changed yes.

The GFE has a tolerance on certain charges of 10%. The charges can not exceed 10% of the value they stated. If told you $400 can not raise more then $440.

While all other charges have no tolerance. No tolerance is pretty much just that. If they stated $400, then the price would be $400 or less to benefit the consumer. Could never be higher.

As to what happened in your original GFE and loan being cancelled I am not sure what actually happened. If the first Loan Originator made errors, it could have cost CITI penalties, and by cancelling the loan they are technically off the hook.

Anyway thats not the issue now...

There are many Lenders that charge an application fee, but this really is a junk fee in my opinion. I have never charged one, and probably never will.

Re: Upfront fees not disclosed on GFE

Anonymous — Sat, 16 Mar 2013 21:28:45 GMT

Thank you for your replies. In researching this, I ran across an "Upfront Mortgage Fees Disclosure and Agreement" form that should be standard issue in these circumstances:

UPFRONT MORTGAGE FEES

DISCLOSURE AND AGREEMENT

The XXXXX Mortgage Lending application process requires certain fees to be paid upfront to process your loan.

We require that you pay a non-refundable credit report fee at the time you apply for your loan. Additional fees may be requested to process your loan or lock your interest rate after you receive your Good Faith Estimate of Settlement Costs and the Truth-in-Lending Disclosure Statement (Early Disclosures) and only if you indicate your intention proceed with this transaction.

To ensure timely processing of your loan, you may use the attached XXXXXX Payment Options form to authorize payment of your credit report fee, appraisal fee deposit and any other fees required to process your loan request or lock your interest rate. XXXXXX will not charge any fee other than your credit report until you acknowledge you have received your Early Disclosures and indicate your intention to proceed with this transaction by providing a signed

Acknowledgement of Receipt of Early Disclosures.

FEE DESCRIPTION

Appraisal fee deposit

The deposit for the appraisal fee is not refundable except if the loan is denied and/or the appraisal was not performed.

Should the actual appraisal fee exceed the deposit estimate, you will be billed for the excess amount. You may pay the excess at or prior to closing.

If the appraisal was completed and you paid the full fee, you are entitled to a copy of the appraisal.

Extended Rate Lock

You are requesting an extended rate lock beyond our standard, free lock period of 45 days.

You must sign the rate lock form to accompany this fee form.

Other: _______________________________________________________________________

ACKNOWLEDGMENT OF RECEIPT OF EARLY DISCLOSURES

By signing below, I acknowledge receipt of the Good Faith Estimate of Settlement Costs and Truth in Lending Disclosure Statement for this transaction. I also acknowledge receipt of a copy of this fee disclosure and fee agreement.

My signature on this document also indicates my intention to proceed with this loan transaction and authorizes

XXXXX Federal Credit Union to collect payment for the fees indicated above.

Applicant_________________________________ Date ___________

Signature

Applicant_________________________________ Date ___________

Signature

XXXXXX CREDIT CARD AUTHORIZATION FORM

---------------------------------------------------------------------------------------------------------

Credit Card Type: □Visa □MasterCard Mail receipt to applicant Yes □No □

Name on the card: __________________________

Card Number: ______ - ______ - ______ - _______

Expiration Date: ______ / _______

3 Digit Security Code __________

Amount to be billed to credit card for a credit report: $_____________

Amount to be billed to credit card for other fees as indicated: $____________ (To be billed after I acknowledge receipt of my upfront disclosures and indicate my intention to proceed with the loan transaction.)

By my authorized signature above, I authorize XXXXXX Federal Credit Union to charge my credit card for the fees listed above. This Authorization is given with respect to a residential mortgage application for a purchase or refinance. This fee shall be applied to the costs incurred by XXXXX in procuring a residential real estate appraisal and residential mortgage credit report. These documents are necessary to the final disposition of said application, shall be used solely in conjunction herewith, and shall remain the sole property of XXXXX Federal Credit Union, its successors and/or its assigns. IF BORROWER(S) CANCEL SAID APPLICATION, OR XXXXX IS UNABLE TO PROVIDE A LOAN APPROVAL, THE FULL FEE SHALL BE RETAINED BY XXXXXX AND IS NON-REFUNDABLE.

This amount will ONLY be charged if either requested by the borrower, and/or not paid otherwise with the closing of this loan.

Authorized Signature: _________________________________ Date: _____________

Had this quite simple business practice of disclosing the upfront fees, payment method and costs "upfront" been followed, the aggravation level would certainly be much less.

Re: Upfront fees not disclosed on GFE

Anonymous — Sun, 24 Mar 2013 20:35:27 GMT

Well, they ended the loan process. A synopsys:

In early February, 2013, our current mortgage loan servicer Citimortgage/Citibank, at our request, provided us with a HARP loan offer with GFE and TIL documents that had no up-front fees. All fees were listed as being paid for by us in closing, including the application and appraisal fee. However, errors in the GFE not related to these fees were noted by us, thus necessitating that new GFE and TIL documents be provided.

Upon receipt of the new GFE and TIL documents for the HARP loan, which included a 90 rate lock, it was noted that these documents showed, again, that all fees, including the appraisal and application fees were to be paid for by us in closing, and that the previous errors had been corrected. After comparing these GFE and TIL documents to other lenders offers, we chose to continue with Citimortgage/Citibank’s HARP loan application based on the terms and conditions they contained.

After the completion of the appraisal, Citimortgage/Citibank began asking us to provide them with our credit card information to pay for the application fee and appraisal fee of $100 and $425 respectively, for a total of $525. We demurred, repeatedly, noting that in the GFE and TIL documents which we used to comparison shop for this HARP loan, these fees were already being paid for by us at the closing of the loan.

We were notified on March 22, 2013 that Citimortgage/Citibank was withdrawing the HARP loan application because we would not provide our credit card information to pay the appraisal and application fees up-front.

This is despite having been offered two HARP loans that had no up-front fees; having a HARP loan with a rate lock of 90 days with over 50 days remaining on that lock; having GFE and TIL documents that were accurate and showed all fees in question as being paid for by us in closing; having requested new GFE and TIL documents if circumstances have changed; and having submitted in a timely manner the requested documentation in the application and subsequent additional conditions rider.

We can't wait for the rule change January, 2014 requiring lenders to provide free appraisals - let's hope they also require that when and what (if any) upfront fees are to be paid shall be clearly specified in writing before a GFE/TIL/Loan rate lock is provided.

Comments? Suggestions?

Re: Upfront fees not disclosed on GFE

Anonymous — Tue, 26 Mar 2013 01:06:35 GMT

Now Citibank says that the HARP loan denial was a loan "withdrawal" and therefore they do not have to provide us with the specific reason(s) why the loan was denied.

Any thoughts?

Re: Upfront fees not disclosed on GFE

Anonymous — Thu, 28 Mar 2013 22:13:12 GMT

Re:

UPFRONT MORTGAGE FEES

DISCLOSURE AND AGREEMENT

Just realized that this document allows that "the deposit for the appraisal fee is not refundable except if the loan is denied and/or the appraisal was not performed."

Makes sense - but then later:

"IF BORROWER(S) CANCEL SAID APPLICATION, OR XXXXX IS UNABLE TO PROVIDE A LOAN APPROVAL, THE FULL FEE SHALL BE RETAINED BY XXXXXX AND IS NON-REFUNDABLE."

Isn't this a contradiction, in that "Unable to provide a loan approval" is the same as being denied?

It seems to me it can't be both.

Re: Upfront fees not disclosed on GFE

Anonymous — Sun, 31 Mar 2013 01:08:45 GMT

The appraisal company will get paid for their services no matter if your loan is approved or denied.

The Lender does not appraise the home. The Lender does not own the Appraisal Company (if they did they would have to disclose it to you in writing).

Being denied because of your credit, or income, or employment, something of that nature will give you the refund.

Being denied funds because appraisal came in lower then selling price, and seller will not lower price, will not give you a refund.

Re: Upfront fees not disclosed on GFE

Anonymous — Tue, 02 Apr 2013 02:17:14 GMT

Thanks JM-AM,

So, two concerns: "Unable to provide a loan approval" and "withdrawing the loan application because we would not provide our credit card information to pay the appraisal and application fees up-front" are both loan denials, yes?

Secondly, if so, doesn't RESPA and other Fed and State consumer laws require that the reasons for "loan withdrawal/denials" be provided?

Again, the "loan withdrawal/denial" reason can't be for non-payment of upfront costs in our case, because Citbank said that these costs were being waived, and because the first and all subsequent GFE's for this particular loan show these fees as being paid for at closing.

What I still see is that the XXXX company says that they can deny your loan for whatever reason(s) (denied due to low apprasial, for example) and still keep the all of money, even the appraisal fee:

"If we are UNABLE TO PROVIDE A LOAN APPROVAL, THE FULL FEE SHALL BE RETAINED BY XXXXXX AND IS NON-REFUNDABLE."

Thanks.