Help!! Intrest rate change 5 days before closing

[olegkap]

What is the name of your state?
North Caroline.

Hi,

We applied for a mortage and we was told that we going to get certain interst rate on second loan that we getting, it was almost a month ago, but few days ago a loan office sent us an e-mail and said that sorry, but intrest rate for the second load changed, increase of 2%.
Loan officer tells us either accept this rate or cancel the mortage at all and she doesnt care.
We already paid down payment for the house and apraisel fee.
Our feeling that either she forgot to lock that loan for that intrest rate or wants to make more money.

What should or can we do in this situation?

Thanks in advance for any advice.

Oleg

[seniorjudge]

Originally Posted by olegkap

What is the name of your state?
North Caroline.

Hi,

We applied for a mortage and we was told that we going to get certain interst rate on second loan that we getting, it was almost a month ago, but few days ago a loan office sent us an e-mail and said that sorry, but intrest rate for the second load changed, increase of 2%.
Loan officer tells us either accept this rate or cancel the mortage at all and she doesnt care.
We already paid down payment for the house and apraisel fee.
Our feeling that either she forgot to lock that loan for that intrest rate or wants to make more money.

What should or can we do in this situation?

Thanks in advance for any advice.

Oleg

What rate did your written agreement have?

[olegkap]

It has 9% and now she said its going up to 11%.
We have good Faith estimate showing that and another document, which it sas its not a contract on top of it.

[seniorjudge]

Originally Posted by olegkap

It has 9% and now she said its going up to 11%.
We have good Faith estimate showing that and another document, which it sas its not a contract on top of it.

So you are saying that you do not have a contract-guaranteed rate?

[olegkap]

What we have is Truth-In-Lending Disclosure statement (which says on the top its not obligaed) and Good Faith Estimate with all number already in it.
All those documents are signed by us.
Basiclly we have all those documents we need to have when we apply for the loan and agree on the rate.
Closing date should be next week Jan 12.

[ice5146]

What is the sales price of this property and how much have you already paid as a down payment? Do you have a poor credit rating? Your rate depends on these things. If you have poor credit, the 9% initially quoted and signed for by you seems extremely low. Are you taking out a combo loan to avoid Private Mortgage Insurance?

[olegkap]

Sales price is $169900.
We paid $1000 already.
The credi score is a little under 700.
Its a second mortage cause you right, we doig it to avoid mortage insurance.
The main moratge has 6.25%.

[ice5146]

Have you agreed to a Line of Credit 2nd, fixed rate second, or a 30 yr Balloon due in 15 years? By the rate you were given on the 80% 1st, I see you are obtaining financing from a Fannie Mae Lender as opposed to a Subprime Lender. With that being said, the combo 2nd's on a Fannie loan are not anywhere near 11%. Even if your Broker is attempting to get 3% yield spread (kickback to Broker for charging you a higher rate than the wholesale rate provided to Broker from Lender), it wouldn't be that high.

I'd look on your GFE and see what % of YSP they disclosed. When they redisclose with the higher rate of 11%, look on the GFE and see what that amount is. It just sounds like the Broker is attempting to get some YSP off you by charging you a rate like that. I just can't see how they're justifying 11% when it shouldn't be more than mid 9's max for your score and Loan-To-Value.

[olegkap]

Thanks Ice,
Its secon 15 Years Ballon,
So I guess my question, can she do that?
Or what can I say or do so she will change it back?
Is it legal?


Thanks,
Oleg

[ice5146]

Legally she must re-disclose the following docs:

Uniform Residential Loan Application showing higher rate

Good Faith Estimate showing Yield Spread (Line 824 & 825) and higher rate
If you are dealing w/ a Broker the YSP must be disclosed, if you are going directly through the Lender, it does not.

Finance Agreement showing higher rate

Yes, they can raise the rate but you have to sign the re-disclosures first.

If you were smart and made a copy of the Disclosures you signed originally, look at the Finance Agreement and see if they placed a check mark next to the statement that they locked your rate with the Lender on a particular date and it expires a certain date. If they didn't, it's probably checked that your rate is floating.

Your options at this point are:

1) Tell your Broker that you do not wish to do business if they are going to require an 11% rate on the 2nd.

2) Tell your Broker that you've obtained Financing elsewhere for a lower rate and you with to withdraw your loan application.

3) Take the higher rate and pay about 40.00 more per month than what was originally disclosed at 9%.

Being a Broker, I can tell you that with your score, there's LOTS of Lenders that would finance you for a lower rate on the 1st and 2nd. If you are closing in a few days, you're taking a gamble finding the one that will promise to bend over backwards and ensure a Title Search and Tax Cert is done in about 48 hours. It can be done but the question is would I bet my left arm it's going to be done for you....unfortunately the answer is not a chance.

Get the re-disclosed GFE in hand. If they disclose 2 or 3% YSP (commission to the Loan Officer), call them and tell them you don't appreciate the 11th hour rate hike and ask them to lower the rate back to what was disclosed originally. If they refuse, demand to speak to the Branch Manager and tell them you intend on calling their Corp office to complain of the bait and switch technique they pulled on you. As stated above, worse case scenario is you pay about 40.00 more on the 2nd per month and never do business with that Broker again. Kill them with kindness, tell them you intend on referring them to your friends and family and chances are you'll get the rate you deserve.

[olegkap]

Hi ice,
Just wanted to tell you thank you,
everything worked out fine,
they return an intreset back to 9%
after we talked to VP and she had to take care of it personally.
What happend, she said, they forgot to put one parameter when they filed, and of course forgot to lock it.

Thanks again,
Oleg

[ice5146]

You're very welcome. I'm glad it worked out for you!