Lie: A fiction; a fable; an untruth.
I’ve been told to lie to my clients, or else. If I don’t lie, I will be asked to pay thousands of dollars. Lying is in the best interest of the consumer and is there to protect them. All honest mortgage loan officers must now lie about their loan charges.
The Mortgage Disclosure Improvement Act or MDIA requires that we include "seller transfer tax" and the “sellers cost” of owners policy for title insurance in the annual percentage rate (APR) on the truth in lending disclosure and new good faith estimate, otherwise we have to pay for them.
Some escrow companies refuse to close escrow unless seller charges are included in the buyers APR. Lenders and escrow companies define APR fees differently. Therefore, to meet the requirements of the new policies imposed by the Fed I will lie to my clients on every truth in lending disclosure I provide by including seller fees that they don't really have to pay.
The process of shopping a mortgage was confusing enough. These new requirements make it near impossible to shop a mortgage loan. Trust is strained between a new client and their loan professional by these inconsistencies. It's absurd to a client that we show them paying a fee they won't pay.
I applaud the Fed on the new good faith estimate. It’s so convenient and easy to use with no signature required by either party. Hmm.. how does one know if the customer ever saw it? The Fed trusts us to provide a good faith estimate without proof of receipt. However they do not trust us to properly estimate fees.
It must be easy for predatory lenders to verbally quote low fees, provide a confusing truth in lending and then slip a higher than initially quoted good faith estimate into the file for underwriting. The customer is still victim to the old “bait and switch” tactics that the new good faith estimate was created to prevent.
The opinions expressed in this blog are not necessarily those of First Priority Financial Inc.
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I like the way you say that you have been told to lie. I actually had to read this twice to understand what you were trying to say about truth in lending. I'm a little slow, and it's late ;-)
Hi Nevin~ When I get told I have to lie to my clients or else.... it would be time to get out of the business! Bait and switch is wrong no matter how you look at it, and lying is something I will not do! It's not just about the money! Surely you are just jesting here...
The seller disclosure requirement appears to be an acknowledgement of the seller's obligation on the TILD and GFE which demonstrates, by virtue of the MDIA, that the burden of closing is more closely in step with unassisted buyer resources.
Nevin ~ I am also happy about the new HUD and disclosures. It will make the good stronger. It really makes me ill when people are taken advantage of one of the biggeest purchaes in life.
Melissa - We are required to show the seller transfer tax and owners policy paid by the seller on the GFE and also must include it in the APR even though the buyer doesn't pay it. To me this is not true. It's over disclosure and incorrect. We should only include fees that the borrower pays.
Vickie - Unfortunately this is the new stupidity of our Fed policies. Their attempt was noble but the execution flawed
David - Yep
Monique - I think you misunderstood my message or didn't really read it. I am not happy that loan officers have to disclose a fee that isn't paid by a buyer as a buyer fee. Pretty much lying isn't it?
Nevin, since w've gone over this a number of times, I clearly see the point you were making here. Quoting seller's fees to the buyer seems like an unnecessary aspect of the new GFE, especially since it doesn't effect the buyer's side of the transaction. Like you mentioned in one of your comments, "Noble effort. Bad execution."
It seems like the word "overdisclose" is being thrown around a lot in lending right now. We don't want to hold things (like a close of escrow!) up so we include everything but the kitchen sink into the GFE, TIL etc. so we won't be penalized with a waiting period and anger our clients and real estate agents. I know that we should be giving clients our estimates in "good faith" but you're right, it's crazy when we have to throw in a fee that they won't be paying. You are right on the mark!
Craig - I'm glad you understand the message. Looks like some folks still don't get it!
cari - Thanks! I appreciate your opinion on this issue especially being that you are in the same side of the industry that I am.
The more they try to tweak things, the more it gets confusing. The predatory lenders will always try to finagle it.
The GFE, HUD-1 and TIL have always been designed to confuse and not inform.
One of the most confusing line item on the HUD-1 was always itemizing the upfront FHA ins. premium. Then it was included in the amount financed.
That has caused more confusion when observed by borrowers and more than a few agents than anything I can remember.
Everything the government touches turns into crap.
Carla - Isn't that the truth! Let recently retired industry professionals design these disclosures instead of bureaucrats
Lenn - You hit the nail on the head..everything the gov't touches turns into crap. Thanks for reading my post!
I was looking for a position here and when I got to Lenn's comment it was totally clear. "Everything the government touches turns into crap." Well, there you go. Government working it's way down to the state level as well with shot from the hip laws to protect someone need eight revisions to make them at all functional.
Glenn - I couldn't agree more.