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Predatory lending

Posted on: 07th Jul, 2007 06:29 pm
I am in Indiana. Can I take legal action against a broker for changing paperwork at closing?
What part of the closing documents changed at the time of closing by broker Cindy?

Please give few other details.
Posted on: 07th Jul, 2007 07:44 pm
Interest rate went from 8 to 11.75%, and a prepayment penalty of 3% appeared. We knew what our payment was going to be at the 8%, and I did specifically ask about a prepayment penalty. This was our fourth home purchase. We sold our other house very fast, and needed to close Dec. 27 or possibly lose the deal. Our closing for our new purchase was set for Dec. 28. We closed on the old property, then our lender did not send our new docs. to the title company, and we could not reach our lender. We had to move into our new home before closing on it, and sign a note promising to close our new loan by Jan. 17. The docs. were finally sent and we closed on Jan. 12. At closing we normally would have NOT signed the papers, but we would of been in a real pickle because we closed on the old house, gave possession, and moved into the new house. Now we are of course refinancing at the rate of 6.75% (local lender). We found the "bad lender" on the internet, and had been working with them for almost 9 months before we even put our house up for sale. I feel like we had no choice but to sign because we would of lost the new house to the next people in line for it, plus being "homeless" with 2 teens, a cat, and 3 dogs! I am still pretty mad about all of it, mostly because we were so STRESSED OUT!
Posted on: 08th Jul, 2007 11:53 am
hello cindy,

welcome back. :)

i feel very sorry for the state that you are in. one of my friends was also in this type of problem but, as the interest rates were locked-in, hence she was able to file a case against the company to ftc and was able to come out of it. in your post you have mentioned that the interest rate went from 8% to 11.75% and you knew that you payments would be at 8%. so by any chance, did you lock-in the interest rate? because, if you have not, then you would have to make payments at the new rate.

if you have locked-in the interest rate, then, even if the lender is forcing you to pay at the increased rate, it would be better for you to opt for the refinance and later on you can file a complaint with the ftc. in case you decide to go for the refinance, you may refer to ; here you can find information about how to deal with corrupt lenders.
Posted on: 09th Jul, 2007 05:00 am
Our refinance will be completed in 2 weeks. From what you have told me, I think we might go ahead and see a lawyer. I think it will cost $50 to talk to a lawyer, but I just don't want this to happen to someone else. If we were young and just starting out, this could of been financially devistating. We are great financially, just mad! :o) With our credit, we earned the right to a good interest rate! You have been very helpfull! I will post any info I get about our situation. Maybe it will help someone else. Thanks a million!
Posted on: 09th Jul, 2007 07:24 am
Yes Cindy, consult a lawyer to know if the lender can be held liable. What Jen said is correct if the rates were locked and even then lender increased it, you will have enough reason to approach FTC.

Please let us know what your lawyer says on this and also the action that is taken against lender. You are financially stable and that is why you were able to bear the rate change and involved increase in payments which can become very difficult for those with limited funds. Your action will be helpful for them.

Posted on: 09th Jul, 2007 12:27 pm
"I will post any info I get about our situation. Maybe it will help someone else."

That would be really useful for other community members who face similar problems but do not have proper information on how to take action against such lenders.

Do post in here on what happens after you consult a lawyer.

Posted on: 09th Jul, 2007 03:19 pm
It's difficult to determine from what you have posted whether or not you are a victim of a bait and switch (a common predatory lending practice) or if this is the byproduct of the changing guidelines (a very common practice these days).

Here is some info that you and others might find useful:

- Until the rate is locked, it's just an estimate.
- A good faith estimate is just that---an estimate.
- A lender is not legally obligated to honor the pricing/terms quoted in a good faith estimate. There are a lot of issues that can arise during the financing process that could change terms/conditions.
- The borrower has the final say---if the financing arrangement was changed at the closing table to your dissatisfaction, the borrower has the right to walk away.

This could have been avoided if the broker was willing to communicate these changes prior to closing---although this isn't required by law, I believe it to be a ethical obligation---one that I prescribe to in my business dealings.

Why didn't your previous bank/broker tell you---Because he didn't want to lose the deal!

Do you have any grounds for a law suit---not that I can tell from what you have posted so far.


Scott Miller
Posted on: 11th Jul, 2007 03:50 am
Well Scott, do you really think cindy should complain to the FTC. i mean does it really work out that quickly so that any action can be taken asap.
Posted on: 11th Jul, 2007 04:15 am
Yes Adonis if there is valid complaints for which documentation can be presented then authorities do take prompt action.
Posted on: 11th Jul, 2007 06:09 pm
Our mortgage servicer want us to pay $1900 extra in attorney fees for a file which was delivered to attorney for collection day before yesterday. We have the money with us that can help us bring our mortgage payments current plus pay late fees if any. But an extra 41900 would be painful. I think they want us to foreclose ..they keep sating they'll send us a bill but they haven't till now. Is it legal for them to ask us for money that too estimated attorney fees just so that we get current on the loan. I can't imagine what to do? Are there consumer rights against this. If yes, then I can send a certified mail to the lender and demand itemized bill, proof of actual charges…Does fair collection debt act or whatever it's called apply to mortgages that too those in foreclosure??
Posted on: 30th Aug, 2007 12:10 am
Jerome, you shouldn't pay what they're asking for. If at you you've thought of paying, just pay what you owe. If the judge asks you as to why you've paid the disputed bill, then what would be your answer? I think it is better if you look out for a lawyer who can help you out with some legal advice asap.
Posted on: 30th Aug, 2007 01:52 am
Hi Jerome,

There is no meaning in paying the extra amount of money to the loan servicer as you have not received any bill from them. I am not aware of any such consumer rights which can protect you against this problem. Moreover, the Fair Collection Debt Act is related to collection of debts and in mortgage, there is no such collection. In this situation, you can take the help of a lawyer as he will be able to guide you better.

I think you should make a complaint against the loan servicer either to the FTC or any state attorney general. To file a complaint to the FTC, you can use the complaint form at$.startup?Z_ORG_CODE=PU01
Posted on: 30th Aug, 2007 02:41 am
a general advice to anyone reading this forum
It is true that there are alot of estimating untill all things are final but anytime your rate changes by more then .5% or closing costs go up more then 2000 there should be a very good reason as most likely loan parameters have changed or you were lied 2 from the beginning.
If you dont want to pay unnesesarry costs or higher rate just walk away. most of the time you can get an extention from the seller and can close with another lender. People who settle cause they feel they got no choice are the ones that facilitate and reward this bait and switch behavior in brokers.
Whenever you do a transaction keep the records and copies of everything you provide to the lender as you might need it to compare or in the case you need to makea quick lender change. With a full file in your hands it should not take most lenders more then 2 weeks to close your loan if you are qualified.
Also ask your lender to provide you with the copy of your credit report, good faith estimate, ratelock agreement, appraisal. And make sure that there no huge variations at the closing table.
All major things that have not been discussed should raise a red flag. It means one of the 3 things usually loan officer is not experienced, lying to you or is hiding information from you because they afraid to lose the deal.
Posted on: 01st Sep, 2007 07:02 pm
Very good advice Eugene.

I completely agree with you. If someone is not disclosing all the details to you, then there are chances that you are not getting a fair deal.

In such situation you can contact someone else or ask for details from present LO. After reviewing all the details, if you are satisfied then you move ahead otherwise back out.
Posted on: 01st Sep, 2007 07:12 pm
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