Posted by Michael Steele on May 04, 2006 at 09:00:37:
The mortgage broker did fail to disclose such pre-paid expenses. This is true. As a customer the only thing you can do at this point is complain but keep in mind your complaint will not change the deal. You are not in the position to say “they didn’t tell me about it therefore I won’t pay it” it does not work in such a manor. Unfortunatly the lack of info does actually affect your apr rate and push up your closing costs a bit but do keep in mind they are costs you would have had to pay anyway (weather you knew of them or not) Don’t take this as me jumping to the defense of a fellow L.O. but facts are facts.
You should not have to sign an initial 4506 but they are usually put in the final loan documents of a “no doc” deal. The purpose of the 4506 is so that the lender can verify any federal documents that you have provided. With you having a “no doc” deal there is nothing they are given that they can verify but the 4506 form is still a standard form put in most loan packets to be signed at the closing table. It is nothing to be alarmed about. Its just standard procedure.
The purpose of paying more interest is such: A no doc deal is an extremely high risk deal for a lender to take. They are set up to not verify any income information what-so-ever. The lender goes strickly on credit score and other compensating factors without need for “income verifictaion” therefore because of their risk they will hit you with a higher interest rate.
To put it bluntly – you will pay for it one way or another. Either way you get your property financed.
Please contact for more detials