Hidden Costs

David · Joined: 19 May 2004 Posts: 754 Location: Atlanta, GA

In the thread about Ditech, at least two people mentioned to beware of hidden costs. What are some important questions a consumer should ask to help find out about hidden costs before it is too late?

Does the old adage, "If it sounds too good to be true, it probably is", apply to mortgages?

Gray Goose · Joined: 25 Jan 2005 Posts: 32 Location: Edmond, OK

David:

What do you think Ditech is going to say when you ask about "hidden closing costs"? They lied to get your attention. Do you think they suddenly reformed?

Our business has tons of papers in the transaction. Most borrowers don't have a clue what they are signing.

Most originating companies are honest; some bait and switch and get away with fraud.

How does a borrower choose a company that's honest? Ask someone in your sphere of trust (63% of our business comes from referrals). Or count on good luck (inadvisable).

David · Joined: 19 May 2004 Posts: 754 Location: Atlanta, GA

Good point Gray Goose
I will trying to get some good recommendations from people. I guess what makes it harder is how often do you buy a house? Most people only buy one or two in a lifetime. I'll bet there are lots of nice brokers who get lots of referrals because they are nice to people, yet they are taking a greater than average cut.

I'm not sure if I feel any more educated. Would you mind pointing out some common methods that are used to mark up a loan where the consumer doesn't even realize it?

Nikko · Joined: 20 Jan 2005 Posts: 536 Location: Northern CA

Two words, David- Junk Fees. When you look at the Good Faith Estimate, which is a listing of fees involved with the loan, you will see many different itemized fees. Most are legit, some may not be. If you were to look at one of these and not understand what a particular fee was, you would want to question it immediately. If it doesn't make any sense, it's likely a "junk fee", money that may go to the broker as part of their compensation.

prmi_ae · Joined: 25 Jan 2005 Posts: 17 Location: Michigan

Maybe we should ask Ameriquest how they feel about this question. :D

chow · Posted: Wed Jan 26, 2005 3:57 pm Post subject:

tcreed wrote: Maybe we should ask Ameriquest how they feel about this question. :D

excuse me while I clean off my monitor. (I just exhaled coffee through the nose)

If you have a line of credit, and close loans on the line of credit, then sell those loans to your investors-you end up with fee's your investors will accept on the GFE and TILA.

I somehow get the impression Goose, Will, and I have an audience of Unseasoned or Uniformed Lo's?

(I would never look down my small short furry nose at any of you)

Here is the issue(s)

People shop for best rates and programs. Some LO'S are honest-some are not. What is a legit junk fee?

I'm here to tell you- I lived through the Asian Flu in 99-2000. We watched many a lender/investor fall over and hit the wall because they couldn't deliver pools to secondary markets. The rules changed in the middle of the night when the 3rd layer went belly up. Any company who doesn't have a solid relationship with a end investor(s), Could be a nightmare.

And last but not least. If you are dealing with people who have "the single largest investment-in their lives, in a home purchase"-you need to expand your horizons. 8)

If you don't "get this statement" email me. Real Estate is a good investment, as long as you own more than a few trac's and homes.

BECCA9892003 · Joined: 20 Jan 2005 Posts: 400 Location: Altoona, PA

nothing in life is free....its a given statement.

when pricing fees alot goes into the calculation...how long will it take to get loan closed,how much work is involved....there is a figure you like to obtain on any loan...most of my loans have all the customary and usual fees....as far as points charged...all depends on what were trying to get for a rate and how much work on my part i will have to commit to get the loan closed..the nice thing is on thebrokers side..is all my fees are negotiatable....most banks dont have that option...

prmi_ae · Joined: 25 Jan 2005 Posts: 17 Location: Michigan

Becca,
You sound like a broker I would actually like to do business with. (Those are few and far between, by the way). Do you do subprime?

{broken link removed}

BECCA9892003 · Joined: 20 Jan 2005 Posts: 400 Location: Altoona, PA

yes i do mainly sub-prime..anyone can do the cookie cutter loans...we specialize in new products to get our clients financing...we also do first time homebuyer seminars and credit repair seminars..

brunk1 · Joined: 25 Jan 2005 Posts: 6 Location: Dayton, OH

Becca

I have noticed here and on the vine that you are doing these Home Buyer Seminars. I have the program put together for some here in Southern Ohio that I am trying to market now.

My question is would you mind sharing how you market your program. I noticed that at your first one you had 20 some guests. That is great. Any help would be appreciated.

Thanks

BECCA9892003 · Joined: 20 Jan 2005 Posts: 400 Location: Altoona, PA

I can give you some ideas...and our second one which was held on the 18 brought us in 30 people and netted 8 loans....

we market very sparsley..becasue we have guest speakers from local realty offices and creidt repair experts they also help us get the word out..we do a mailing through the chamber we fax our flyers we put them up around town..we do no mass advertiseing for it....word of mouth goes a long way these days...the PAMBA has also reconized also now that we are doing them....

lodge1 · Joined: 29 Jan 2005 Posts: 7 Location: Houston, TX

When I have a borrower shop me or give me some quote they received with an online company or Ditech, I usually call the lender on 3 way with the borrower listening while I shop them. That way I can ask more detailed questions that will get through the crap they are advertising.

David · Joined: 19 May 2004 Posts: 754 Location: Atlanta, GA

lodge1 wrote: When I have a borrower shop me or give me some quote they received with an online company or Ditech, I usually call the lender on 3 way with the borrower listening while I shop them. That way I can ask more detailed questions that will get through the crap they are advertising.

That is a GREAT idea. I'd love to hear the questions you are asking. It is so difficult for a non-LO to know what to ask.

lodge1 · Joined: 29 Jan 2005 Posts: 7 Location: Houston, TX

In most cases the borrowers have gone online to say...eloan. Well let's say eloan is quoting on their front page 5.5% 30 yr fixed NO closing costs. Ok, if you actually go through the process on eloan and put in your information you will find that the rate they quoted on their front page is their lowest rate, but you will also see that it costs 3+ points to get, their "no cost" loan really costs 6.375% (these are example rates, I don't know what their quoting today) you can go there and see for yourself. On the phone deals I call and ask to speak to a loan officer, i give the scenario that will apply to my borrower and ask for a quote. Once I get the quote from them I question them about every fee and if the fees they are quoting me apply to the specific rate they gave me originally. I also ask them the APR, if it is much higher than the rate, i know there are "hidden" fees they conveniently forgot to tell me. It's hard to put it in writing. I did find one deal that really did sound awesome and I couldn't find anything wrong with it, I told the borrower it was a good deal and I can't beat it. As long as I'm not competing with a Lending Tree lender on an "A" paper deal, I will always find a way to do better. Usually I will educate the borrower that a 30 yr fixed rate loan is not the best loan for them and find a product that is more in their financial best interest, which I will also be able to make more money on.

lodge1 · Joined: 29 Jan 2005 Posts: 7 Location: Houston, TX

In almost all cases the true scenario of the borrower will change the quote and fees. One lender we shopped was quoting our borrower a rate almost .5 below ours, the lender did actually have a program with that rate but it was for a min $275k loan and the borrower had to have a mid score over 800 to qualify. The actual rate the borrower would have qualified through this lender was .125% worse than ours. I called the lender back without the borrower on the phone to get the real deal on the program. They had a portfolio loan that they would could use but it was only so they could advertise their rate. He told me they had only done 1 loan on it in over a year. We all use the same money and get our rates from the same sources, if it sounds to good to be true, it usually is.

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