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Can the bank openly lie?

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C

CJMBluehouse

Guest
Ok, I have several questions that I am going to try to combine in one message. First: We live in Pennsylvania and last June(2001)we applied for a mortgage. We told the loan officer we were putting down 26% as a downpayment to avoid PMI and have the option of paying property taxes ourselves. Since one of us was in college-we were living on one income. The loan officer said to go with an FHA loan because they had the lowest interest rate. She never gave us a comparison to a conventional loan. Throughout the whole process-she continually told us any PMI shown in the estimates would "come off at closing" Day of closing: we still do not know what closing costs are going to be. One hour prior-phone rings and we are informed that we have to pay PMI plus a premium and set up escrow accounts. Because the bank dragged out the whole loan process nearly 6 months(we closed in November)the seller was threatening legal recourse because he thought we were purposely delaying the process. I have contacted FHA, the FTC and the Comptroller of the Currency. Nobody has responded. What are the Statute of Limitations for something like this? Can a bank lie to your face and verbally say "this will come off at closing" and then say "oh, sorry, you have to have PMI" ?? I called an attorney-they said they did not want to take this on, they said "three days after closing you will have forgotten about the whole thing" On top of all this-in some of the remodeling we have begun-we found plumbing not done correctly on a bathroom that was added back in the 60's or early 70's. I assume there is nothing we can do about this. Also, one month after closing-we had 600.00 in furnace repair bills. And when I received our first water bill-the water company is claiming we used 81,000 gallons of water in one week-and in this particular week-we had not moved in-the seller was still getting his mothers things out of the house but he had already removed her name from the utilties. The water company came and checked the meter and did not find any problems. I called the PUC and to date they are still investigating. Is it possible the previous owners did not pay the water bills in full and the company is trying to transfer that balance to us? On average-we only use 7000 gallons of water per month. Do we have any recourse in any of this? Or have we been royally given the shaft by everyone involved?
 


HomeGuru

Senior Member
CJMBluehouse said:
Ok, I have several questions that I am going to try to combine in one message. First: We live in Pennsylvania and last June(2001)we applied for a mortgage. We told the loan officer we were putting down 26% as a downpayment to avoid PMI and have the option of paying property taxes ourselves. Since one of us was in college-we were living on one income. The loan officer said to go with an FHA loan because they had the lowest interest rate. She never gave us a comparison to a conventional loan.
**A: then at that time you should have said, "ok, sounds good but can you do a matrix for us showing this FHA loan in comparison to a conventional loan, adjustable loan comparing important items such as term of the loan, interest rate, APR, points, pre-payment penalty clauses, PMI etc."
and refuse to proceed further until YOU got the requisite information and had time to make YOUR own decision as to what type of financing would be the best for you.
***********


Throughout the whole process-she continually told us any PMI shown in the estimates would "come off at closing" Day of closing: we still do not know what closing costs are going to be.
**AL: why not? Did you not get a truth-in-lending and good faith estimate?
**********

One hour prior-phone rings and we are informed that we have to pay PMI plus a premium and set up escrow accounts. Because the bank dragged out the whole loan process nearly 6 months(we closed in November)the seller was threatening legal recourse because he thought we were purposely delaying the process.
**A: the delay was also due to your letting things get dragged on. You had the option of cancelling and going to another mortgage broker or lender. If you went direclty to the bank, that is another reason why banks are loosing mortgage originations to mortgage brokers.
**********



I have contacted FHA, the FTC and the Comptroller of the Currency. Nobody has responded. What are the Statute of Limitations for something like this? Can a bank lie to your face and verbally say "this will come off at closing" and then say "oh, sorry, you have to have PMI" ??
**A: yes.
*************


I called an attorney-they said they did not want to take this on, they said "three days after closing you will have forgotten about the whole thing" On top of all this-in some of the remodeling we have begun-we found plumbing not done correctly on a bathroom that was added back in the 60's or early 70's. I assume there is nothing we can do about this.
**A: was this a purchase or a refi? Did you get a home inspection and was there a seller disclosure statement?
Did you check to see if there were building permits and the work done by a licensed plumber?
*********



Also, one month after closing-we had 600.00 in furnace repair bills. And when I received our first water bill-the water company is claiming we used 81,000 gallons of water in one week-and in this particular week-we had not moved in-the seller was still getting his mothers things out of the house but he had already removed her name from the utilties. The water company came and checked the meter and did not find any problems. I called the PUC and to date they are still investigating. Is it possible the previous owners did not pay the water bills in full and the company is trying to transfer that balance to us? On average-we only use 7000 gallons of water per month. Do we have any recourse in any of this?
**A: did you hire your own plumber to do a leak test?
*********


Or have we been royally given the shaft by everyone involved?
**A: when you bought the property, did you have a Realtor and/or a real estate attorney represent you?
If not, you contributed to giving yourself the royal shaft.
 
C

CJMBluehouse

Guest
No, I did not find out until later that it is FHA policy that a lender is required, by law, to provide a borrower with a loan comparison. It is at www.hudclips.org, called the 'informed consumer choice disclosure.' As I said, I have contacted FHA, with no response from them. Attorney said he did not want to take it on.
Yes, she gave us the truth in lending and good faith estimate-and when I saw the PMI added, I questioned her about it. She again said "don't worry, that will come off at closing because of the size of your downpayment." I questioned her continually throughout the whole process-and she kept saying "it will come off at closing."
We did bring up the matter of going through a different bank-and they would say "oh, don't worry, this is the last thing we need and we will be done." We did see an attorney during the whole process and he told us that it would be hard to prove they were treating us differently than anyone else. Shame on us-they dangled the carrot in front of us and we went for it.
We did get a home inspection. And also a seller disclosure-anything pertaining to the plumbing, furnace, he checked off that he was not aware of any problems. The bathroom was done 30+ years ago-there was no documentation left.
The water company did come out and test the meter. There have been no problems since that one bill, which leads me to believe that either the company made an error in the billing, or the seller did not pay his water bill in full. The PUC is, apparently, still investigating-but I was wondering if there is any way that a seller can legally transfer unpaid utilities to the buyer. 81,000 gallons of water is one year worth of water. A leak would not generate that much water coming from a residence in one week. Water would have to be pouring out of the house and into the street or ground in order to constitute 81,000 gallons. We may have been uneducated in the mortgage process and apparently have allowed others to take horrible advantage of us, but common sense tells me that 81,000 gallons in one week is alot more than a "leak" and would be quite noticeable. As I said, all bills after that have been normal(7000 gallons per month).
The realtor was a dual agency-but we knew he was, for the most part, working for the seller. Silly me, I thought there were laws to prevent banks from predatory lending practices. I also thought there were laws pertaining to Utility regulation. Or, perhaps these laws do exist and nobody wants to enforce them. I came here to find out if anyone else saw something legally wrong with the way things were done. But I guess it is all "business as usual." So, Home Guru, you are probably right in the fact that we helped ourselves along at being screwed over. And although it does me no good now-the only consolation is that we were honest and our intentions were good-because eventually everyone has to answer for their actions.
 

HomeGuru

Senior Member
CJMBluehouse said:
No, I did not find out until later that it is FHA policy that a lender is required, by law, to provide a borrower with a loan comparison. It is at www.hudclips.org, called the 'informed consumer choice disclosure.' As I said, I have contacted FHA, with no response from them. Attorney said he did not want to take it on.
Yes, she gave us the truth in lending and good faith estimate-and when I saw the PMI added, I questioned her about it. She again said "don't worry, that will come off at closing because of the size of your downpayment." I questioned her continually throughout the whole process-and she kept saying "it will come off at closing."
We did bring up the matter of going through a different bank-and they would say "oh, don't worry, this is the last thing we need and we will be done." We did see an attorney during the whole process and he told us that it would be hard to prove they were treating us differently than anyone else. Shame on us-they dangled the carrot in front of us and we went for it.
We did get a home inspection. And also a seller disclosure-anything pertaining to the plumbing, furnace, he checked off that he was not aware of any problems. The bathroom was done 30+ years ago-there was no documentation left.
**A: on the contrary, the documentation that you must rely on is the home inspection and the Seller dislosure statemtment.
If the Seller knew of problems and did not disclose them, then the Seller is guilty.
**************



The water company did come out and test the meter. There have been no problems since that one bill, which leads me to believe that either the company made an error in the billing, or the seller did not pay his water bill in full. The PUC is, apparently, still investigating-but I was wondering if there is any way that a seller can legally transfer unpaid utilities to the buyer. 81,000 gallons of water is one year worth of water. A leak would not generate that much water coming from a residence in one week. Water would have to be pouring out of the house and into the street or ground in order to constitute 81,000 gallons.
**A: the utlity company cannot charge you for water usage during the time you were not the legal owner.
**************


We may have been uneducated in the mortgage process and apparently have allowed others to take horrible advantage of us, but common sense tells me that 81,000 gallons in one week is alot more than a "leak" and would be quite noticeable. As I said, all bills after that have been normal(7000 gallons per month).
**A: you are rambling here.
***********


The realtor was a dual agency-but we knew he was, for the most part, working for the seller.
**A: did this Realtor disclose the dual agency AND did you sign a dual agency disclosure form? If you did, you have no right to complain. If you did not, the Realtor has violated code of wthics and State licensing laws.
*************
*************



Silly me, I thought there were laws to prevent banks from predatory lending practices.
**A: there are.
***********


I also thought there were laws pertaining to Utility regulation. Or, perhaps these laws do exist and nobody wants to enforce them. I came here to find out if anyone else saw something legally wrong with the way things were done. But I guess it is all "business as usual." So, Home Guru, you are probably right in the fact that we helped ourselves along at being screwed over. And although it does me no good now-the only consolation is that we were honest and our intentions were good-because eventually everyone has to answer for their actions.
**A: I wanted to revisit this thread again to let you know that although you made numerous errors in the way you handled things, there may be various causes of independent and separate action against the mortgage broker or lender, the Seller and the real estate broker for the Seller.
Your inital post contained too much rambling so if you continue this thread, please be brief and concise.
If you feel strongly about your position, you should talk to a real estate attorney that is willing to help you. And not someone who wants a slam dunk case or just wants billable hours at your expense.
 
C

CJMBluehouse

Guest
sorry for the rambling, I just wanted to be as specific as possible. I do not recall signing anything pertaining to the realtor being a dual agency-but I do remember him telling me verbally. It seems like the bank, realtor, previous owner "bent" the rules, but not quite enough for legal action.
 

HomeGuru

Senior Member
CJMBluehouse said:
sorry for the rambling, I just wanted to be as specific as possible. I do not recall signing anything pertaining to the realtor being a dual agency-but I do remember him telling me verbally. It seems like the bank, realtor, previous owner "bent" the rules, but not quite enough for legal action.
**A: please double check your paperwork with respect to dual agency. The law requires not only verbal disclosure but your written agreement as well.
 
J

justathought

Guest
Do an internet search for the Homeowner's Protection Act of 1998.

It will answer all the PMI questions... From a quick skim, PMI is automatically eliminated after 22% equity *unless* the borrower has been shown to be an exceptionally high risk. (Can request after 20%, automatic at 22%) But read for yourself, I only skimmed.

So perhaps, though the poster is putting down more than required, maybe the bank is not taking off the PMI until they see how timely the payments come through due to poor previous credit?
 

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