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Thread: Mortgage bait and switch

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    God/dess colleen's Avatar
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    Default Mortgage bait and switch

    I just bought a new house. The mortgage guy seemed like a fuck up to me from the beginning, but due to the exceptioanlly high level of drama surrounding the sale of our old house and the purchace of our new house, there was never a good time to relpace him, so we went with the flow, so to speak, and allowed him to do our mortgage. The whole process was frought with drama, him never calling us when he said he would, him never having the right paperwork at the right time, etc.

    In order to make the loan work, he removed his commission form the loan, and had me pay him under the table afterward. I should have known then that something was wrong with him.

    A month or so after we bought the new house, the same mortgage guy calls me and says he has a new porgram that will help me get about $10,000 cash out a nd a slightly lowere interest rate. Hmmmmm....sounds good. Slow season is coming. Ok, I'll try it. That was mid April. I was originally supposed to sign the loan at the end of april, but the day I was supposed to close, some paper or other didn't appear on time and the close was postponed. In mid May, a guy from his office calls me, claims my mortgage guy Matt has been injured on a trip to the Kentucky Derby, and this new guy Dave is taking my case. He offers me a very poor substitute for the original loan I was offered, and worse yet, times his communication so that I am going to go to the closing table about 2 days before my first mortgage payment is due. Even after I have repeatedly requested he e-mail me certain key information about the loan he is offering, he refuses to do so. I think he is betting that I won't have the cash to make my house payment, and so will sign anything just to postpone it. Further, I believe that he is trying to keep me from seeing the terms of the loan until I am at the closing table, and then will attempt to hard sell me.

    I tell Dave to go jump in the lake.

    A week later I get a call from the original guy, Matt. When I inquire after his health, he is vague. He offers to start up the loan process again, making all the proper noises about how he understands how I must have felt ripped off, etc. I was going to blow him off, but sudden drama with my husband's car makes this re-fi deal seem like a good idea. It is late in the month now, I know, but I still meet with him, sign papers, etc.

    Sitting down at the closing table today, I find I am offered a different loan than what I had agreed to. Slightly lower interest, but much less cash out, no escrow arrangements, and over $6000 in closing costs, even though there was no assessment, inspection, attorney, etc. I can't say for certain, but I am pretty sure it is almost the same loan Dave tried to get me to sign. Matt was not at the close, but I did talk to him on the phone. He did the expected backpeddling and telling me what a great loan he got me, etc.

    I didn't sign it.

    I believe this is a deliberate bait-and-switch play. It really strikes me that the same thing happened two times in a row, and of course it is always a "down to the wire" deal, that has to be signed RIGHT NOW. I have had enough experience in sales and enough courses with names like "Psychology of negotiation" to recognise when a lot of hard-sell tactics in play here. (My husband says that this happened when we finally closed on the house, too, that there was some confusion about the terms of the mortgage and how much cash out we were supposed to get, but I was so exhausted from the moving and the stress, I really don't remember. )

    I really don't have time to go looking for another lender right now, and anyway it is the end of the month. Car and house drama has depleted my savings to almost nothing. Borrowing from a parent or friend is out of the question. My credit is below 600, and this re-fi was supposed to help me get out of that spot.

    What I want to do is force the mortgage broker to give me the loan he originally offered me. I do not have a copy of the papers I signed wehn I applied for the loan, unfortunately. (I regretted it at the time. He met me at work to sign the application, and no copier was available.) Besides invoking t6he approprieate Illinois law*, and outright refusing to sign anything I don't want to sign, what else can I do?

    *“Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use or employment of any deception fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact, or the use or employment of any practice described in Section 2 of the ‘Uniform Deceptive Trade Practices Act’, approved August 5, 1965, in the conduct of any trade or commerce are hereby declared unlawful whether any person has in fact been misled, deceived or damaged thereby.” 815 ILCS 505/1.


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    God/dess sxybrat07's Avatar
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    Default Re: Mortgage bait and switch

    Unfortunately, it is difficult to force him to give you the loan you assumed you were getting, for a few reasons.

    Typically when you sign initial paperwork, your loan has not been approved with a lender, the broker has simply quoted you a rate based off your credit, the current rates, etc. Many factors can cause a lender to change what they are able to give you, from having your credit drop a few points before closing, to the broker screwing up and locking the rate wrong.

    Sometimes, the lender just screws up and does the wrong paperwork. Sometimes it's on purpose, and the broker just hopes you won't notice. Sounds like he's a scumbag.

    I was an escrow officer for 4 years, so I've dealt with plenty of stupid loan officers. You didn't say what was different about your loan, but I'm guessing that the extra closing costs were fees your loan officer added that were going to him. If you still have a copy of your paperwork, pm me and I can tell you what to look for.

    All that aside, it's gonna be really difficult to force the loan officer to give you what you want. You can try and get him to credit the fees back to you, then you wouldn't be forced to pay them and you'd get more cash out. Or, if you want to really go after him, call your local real estate commissioner and say something like "well, i'm really confused, my loan officer had me pay him his commission in cash after closing, is that normal?" And that will probably get his license revoked. (and I'm afraid he may have gotten paid twice on that loan, odds are he made money on the back end of the loan, and made money by hiking up your interest rate a quarter point or so.)
    I believe you Dottie and you have my support

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    Banned Melonie's Avatar
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    Default Re: Mortgage bait and switch

    two points appear obvious, but were not specifically mentioned so far. The first is the appraised value of the house, which effectively determines the maximum amount that any lender is going to agree to lend, the amount of 'cash out' possible, the amount of equity + down payment required to avoid involving a secondary lender like PMI etc. If the appraised value of the house has gone down significantly over the past two months, this can irreversably affect the lender's offer.

    Same holds true for rising interest rates over the past two months, which will irreversably affect the lender's offer and the amount of monthly mortgage payments. Rising interest rates can also affect the 'creditworthiness' rating of the prospective buyer, perhaps causing certain mortgage lenders to back away from the deal altogether thus forcing the mortgage broker to seek out less 'picky' mortgage lenders who will still write the mortgage but with different fees and interest rate spreads.

    There may also be an issue of new regulations/policies having come into effect in your state laws or with lenders in your state in regard to mortgage lending standards. This has been a really hot topic over the past few months, and has been particularly focused towards 'no-doc' loans, 'stated income' loans etc. A change in this area could have resulted in a lender who was willing to offer a particular package to a particular new home buyer 2 months ago now being bound by stricter documentation / lending standard requirements.
    Last edited by Melonie; 06-27-2006 at 03:10 AM.

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    God/dess VenusGoddess's Avatar
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    Default Re: Mortgage bait and switch

    Call the IDFPR (Illinois Dept of Financial and Professional Regulation). Here is the website with more information: http://www.idfpr.com

    What these people did was illegal and they make ALL brokers look bad. Call with all of your information and report the company and BOTH loan officers. Now, all loan officers doing loans within the state of Illinois must be licensed through the state and stupid stunts like this will get their licenses revoked. Do you have proof that you paid this broker under the table? Cancelled check? Money Order? Please do not tell me that you paid him cash.

    Unfortunately, I do not believe that there is much you can do to get the loan that you were originally quoted. If you read the disclosures on the loan papers you signed, it says that the company cannot and will not guarantee the loan that you are signing for (it's impossible...anything can happen).

    Also, let this be a good lesson for you that you follow your gut instincts in the future. There are a lot of really good, honorable mortgage brokers out there...but there are also really shadey brokers as well.

    I really wish you would have contacted me. We're not the mortgage brokerage side anymore (Joe is an Account Exec at a bank and we have our own commercial brokerage business) but we know a lot of GOOD brokers that would have done their jobs and not screwed you over. If you need help, PM me.

    Other than that, if the IDFPR finds that the company/brokers involved in your loan were dishonest, they may make them pay a fine and refund your money...but I'm not sure. You are better off calling them and asking them how to handle the situation.

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    Featured Member Vamp's Avatar
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    Default Re: Mortgage bait and switch

    I think there is a simple solution to this problem.

    Go and talk to the manager of this lending office. There is alot of shady dealing going on with this experiance from the top down. Any reputable lender will give you copies of any paperwork you sign. You shouldn't even have to ask for them. It also sounds like Dave was trying to cut in on Matt's commision. Matt sounded like he would do anything to get the loan started. Tell the manager what happened. If the manager is patronizing then that is how they do business. If the manager takes it seriously by taking over or overseaing the mortgage then it is just two rogue loan officers.

    If you are having this many problems before you even get the mortgage just imagine what will happen a few years down the road. Do you think they will answer questions you have about the mortgage then? Think you will get straight answers after the ink is dry? Are they burying fees in the mortgage that you don't know about until they hit the mortgage?

    A mortgage is a huge investment. I always advise people to work on their credit score before they look for a mortgage. With a good credit score you have more choice of lenders. Educating yourself about the process of obtaining a mortage first saves alot of heartache. It really isn't to late to do your research. The internet is a great tool to get the basic information you need.

    I also think that refinancing a house for a car isn't the best move. There are alot of reasons. If the car is totaled your insurance company is only going to give you the blue book value of the car. The remaining amount will be your responsiblity. With car loans you can get gap insurance that would cover the amount the car insurance doesn't pay. If anything happens and you can't make the payments on the refi there goes your house instead of your car.

    I am not even going to ask if it is a fixed rate loan or a variable rate loan. That is a whole other aspect to this.

    My advice would be to reconsider everything. If you can't make any head way with the manager start over. I know it sucks. But it is better to do it right the first time and save yourself future stress. Get a car loan for the car. You will pay a higher intrest rate for the loan because of your credit score. It will also keep you from dealing with these clowns and help you with your credit score.

    To make sure I understand your post.. You already have the orginal mortgage and your question is about the refi?

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    Default Re: Mortgage bait and switch

    I am in such a mess now I don't know what to do. If nothing happns, my house payment will almost certainly be late. My credit is really bad now, so that actually does not seem like such a big deal, but then I will spend therest of the summer playing catch-up with the bills.

    We are leaving on vacation Sunday, which I know sounds absurd, but it is a family obligation and I can't back out or change the date. What few dollars I have managed to save, were meant to cover travel expenses.

    Mortgage guy was suppsoed to call me bright and early this morning, but as usual, I have heard nothing from him. I am thinking of telling him either he is going to get me a loan very similar to what he originally offed me, or I am going to present my cancelled check to the proper state authorities. (yes, I di dpay him by check) If hew does not call me by the time I finish my coffee, I will probably be contacting him.

    The loan he is actaully asking me to sign, would actaully do me more harm than good. It would accomplish nothing I set out to do, cost me $6000 in closing costs (much of it to the title company) and leave me with so little cash out, it would not change one thing in my life. My house payment woudl be higher than it is now, my equity depleted, and my credit in the same shit hole it has been in, which is how I wound up with this scum bag of a broker anyway.


    OK....end rant. I am going to go get my coffee now. Any advice woudl really really be appreciated!


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    God/dess colleen's Avatar
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    Default Re: Mortgage bait and switch

    Vamp--yes, we have the mortgage, this is all about the re fi. And DAVE is, I believe, MATT's manager. I think I am going to try to find out a little information about Envision MOrtgage.

    I am totally reonsidering the whole deal. Part of the point of doing this was to pay down my credit cards and get started building a better credit score. Now I am stuck to the point where I can't even do that. As it is, I am better off struggling along (things can hardly get worse) than signing the loan as it was presented to me last night.


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    God/dess VenusGoddess's Avatar
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    Default Re: Mortgage bait and switch

    Ok...I just showed this post to Joe (scorpio) and he said that there is absolutely nothing you can do. Nothing. The best thing you did was not sign the papers. He also said that under no circumstances should you go back to this broker. Some brokers have Title Companies and they can charge whatever they want...and this could very possibly be the case here.

    There are too many variables to this scenario. Your rate could have changed because your credit score changed from the time the loan was pre-qualed to the time it closed (it happens really often)...or the bank offered this loan for a while but then discontinued the program that you were going to get and so your loan officer had to find something else.

    None-the-less, your loan officer/loan manager pulled some shadey stunts.

    We have some really good friends who are really good at what they do...and if they can help you they will. We trust them implicitly as they've done both refi's on our condo AND the purchase on our house. If you want to talk with them or see if they can help you, let me know and I'll get you in touch with them.

    Other than that, if the guy calls you, tell him to take a hike...and don't call him. You need to work fast here if you are afraid that your mortgage is going to be late...you cannot afford to have any mortgage lates on your report.

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    God/dess colleen's Avatar
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    Default Re: Mortgage bait and switch

    Well, he did call, and offered to pay me a $700 kickback on the loan. The things he is telling me do not add up, even considering all you have told me here. I understand that there woudl be some difference in what I signed and what I actaully got. I know that happens all the time. What it appears actaully happened was, once I signed the application, he changed just about everything about the loan to make it go through. I woudl be getting socked with 2 differnt large fees form his office, a $700 buy-down on my interest rate, and about $2000 to the title company. I have no idea who this title company is. They have a small office in a small office building. The seem to know all the guys at my mortgage broker by name (although that is not too surprising, condidering it is directly across the street)

    When he called, I let him go through his numbers with me again. I am by no means a stupid person, but his explinations are confusing and make little sense. Then I pointed out the differece between what I was offered and what I was asked to sign. I poined out that the difference adds up to thousands of dollars. I mentioned that he had used a bait-and-switch technique. That made him defensive and he resorted to asking me if I had enough money to make my next two mortgage payments. Then he told me he was not going to argue with me and I tild hium I had to discuss it with my husband. I don't expect he will call me again.

    I am considering calling the president of hte company, since he made it clear he could not "discuss" his kickback offer in the office.


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    God/dess VenusGoddess's Avatar
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    Default Re: Mortgage bait and switch

    Just leave it be. It is not "illegal" to give a kick-back to the client. If the numbers are not adding up and you are getting smacked with high fees on your refi, then you have good reason NOT to do the refi with this company. He's using a hard-sell technique because he knows that you are in a rough spot and he thinks that he can get you to sign for anything.

    Call Kevin. See what he can do and go from there. Let me know what happens.

    Just wondering...could you scan/email or fax your Good Faith Estimate over? Do you have that? It's the sheet that has the run-down of all the fees associated with your loan. I could look at it and tell you if it has "reasonable fees" or if you were/are getting gipped. Let me know.

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    Default Re: Mortgage bait and switch

    ^^ Really? Here it is illegal for brokers to do kickbacks. Anything they do has to be approved by the lender, and typically they only do kickbacks if the lender won't allow credits. *note, that only applies if he's giving you cash outside of closing*

    Either way, sorry you had to deal with Envision, I dealt with them here, and they suck big time.
    I believe you Dottie and you have my support

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    God/dess VenusGoddess's Avatar
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    Default Re: Mortgage bait and switch

    Well, just because the lender doesn't allow the broker to give a credit to customer, doesn't mean that it's illegal. It's just something that you don't tell the lender. At this point, the lender is approving that money be paid out (say that the broker is "charging" you $8,000 with the agreement that you will receive $5,000 of it after closing). THAT is not illegal. It's traceable as needed and the money is being paid out either way. Whether the broker keeps the full amount or agrees to kick back money to the customer is the broker's choice...not the lenders, since the money is now the brokers (does that make sense?).

    However, it IS illegal for the broker to demand cash under the table from the customer. If the broker does not list all of the fees that he/she is collecting on the final GFE (Good Faith Estimate), then they are not entitled to those fees NO MATTER WHAT. If the broker cannot make the loan work with his "commission" or "points" from the customer and therefore removes the points from the loan to make it work, then he is NOT allowed to collect those fees at all...and in doing so will/can get into legal hot water with the OBRE.

    Colleen, you can report paying cash under the table to the broker on your first closing to the OBRE (Office of Banks and Real Estate). And, really you should. Here is the information on the OBRE http://www.obre.state.il.us/default2.htm and the phone number: 877-793-3470.

    Also, the mortgage company has 2 different offices, and this is their website: http://www.envision3m.com/

    You may want to call each office and see if they are a "branch" for this company or if the OWNER of this company is available. Go to the top of the ladder and see what happens. At best, they'll bend over backwards to help you and at worst, they'll tell you to fuck off...at which point you can laugh knowing that you can just report them. Dave may have been Matt's manager, but that doesn't mean that what they did is acceptable by the company higher-ups.

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    God/dess colleen's Avatar
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    Default Re: Mortgage bait and switch

    yes, I am going to report it. I paid him by check (he didn't want it, but he was faced with a check now or cash sometime after I got around to going to the bank, so he settled for a check now.) I may have to use it as leverage to get a loan out of this asshole, to avoid being late on my payment this month, but I am definitely going to report it. Just as revenge for their shitty treatment and runaround. I lost money b/c I was supposed to go to work Monday, and instead sat around waiting for confirmation I was going to close, then signing papers in the title office.


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    God/dess VenusGoddess's Avatar
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    Default Re: Mortgage bait and switch

    ^ I'm going to say it one last time...there is no way that you should be going back to this company for ANYTHING. They screwed you once, then attempted to do so again. Why do you insist on putting yourself through this drama? Go to a new place (Kevin) and do what you need to do to report the bullshit of the other company. Move on. This company may get fined, lose their license...but there is no way that they are going to be able to get you a loan if they haven't already. Just move on.

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    Featured Member scorpio's Avatar
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    Default Re: Mortgage bait and switch

    Ok, I will step in now. 1st of all, VG is right. Do not deal with Envision. Their Schaumburg office is in the same building as my former office. I tried doing business with them as an account executive (I sell lending programs to brokers) and found them to be shady at best. In fact, they are on the lenders watch list. 2nd, MAKE YOUR MORTAGE PAYMENT!!!!!! Do whatever you have to do. Cancell the vacation, don't pay other bills, sell your body, BUT MAKE THAT PAYMENT! If you dont you will be fucked beyond repair and if you think it is hard to get a refi now, it will be 10 times worse-and more expensive.
    If you have any questions, PM me or VG.

  16. #16
    God/dess Deogol's Avatar
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    Default Re: Mortgage bait and switch

    Wait! You mean there are honest mortgage brokers?

    (I too worked in developing mortgage software for the sub-prime market - horrible crowd.)

  17. #17
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    Default Re: Mortgage bait and switch

    I don't know how you can deal with a company that keeps trying to hustle you. They are treating you so badly plus charging a lot in fees. You should just never talk to them again.

    Anyway, I hope you made it to work and can pay the mortgage payment on time.

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