Home Ownership (misc.consumers.house)

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Default Bank Bait & Switch?

Over the past few weeks I have been given quite the run-around by a
local bank. I locked into a good mortgage rate before they started to
climb. It was for a 30yr. fixed with zero points. Two weeks after
locking in I was informed by the bank that Freddie Mac requires a point
on any muli-family dwellings (it will be owner occupied, though). So
even though the lender never told me that, I eventually conceded the
point and continued on with the million things that need to be taken
care of when buying a home (this is my first time). Well, now, 10 days
before settlement, the bank says that Freddie Mac "doesn't like" the
appraisal because the comparison properties are too far away! The
nearest multi-family that sold is 3.5 miles away... and is well over
the price I agreed to pay for the property I am purchasing. It appears
that the bank is unhappy with the rate they promised and are trying to
kill the deal.

So, my question is: do I have any legal recourse to force the lender to
honor their promise? In the consumer world there are bait & switch
laws, does something like that apply to banks? Who can they be held
accountable to?

Thanks for any advice!

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v
 
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On 5 Apr 2005 05:40:21 -0700, someone wrote:

....Well, now, 10 days
before settlement, the bank says that Freddie Mac "doesn't like" the
appraisal because the comparison properties are too far away!

OK. Do you ACTUALLY have any proof that this is a LIE???

The
nearest multi-family that sold is 3.5 miles away...

Usually underwriters like the comps to be within a mile. If none are
available the appraiser needs to justify this to the bank (I used to
be a Certified General Appriaser). The bank is worried that the
appraisal might be bogus and ignoring unfavorable comps that are
closer.


... It appears
that the bank is unhappy with the rate they promised and are trying to
kill the deal.

HUH? How did you get from their to here? How many shots were fired
from the grassy knoll? What is the CIA and the Trilateral Commission
hiding at Area 51? WHY do YOU think it "appears" that way? WHY is
the stated reason a LIE?


So, my question is: do I have any legal recourse to force the lender to
honor their promise? In the consumer world there are bait & switch
laws,

What's the bait and switch, it always had to appraise, what's the
promise, the loan always had to appraise, why do you think they did
the appriasal, do you think the "promise" is they will make you a loan
no matter what the appraisal says?


Who can they be held
accountable to?

They are "accountable" to their regulators. Who will not let them
make a loan without an adequate appriasal. I hear people (sometimes
literally, sometimes fiuratively) yell and pound the table that
somebody must be "held accountable". Seems to be a new buzz word.
What exactly does that mean? What would be an example of holding
"them" 'accountable' that would satisfy you?

AND BTW DID THE DEAL ACTUALLY FALL THROUGH OR ARE THEY JUST HAVING
TROUBLE WITH THE APPRAISAL????

-v.


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v wrote:
On 5 Apr 2005 05:40:21 -0700, someone wrote:

....Well, now, 10 days
before settlement, the bank says that Freddie Mac "doesn't like" the
appraisal because the comparison properties are too far away!

OK. Do you ACTUALLY have any proof that this is a LIE???


I never claimed that I was lied to.

The
nearest multi-family that sold is 3.5 miles away...

Usually underwriters like the comps to be within a mile. If none are
available the appraiser needs to justify this to the bank (I used to
be a Certified General Appriaser). The bank is worried that the
appraisal might be bogus and ignoring unfavorable comps that are
closer.


That jives with what the bank was saying. I guess I wasn't aware that
a appraisal was debatable... I guess that does make sense, it is the
banks money. The property DID appraise for $15,000 over the sale price,
so I thought that was a Good Thing.



... It appears
that the bank is unhappy with the rate they promised and are trying

to
kill the deal.

HUH? How did you get from their to here? How many shots were fired
from the grassy knoll? What is the CIA and the Trilateral Commission
hiding at Area 51? WHY do YOU think it "appears" that way? WHY is
the stated reason a LIE?


Because of my lack of knowledge on how banks operate. So as a laymen I
would guess that a loan with a low rate when the rates are high doesn't
pay and would be hard to sell to the secondary market. I assume the
banks are out to make money so killing the deal to replace it with a
new, more profitable one would make sense to me... so that was my stab
in the dark.


So, my question is: do I have any legal recourse to force the lender

to
honor their promise? In the consumer world there are bait & switch
laws,

What's the bait and switch, it always had to appraise, what's the
promise, the loan always had to appraise, why do you think they did
the appriasal, do you think the "promise" is they will make you a

loan
no matter what the appraisal says?

When I originally sat down with the lender I was told to lock in at a
rate with zero points I would have to put money down. I put $1000
down. That was the bait. Two weeks later they inform me that they
'forgot' that Freddie Mac charges 1 point on multi-unit homes. That
was switch number 1. And then just recently they inform me that they
'don't like' the appraisal so they can't give me the 30yr fixed - and
then in the same conversation offer me an ARM at TODAYS rates. That
was switch number 2. Now if I want to go to another lender I am
screwed because the rates have gone up so quickly. What was the point
of locking in at rate??


Who can they be held
accountable to?

They are "accountable" to their regulators. Who will not let them
make a loan without an adequate appriasal. I hear people (sometimes
literally, sometimes fiuratively) yell and pound the table that
somebody must be "held accountable". Seems to be a new buzz word.
What exactly does that mean? What would be an example of holding
"them" 'accountable' that would satisfy you?


The reason I am upset is that I feel like I was intentionally deceived.
I told what I wanted to hear to make a commitment to the lender, but
when it came time to deliver they didn't. I would have gone to a
different lender had they been upfront with me and told me about the
point.

Being held accountable means that their poor service should be
acknowledged so that potential customers can be made aware. Examples
are the Better Business Bureau for businesses and the Real Estate
Commission for realtors.

AND BTW DID THE DEAL ACTUALLY FALL THROUGH OR ARE THEY JUST HAVING
TROUBLE WITH THE APPRAISAL????


They said they could not provide me with the loan and offered me an ARM
as an alternative. As suggested in another NG I put this in the hands
of my real estate attorney and he has now straightened it out. They
WILL provide me with the loan and they are not requiring a new
appraisal. Which still leaves me wondering what the real problem was.
Thanks for the help - though it felt like an interrogation

-v.


Reply to NG only - this e.mail address goes to a kill file.


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Lady
 
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That jives with what the bank was saying. I guess I wasn't aware that
a appraisal was debatable... I guess that does make sense, it is the
banks money. The property DID appraise for $15,000 over the sale price,
so I thought that was a Good Thing.


Actually it is a Good Thing - because if the appraisal was less than the
sale price you might have to come up with more money to put down depending
on what you want your payments to be. Banks usually will not lend more than
80% of the appraisal value so the higher the appraisal the better.

When I originally sat down with the lender I was told to lock in at a
rate with zero points I would have to put money down. I put $1000
down. That was the bait. Two weeks later they inform me that they
'forgot' that Freddie Mac charges 1 point on multi-unit homes. That
was switch number 1.


Whate does the paperwork that you signed when you "locked in" state? Read
the fine print carefully -- it probably mentions something somewhere about
points -- if it does and you signed it then it's not bait and switch it's
more that you were excited about the rate and signed whatever the bank told
you to sign without reading all the fine print. If it doesn't say anything
about the points - ask the bank to show you where in writing it states that
points may be required.

And then just recently they inform me that they
'don't like' the appraisal so they can't give me the 30yr fixed - and
then in the same conversation offer me an ARM at TODAYS rates. That
was switch number 2. Now if I want to go to another lender I am
screwed because the rates have gone up so quickly. What was the point
of locking in at rate??


Didn't they give you an approval? When I locked into my mortgage I was told
that I had to provide them with certain documentation - then I had to give
them a deposit and sign the papers to lock the rate for 90 days -- they had
3 days to review all my papers and then I was "cleared" for the rate I
locked into - if I turned back after this period I forfeited my deposit
however if after the 3 days for some reason they felt that they could not
give me the rate I locked at for whatever reason (i.e. my documents didn't
show I had enough for a downpayment or I didn't make enough, etc) they would
refund my deposit. I received a letter in the mail stating that the
documents were reviewed and they were accepting my application as agreed to
in writing on the day I signed the contract. Of course, until closing they
kept asking for more and more records, etc.


The reason I am upset is that I feel like I was intentionally deceived.


Probably not -- probably just being a bit inexperience you took everything
at face value and believed what was told rather than reading every single
word and fine print on the documents. Not totally right by the bank for
not explaining the fine print, but that's why it's there -- they want to get
your business and of course only tell you what is attractive.




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v
 
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On 6 Apr 2005 06:02:14 -0700, someone wrote:

... As suggested in another NG I put this in the hands
of my real estate attorney and he has now straightened it out. They
WILL provide me with the loan and they are not requiring a new
appraisal. Which still leaves me wondering what the real problem was.

Glad its all straightened out now.

Maybe the real reason is that they had trouble getting the appraisal
accepted, but someobody bitched and moaned enough, and perhaps the
appraiser called or fax'd a statement that the reason he chose a
farther Comps was blah blah blah (none available closer, farther Comp
was more timely, closest Comp had major physical differences or zoning
that would require excessive adjustment, blah blah blah). There are
indeed valid reasons to select a farther Comp, but its a red flag.

I would still like people to explain to me what specific occurances
would satisfy them that so and so HAD been "held accountable". But
nobody is required to. For instance I had a mother call my office
looking for help in having some teachers "held accountable" because
she had a gripe with something that occurred at school with her son.
I asked her over and over for examples of specific results or
responses she would like me to obtain from the school that would
satisfy her, and all she would say was "I want them held accountable".
But she could not tell me what would constitute that thing.

But I digress. Glad the guy's appraisal went through and he got the
loan.


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Sam
 
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wrote:

Over the past few weeks I have been given quite the run-around by a
local bank. I locked into a good mortgage rate before they started to
climb. It was for a 30yr. fixed with zero points. Two weeks after
locking in I was informed by the bank that Freddie Mac requires a point
on any muli-family dwellings (it will be owner occupied, though). So
even though the lender never told me that, I eventually conceded the
point and continued on with the million things that need to be taken
care of when buying a home (this is my first time). Well, now, 10 days
before settlement, the bank says that Freddie Mac "doesn't like" the
appraisal because the comparison properties are too far away! The
nearest multi-family that sold is 3.5 miles away... and is well over
the price I agreed to pay for the property I am purchasing. It appears
that the bank is unhappy with the rate they promised and are trying to
kill the deal.

So, my question is: do I have any legal recourse to force the lender to
honor their promise? In the consumer world there are bait & switch
laws, does something like that apply to banks? Who can they be held
accountable to?


Your suspicions are probably correct. Bankrate.com told of a similar story
a few weeks ago where the bank lowballed the appraisal to attempt to get
out of the loan. What happens is the lender doesn't lock in the rate with
the underwriter, and then they try to back out when rates rise. Or the
underwriter wants to back out when rates rise, although that is less
likely. See
http://www.bankrate.com/brm/story_co...9&prodtype=mtg

Good luck and let us know what happens.

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Yeah, I agree with Sam. Some lenders have been known to jerk people
around left and right on loans like this. The fact that they didn't
tell you about a 1 pt fee up front which they later pulled out of their
pocket, speaks for itself. Is this the first loan they ever did so
they didn't know about it? Of course not. I'd carefully review what
info they gave you and anything that you signed to see what it says
about pts, loan fees, etc.

Unfortunately, in situations like this, they pretty much have you over
the barrel. You can always walk and start over with another mortgage
lender, but of course you risk losing the deal and any non-refundable
fees you paid.

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v
 
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On Thu, 14 Apr 2005 00:53:20 -0400, someone wrote:

Your suspicions are probably correct. Bankrate.com told of a similar story
a few weeks ago where the bank lowballed the appraisal to attempt to get
out of the loan.

???? Don't believe everything you read on the internet. "Banks" do
not do generally appraisals. It is a regulatory requirement in most
situations that they use independent, licensed appraisers. Yes there
is pressure on them to me the number - BUT - when I was doingn these,
I NEVER EVER had a bank try to get me to LOWER the answer. At times a
loan officer (who would get compensated for originating loans) would
call me to bitch and moan about how if it was only a few thousand
HIGHER, then the deal would work.

In business, perhaps one should never say "never", but I am very
skeptical of claims that a "bank lowballed an appraisal". Like I
said, typically "banks" do not do appraisals in the first place, and
(especially for this to be news) it must be very uncommon, as the
industry economic forces generally lean the other way.



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Sam
 
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v wrote:

On Thu, 14 Apr 2005 00:53:20 -0400, someone wrote:

Your suspicions are probably correct. Bankrate.com told of a similar story
a few weeks ago where the bank lowballed the appraisal to attempt to get
out of the loan.
http://www.bankrate.com/brm/story_co...9&prodtype=mtg

???? Don't believe everything you read on the internet.


It would help if you read the article cited first.

"Banks" do not do generally appraisals.


No they don't. They can however choose whose appraisal they care to work with.

It is a regulatory requirement in most situations that they use independent,
licensed appraisers. Yes there is pressure on them to me the number - BUT -
when I was doingn these,
I NEVER EVER had a bank try to get me to LOWER the answer. At times a
loan officer (who would get compensated for originating loans) would
call me to bitch and moan about how if it was only a few thousand
HIGHER, then the deal would work.


It does happen, particularly when interest rates suddenly rise, and the lender
decided not to or didn't bother to lock. Notice in the case cited, the bank's
appraiser's appraisal suddenly was lower than the original appraisal, 2 others,
and comps.



In business, perhaps one should never say "never", but I am very
skeptical of claims that a "bank lowballed an appraisal".


Banks refunding non-refundable fees doesn't happen every day either, and here
they had motivation to do so.

Like I
said, typically "banks" do not do appraisals in the first place, and
(especially for this to be news) it must be very uncommon, as the
industry economic forces generally lean the other way.


Not when interest rates are rising, e.g. as they did from Feb to March, and the
end lender doesn't want to keep the agreed interest rate. This happens all the
time when the lender didn't get a lock committment, and they know they are in
trouble if they previously claimed they did.

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