I want to sue my mortgage broker, is there a lawyer in the house?

Question

My credit scores before I purchased my home were 620,650 and 570. At this rate I believe I should've had a better rate than what I got. I'm 100 percent sure that my broker got over on me because his fee is not stated on my HUD form.

Answer 1

Your middle score of 620 would not get you the best of the better rates that are available; you would need a 730 score to get the best available rates, assuming that your income to debt and employment and savings patterns were all in line to warrant the best rate. The HUD settlement statement form shows all the income receives by a broker and if not, and you can prove that their were monies received by the broker that weren't disclosed, you have a very good case. Be sure and look the form over completely and check it against your good faith estimate and see if there are any big discrepacies, because, if there were you should have received another disclosure prior to closing. Look on line 801 which shows the broker's and lender's origiantion fee. Line 802 shows you any discounts that are charged and paid to the broker or lender; if paid to the broker then that is part of the income. If paid to the lender it is their charge and it could be income or a cost to bring down the interest rate. Lines 810 through 815 are also lines where fees and charges by the broker can be found. Sometimes a broker will just charge everything under an origination fee, or broker fee, which is what we do at my company. It is real simple we charge all income as a mortgage broker's fee. Any other charges paid to us would be for actual expenditures, like an appraisal, courrier fee, credit report or flood cerification. There could be other ligetiamate charges that aren't income. The only other line where the broker could receive income and somethimes the attorneys try and skip over it as incentdental are the same lines already mentioned and lines 1303 through 1308. On these lines the figures will be to the left of Paid From Borrowers Funds at Settlement, as this is actually a yield spread premium paid to the broker from the lender for selling them a loan at a higher interest rate. It usually is 1 to 2.5 and in some cases it could be 3 percent of the loan amount. This would make your case as if not charged by the broker a lower interest rate could have been provided. However, if disclosed prior on the good faith estimate, and the broker has a singed copy, you wouldn't have a case. The disclosure, GFE must be provided within three days of making a loan application and it must be within $250.00 of the actual costs, or redisclosure has to be made. When refinancing, you don't necessarily have to have a pre disclosure or GFE, as you have three business days to review, discuss with anyone you like, before the transaction is finalized. The key to your situation is check your GFE or estimates, and look the HUD settlement form over for any discrepacies above $250.00. Also, if a lender, and not a broker, they YSP will not have to appear on the HUD, only when it is paid to a broker by a lender. Your question said Broker, so I assume it would have to be disclosed. Good Luck.

Answer 2

Thank You Doogie Howser. The math does not compute. If you bought a home with 2400 I/O payments that is some house. Interest Only (I/O) is calculated by multiplying your loan amount times the interest rate and dividing by 12. If you bought a $800,000 say at 6% I/O your monthly payment would be $4000. Buy you said teaser rate so I think COFI or Option ARM. that rate would be 1.25 or 1.5% and that would compute to about $1000/mo. So for our example lets say you had a 3% teaser rate that lasted for 3 months. You would have been paying $2000/mo. Get your paperwork out and read it. If you didn't understand the loan before you closed, you should have asked questions. If your broker could not answer the questions, you should have gone to a different broker. Not all Brokers are like this and there are many good ones out there. Would you have done this with a car purchase? I think not! This was the biggest purchase you will ever make and what you are saying is that you didn't pay any attention to it. Anyone can do the math - You should know that a $650,000 mortgage will not have a monthly payment of $2400 and pay off ever. As for Stated Income Loans - there is another subject. If you are self employed and like most self employed you write off as much as you can and then some and you pay less taxes than those of us that have a W-2. But then you want to be able to qualify for a huge home with large payments but your taxes say you only make $2000/mo. Which do you want, a better loan or to pay less taxes, it doesn't seem like you can have both now does it. Stated Income loans were made for these types of situations, but lenders allowed them on wage earners and not just the self employed and since they also carry more risk they have higher rates and terms. Some states have limited or outlawed Stated Income loans altogethers. Borrowers have as much responsibility in this as Brokers do. On the other hand, Option Arms are very good for some people that have huge fluctuations in their income and can handle having varying payments on their home. They can choose from the minimum payment, an I/O payment a bi-weekly payment or a fully indexed and amortizing payment. They work for good money managers.

Answer 3

Your score would not have given you the best rate.

If you were seeking a no cost loan, you would not have been given the best rate.

If you needed 100% Financing, you would not have been given the best rate.

Did you compare the GFE to atleast one other broker offer?

Did you go onto a website like
http://www.creditboards.com to see if the rate with your circumstances and scores was high to begin with.

You will not find a lawyer to take a case stating that you should have gotten a better rate based on your scores.
You hold responsibility to your own due diligence. You're also responsible for finding the best person for the job....you are not forced to use a certain person.....you can choose whom ever you wish to work with.

What were his qualifications? His experience, his credit history?

You didnt state what rate you got and when..........so we can't really agree that you got screwed on your rate.

Did you ask him what your rate would be if you paid his fees upfront?

In our experience working with a broker saves borrowers $.
But Borrowers still have to take responsibility and either educate themselves (and dont fall for inexplicable lines) or bomard their broker with questions until they do understand.

If he's not forth coming and transparent, or doesn't educate his clients via his website or blog... you should have moved onto to someone else.........

I doubt you would have a case.

OBA™

Answer 4

ok...still..your credit scores are not too great. Your mortgage broker probably put you in one of those adjustable mortgage programs or even MTA program. You were not qualified to get regural interest rate and at that time you were qualified for BCD(subprime lender) rate. And also if your broker's fees were not stated on the Hud-1 that means he didn't get any $$ from your transaction or if he was the direct lender only the bank(lender) fees applied. Once again, your credit only qualify for subprime lender rate and program and once you signe the loan document, you are stick with it until you refinance. Think..did you ask for lowest payment? if so you probably got MTA / Pay Opt program.

Answer 5

Any loan origination fee(s) charged by the mortgage broker should appear on Line 801 of the HUD statement. If you paid any 'points' to originate the loan, that should appear on Line 802.

However, if you signed for any specific rate of interest, you agreed contractually to pay said rate. That rate is not disclosed on the HUD, and you will have to refer to your mortgage documents for clarification.

Chances of you successfully suing your mortgage broker are slim, since you would have to prove outright fraud to suceed. Since you signed all the appropriate paperwork, you acknowledged that you knew the details of this transaction.

Black and white (paper) normally triumphs over 'he said-she said."

Good luck.

Answer 6

his fee? if the broker didnt disclose the YSP then he can be liable, but most brokers arent brokers and are 'direct lenders'.
If he's a direct lender then he doesnt have to disclose YSP.

you should compare your rate to freddiemac.com.

also remember that if you put zero down then your rate is going to be super high.

Answer 7

he could have also had his fee built into the rate..the bottom line is you signed the documents..if you had concerns about it..after the fact is not the time to deal with it...and there is alot that goes into a persons rate..their DTI ratro..how much they are financing, the amount of the loan..the smaller the loan the higher the rate....you should have shopped around more before you agreed to go with him......