Problems with Lender/Mortgage Broker - Posted by Molly Jacobsen

Posted by William Bronchick on February 19, 2002 at 20:23:42:

Not he cannot, unless you can prove he acted with malice.

Problems with Lender/Mortgage Broker - Posted by Molly Jacobsen

Posted by Molly Jacobsen on February 19, 2002 at 01:24:52:

What’s my recourse? I estimate lender errors/negligence are going to cost me over 150K plus some damaged credit. I applied for three loans through MortgageIT on November 7th. I was told closing would be in two weeks…it didn’t happen. The loan officer didn’t want half the information I was offering him, saying it wasn’t needed. At one point the loan officer had to fill out new loan applications (mid-end of December) because everything was wrong…because of his refusing to take information I was telling him, errors, etc. I complained to Costco and the Lending Tree and started getting results…I thought…I threatened a complaint to the Securities Board (Oregon)…I was told the loan was in processing on January 9th but found out it wasn’t. I was told it would close soon but was called back January 18th with a message saying “we need to restructure your loan.” After alot more phone calls and false promises I was denied credit on Febuary 8th…a whopping 93 days after I applied!!! The loan officer had ALL supporting documents in his hands the first week after I applied and requested nothing else. He states my credit score was 660 (I did a trimerge and it was 700) and my debt ratio was 47/55. He stated he was treating the loans as one loan! The ratios were obtained from the credit report he obtained November 7th! At that time, I told him that ALL revolving debt and installment debt…was to be paid off with the free and clear home I was refinancing. He should have told me then that I would not qualify based upon what he told me later…that they take my CURRENT debt and calculate my debt ratio. I’ve never heard it done like this…and if it is it is their choice…but I should have been informed THEN, when I applied…not over 90 days later and much higher interest rates let alone extra credit card interest due to the loss of special promotions. He tried to make several excuses…I’m now working with another broker and I think I discovered part of the problem…he didn’t know how to adequately use the Calyx software he was using when rental properties are involved…in fact when I asked how he calculated my debt ratio (I calculated by hand to be about 23/23), he said he didn’t know…the computer did it…Under the Equal Credit Act should I have been notified within 30 days? On the same day he told me I was denied I was offered another loan…at a much higher rate. I wonder if the “good faith estimate” at 6.5% and extremely reasonable closing costs (no points for non-owner occupied) were really done in good faith! On about Febuary 16th, I recieved the Letter of Denial of Credit…I laughed! When filling out the information as the the credit reporting agency used, he filled in my name. When filling in the information as to whom I should contact regarding the notice, he filled in MortgageIT…not a federal agency…and of course the federal agency that administers compliance with the law concerning MortgageIT was left blank! I laughed even harder when the next day I received a “Dear New MortgagIT Client” letter and gift…Any recourse? Are class actions suits difficult? (I’ve been hearing an increasing number of complaints and as far as I know I was on a “List” of “costo problems.”)

Don’t waste time fighting it - Posted by Frank Chin

Posted by Frank Chin on February 21, 2002 at 07:39:02:

Hi Molly:

I too, was turned down on more than one occasion during refi’s.

If you already owned several properties, this is simply another business problem to overcome. I refi a number of times, as interest rates fell from 16% the early 1980’s to 7% in 1993.

I got mad over the BS, at being turned down. Thinking about it now, I LOST TIME being mad, writing letters, rather than figuring out what went wrong, and forgot that the purpose was just to get a cheaper loan.

I got ALL THE LOANS I NEEDED after several tries, and I DID better on rates on the second time around.

Here’s my suggestion from one of my fiascos.

1- Call up some small banks directly, and find out what their guidelines are.

2- Do ONE loan at at TIME, at least just refi YOUR RESDIDENCE first, and pay off the credit cards. Loan policies on owner occupants are easier.

Keep in mind the Loan Processor is only a clerk applying rigid guidelines based on how the loan is presented. LOGIC DOES NOT APPLY here.

I put in for two loans at the same time, but one was approved, and the other rejected. Makes sense?? Long story here, but my mother in law’s name was on one of the deeds, but including all her debt with deals she was doing on 3 other houses with her son shot the debt ratio to the moon.

So I called up another bank, and the fellow said, no problem, just submit an application with us, leaving your mother in law’s name off. Include a letter from her saying she understands we’re getting a mortgage, but she will be in NO WAY responsible for paying for it.

Got the thing approved in two weeks, a number of months later, while rates fell further.

So, MOVE FULL SPEED ahead and try, try again. Don’t waste time fighting while rates are still at an all time low.

Frank Chin

Re: Problems with Lender/Mortgage Broker - Posted by William Bronchick

Posted by William Bronchick on February 19, 2002 at 20:01:04:

Molly, this is not a legal advice board. If you are interested in an answer to a general legal questions, please rephrase your Q.

Re: Problems with Lender/Mortgage Broker - Posted by Molly Jacobsen

Posted by Molly Jacobsen on February 19, 2002 at 20:19:14:

Thank you. I should have known that but in my frustration I rattled on. My GENERAL question is "Can a mortgage broker/loan officer be held liable for delayed notification of denial if all required documentation/supporting documents were in hand…90 days beforehand? Can they be held liable for errors they make in computing debt ratios (because of the lack of knowledge in the software they are using)? Is “retaliation for complaining” difficult to prove?

Thank you