Confusing Mortgage Broker Behavior

vickro · Joined: 28 Nov 2009 Posts: 2

I apologize in advance . . . this is kind of a long question regarding a mortgage broker invoice for "services" I did not agree to:

I bought a condo in Los Angeles in 2006 for $335K. It proceeded to drop to below $220K (according to neighborhood values/sales) by the beginning of 2008. At that point, I owed about $217K on it. I was screwed. The county did lower my taxes, which was good, but I had a 5 Year ARM in its third year, and that was not good. I called a bunch of banks about refinancing, including the one with which I had the loan, and they all laughed in my face (figuratively). This was early in the year.

In the summer I ran into a man I had known when I was in my early 20s and working at a record store. He's my parents' age and he used to hit on me. I suspect I ran into him because he was trying to run into me. I had known him relatively well on a superficial level about 15 years earlier. He was not hitting on me (much) at the time, and I knew he was a mortgage broker, so I asked him if he had any ideas about how I could get in on the government's help for people in my homeowner position. By the way . . . I have outstanding credit and a good, stable career with a very middle class income.

He said something about Obama being on my side. Then he said, "I usually charge a point for this, but I can look into it for you." When he said that, I said something like, "Well, maybe you could just point me in the right direction." So I gave him my address and some basic info. He's a member of the community and not widely known to be a freak or anything. And his business and license are in good standing. So I wasn't doing anything risky by giving him my address. Aside from being excessively flirty, he's fairly normal. His kids went to my elementary school (not that that says anything, I guess).

Anyway, he called me a day or two later and said there was a federal program for getting loans like mine refinanced quickly and low-doc style and he knew a guy at Bank of America who specialized in them. My loan was already with B of A, so that was extra convenient. He gave me the guy's number and said someone would call me. That was it. I think he might have taken my SSN# for the guy, but that was all. I thanked him for his help, said I really appreciated the information, and I thought that was probably the last I'd hear from him.

Then he, the broker (we'll call him "Dave"), called me again about a week later and asked me if I'd talked to the B of A guy (we'll call him "Arnie"). I told Dave I didn't want him to go to anymore trouble and that I would follow through. I hadn't received a call from Arnie, so I did call and I left a message. Then I went out of town. While I was out of town, I got a call again from Dave--he wanted to know if I'd talked to Arnie. So this time I said to him, "I know you're putting some effort into this, so I'd like to talk about how this is going to work. Are you going to charge a fee? What's your role going to be in this? I want you to get paid if you're going to be doing the work." I mostly said this because I was realizing that he wasn't just letting it go, and I sure as hell wasn't going to agree to paying him a point. He said, "Let's just see what happens."

I spoke to Dave one more time before returning to CA, and again I asked him how this was going to work--how did he intend to get compensated? I did finally end up hearing from Arnie, but I didn't speak to him directly until about ten days later. At that point he said, "Wow . . . Dave has impeccable follow-through." Then I started the loan process with Arnie directly. I paid an application fee of like $450 and signed some disclosures and good faith things and whatnot. When Dave called again, I told him I'd already started the process. He said if I needed any papers taken to Arnie, he could do it. I explained that we were doing everything over the phone and electronically. For the third time, I asked him what his role was going to be and how he wanted to get paid. He told me to ask Arnie. So I asked Arnie, and Arnie said, "I don't know why Dave didn't do the loan himself. Maybe it wasn't large enough to be worth his time." Clearly, there was no plan for Dave to be involved any further. So I just called Dave and left a message and said Arnie didn't really say anything. But again I thanked Dave and I offered to buy him lunch to thank him. Yeah, maybe that's kind of lame, but I did give him at least three opportunities to charge me a fee of some sort.

I finished up the loan, and I didn't hear from Dave again until the loan was headed into escrow. Then I get the call from Dave, and he says . . . get this . . . that now that the loan has gone through and I will be skipping a payment in October (it wasn't really until November) and I'd be getting some money back (this was one of those loans where you couldn't get much money back--it was slightly over $200), then he'd like to charge me 1/2 a point because we're "friends." That was his favor to me. He wanted $825! I was shocked, but I ended up saying okay, put it through the escrow. At this point, there was still time to do something like that, I think. He said no, this was a different situation and we couldn't do it that way. This was a special favor for a friend. I said that the favor was more expensive than the actual business transaction. Then I suggested he work out a finder's fee with Arnie. He said he couldn't do that either because this was a special situation. I said I'd think about it, then I didn't call him back. Arnie only made about $450 off the whole thing. I was thinking about sending Dave $200, but I wanted to wait until escrow closed.

So a couple of weeks ago, I got an invoice from Dave. There were no services listed . . . it just said "services" and $825. And there was a note that said, "If you think my input was helpful, please submit payment." WTF? I haven't responded to that, either, but I've done a heck of a lot of research. Brokers aren't allowed to charge unless they've actually performed services dealing with the loan (he made a few phone calls). Also, there is supposed to be a disclosure of fees ahead of time, right?

None of this seems right, but I want an expert's opinion. I've totally learned my lesson. I won't deal with someone at all without either a written agreement of what they expect or a clear verbal agreement that I'm just asking a freaking question and there's no obligation to answer. I would not have agreed to paying $825 at all. I definitely wouldn't have agreed to paying it out of pocket, either. I'm supposed to be given that choice, right?

Someone who knows, please tell me what you think I should do. And please don't tell me I'm an idiot--I already know that.

m2c · Joined: 03 Aug 2005 Posts: 937

Obviously your “story” strains my credibility monitor but even though this isn’t the way things happen in the real world, I’ll accept the tale as gospel.

Consider just ignoring the bill. Don’t see how Dave could collect and they’re all sorts of issues about referral fees, RESPA, etc. Even though CA is a “foreign county”, I can’t believe this is permissible business practice. All LOs prepare a lot of analysis sheets and do extensive research only to see applicants walk and never see a dime; it’s just life. If Dave doesn’t just go away, you might say you’re confused and want to talk to CA’s state regulatory agency so you can fully understand everything.

The $450 is likely “history”. Money probably paid for an appraisal and credit report. You should have or, if not covered by HVCC, you can request a copy of the appraisal. Also you should have received written notice of the credit scores.

If you mortgage has been “sold” to Fannie or Freddie, a DU Refi or DU Refi Plus could be an option. Perhaps this is what the tag team of Dave and Arnie were attempting. Big advantage to you is that you can get a fixed rate and not have to pay mortgage insurance even though you have less than 20% equity. Dave and Arnie may have been attempting this but usually doesn’t work with a lender other than current servicer – why take on someone else’s problems? This type of refinance does differ from its predecessor – Option A Refinance – and you’ll need to go through income and asset verifications, etc but benefits are still substantial. I’d call the folks to whom you’re currently sending your monthly payments and inquire about your choices (I suspect “choice”).

vickro · Joined: 28 Nov 2009 Posts: 2

Thank you for responding. I realize it sounds kind of nuts.

I must have miscommunicated--the $450 went to Arnie who is an employee of Bank of America, so essentially, it went to B of A. It was an application fee, and I'm okay with that. There was no appraisal. I've already finished the refinance, and I did get a good rate. It was all through Arnie and B of A. I'm fairly certain they weren't working together on this. I'm thinking now that it's just a completely insane and unfounded request for payment.

What's baffling to me is that Dave thinks he should get paid for the referral or whatever it is he thinks he did. I just needed to hear what you just said--lots of brokers do the footwork and nothing comes of it. I'm taking that to mean that unless he's actually involved in the loan process, he doesn't get paid. And he wasn't involved in the loan process, escrow has closed, and Arnie received a small commission--significantly smaller than the $825 requested by the other dude.

Again, thanks. I have a better idea how to handle it.

EricJ · Joined: 09 Jan 2009 Posts: 321 Location: New Jersey

I agree...just ignore the bill for sure