Posted by CopperheadVA on 2/3/09 1:53pm
Msg #276401

Can you believe this one?

I did a loan app appointment yesterday. One of the disclosure docs listed the estimated closing costs, and made the final figure seem very low because it took into account the anticipated refund from the current escrow account, and some sort of IRS tax form # 4058T that would recover 30% of the closing costs back to the borrower, and also factored in "missing two mortgage payments".

Then later in the package there was a doc that said the following:

I/We acknowledge that, although we have applied for a refinance debt consolidation loan with XXX, all our consumer and installment debts are still required to be paid in a timely manner. I/We will maintain our payments as they become due and have not been advised otherwise.

Borrower Signature _____________________


Borrower told me that L/O did indeed tell her to skip two mortgage payments, so how can she sign this doc? Alrighty then, let’s call the L/O. Borrower calls L/O and asks about it and expresses concern. I can hear L/O through the phone telling the borrower that she will not let anything bad happen to her credit, that it’s perfectly fine to miss two payments, etc. Also, she says that the doc in the disclosure package refers to making her required payment on the new loan she’s applying for – that it doesn’t apply to her current loan.

I just kept a poker face and the borrower accepted the L/O’s explanation and signed the doc. Unbelievable.

Reply by Linda Juenger on 2/3/09 2:14pm
Msg #276404

I ran into a similar situation not too long ago. This is one of the reasons why I am not doing Respa's anymore. I don't care to do them anymore. I guess its just me.

Reply by Susan Fischer on 2/3/09 10:47pm
Msg #276485

Not just you, Linda. If it walks like a duck... n/m

Reply by Linda_H/FL on 2/3/09 2:15pm
Msg #276405

This LO sounds like a real piece of work - sort of along the lines of those who helped create the mess many people are in today...no one will ever convince me that it's okay to miss two mortgage payments..but you know what?...

"the borrower accepted the L/O’s explanation and signed the doc."

The borrower is just as much at fault - "trust me I won't let anything bad happen" .... right .... "she says that the doc in the disclosure package refers to making her required payment on the new loan she’s applying for – that it doesn’t apply to her current loan." - the disclosure speaks for itself and no it does not apply to the new loan - it applies to current debts...

I can't believe the borrower accepted these statements...all I can think is she must be in some situation where she just has no choice and is allowing herself to be strung along like a lamb being led to slaughter...

Sometimes you just can't save people from themselves.

Reply by CopperheadVA on 2/3/09 2:20pm
Msg #276406

I agree - borrower is a big girl and should know better. Her gut was telling her it didn't pass the smell test, but she went with the L/O's explanation. She's approx 50 years old and seemed pretty intelligent to me. I don't think she was under any financial stress, at least she didn't let on that was the case. She was simply refi-ing because she could go from a 6% to a 5% or lower rate. This was a VA loan, too.

Reply by jba/fl on 2/3/09 2:28pm
Msg #276408

"I don't think she was under any financial stress,"

If she has not made 2 mtg payments, she is under financial stress.

During the day, many were told by LO's that they no longer needed to pay mtg payments, that all would be ok, we're going to close any day now, blah, blah, blah, then NSA arrives to gather sigs and notarize and the poor BO is standing with their backs against the wall. If it's not in writing, ignore the LO, the greedy bas*****! Of course, I do not absolve the BO for listening to the garbage and throwing their credit away and/or thinking rationally, but I suppose that they were just as greedy as well. JMO

Reply by CopperheadVA on 2/3/09 2:30pm
Msg #276410

The borrower is currently paid up thru Jan 2009 on current mortgage. L/O was telling her to skip Feb and March payments.

Reply by jba/fl on 2/3/09 2:34pm
Msg #276412

I read a bit fast on the first post, but, notwithstanding, this still smacks of less than stellar performance. My scenerio would definately come into place shuld this loan have a cloud on title, for ex., and have to be delayed till May or whatever. Been there, seen it in the past. (not personally to self, others tho.)

Reply by MistarellaFL on 2/3/09 2:45pm
Msg #276416

Sounds more like a mod than a refi n/m

Reply by MistarellaFL on 2/3/09 2:52pm
Msg #276420

Meant sounds more like a mod than a loan :) n/m

Reply by MarcyLA on 2/3/09 3:16pm
Msg #276423

"The borrower is currently paid up thru Jan 2009 on current mortgage. L/O was telling her to skip Feb and March payments"

Is the amount due for Feb included in payoff?...and is March interest collected on "paid in advance" section of HUD (line 901)? If this is the case, Feb will be taken care of. It's the same as closing EOM...March pmt wouldn't be due---March interest is collected on HUD line 901. First pmt should be due in April.... This is ok unless I am misunderstanding the scenario.

Reply by Joan_OH on 2/3/09 3:27pm
Msg #276426

The problem is that it smacks of what they were doing years ago. Tell the buyer don't make the payments, it will all be included in the payoff - then the notary arrives with loan docs with entirely different terms, higher closing costs, FIXED/Adjustable, etc, and the borrower's back is up against the wall because if they decide not to go with it, they now have to come up with 2 payments. Don't bother trying to find another lender at this point because the old credit score took a nose dive because the borrower was now 2 months behind on Mortgage payments.

There's a reason this disclosure is now showing up in the document sets. What the LO told this borrower is completely unethical if not illegal.

Saying all that, I wonder what the borrower spent their missed mortgage payments on because you can bet if that are falling for this line of crap they spent it on something really important like a new flat screen or something.

Joan-OH

Reply by Linda_H/FL on 2/3/09 3:44pm
Msg #276431

Marcy, what if they don't get the loan (or modification)? Her February payment is due right now - what if the underwriting time, and time to clear issues up, takes over 60 days? This person is now seriously delinquent. Unless this person has stellar credit with scores over 800 (and I doubt that's the scenario because it's a debt consolidation), I find it irresponsible for the LO to say "don't make your Feb. or Mar. payments" without absolute certainty that this woman will qualify for the loan. We just looked into refinancing in November and were told flat out to keep making our mortgage payments - which I would have anyway..

Besides all that, when you refinance, your escrow refund and one-month skipped payment should be money in your pocket - not amounts already paid and used to offset the costs of the new loan.

MHO

Reply by MarcyLA on 2/3/09 3:47pm
Msg #276432

Sorry, after reading again I see it wasn't a closing, but an application appt. If it were a closing and it didn't fund this week, there is still time to make Feb pmt and all is well.
It's amazing to see these things still happening...

Reply by cdoty_IL on 2/3/09 3:55pm
Msg #276433

This comment can be taken two ways...

Was the L/O referring to the two month break she would get no making payments because of the Loan payment not being due till April 1st, 2009?? If she was paid up till January 2009 as you stated before, then I do not see an issue and she could go on ahed and sign the disclosure.

However, if the L/O was telling her to stop making payments on her previous loan (current loan when she was inquiring to refinance) then I do not think she should have signed it. Of course, being a notary we can not advise the borrower on what to do in this scenario and calling the LO was a right move.....but if this is the case then he gave her ill advice.

I am hoping it was the first scenario for the borrowers sake.

Reply by Linda_H/FL on 2/3/09 4:05pm
Msg #276436

First of all, if she's just applying, unless she closes tomorrow her February payment is going to be late, incurring late fees along with a ding on her credit...also

"although we have applied for a refinance debt consolidation loan with XXX, all our consumer and installment debts are still required to be paid in a timely manner. I/We will maintain our payments as they become due and have not been advised otherwise"

This statement is pretty clear - We've applied for a refinance loan but will keep making our consumer and installment debt payments and have not been told not to do so...it's referring to current debt and current loan payments...MHO

Reply by CopperheadVA on 2/3/09 6:05pm
Msg #276449

The paperwork that I brought to the borrower was the initial loan application and disclosures that begin the loan process - also known as a RESPA appt.

The missed payments (Feb and March) would be missed during the underwriting and approval process. This was NOT a loan that just now signed and funded, with first payment not due until April 1st. This loan would presumably sign and fund sometime in March. As others have already indicated, something could easily delay the process and the loan could not be ready to sign until April, OR the loan terms could change and by then the borrower is stuck between a rock and a hard place.

There was also a doc in the package that advised the borrower to set the funds aside for the missed payments and not spend it, just in case they are needed. The whole thing just sounds fishy to me. Hopefully the borrower will wise up before she actually signs loan docs. And hopefully she ends up making her payments as scheduled. It just didn't sit well with me that the closing costs were artificially reduced by the missed payments.

Reply by cdoty_IL on 2/3/09 7:05pm
Msg #276457

I must have missed that it was a RESPA signing in your original comment, so there goes my theory of the L/O explaining something the borrower misunderstood. I believe in the "innocent till proven guilty" theory......

IMO I would not sign such a document, and regardless of what anyone tells her, once a payment is over 30 days late it is reported to the credit bureaus and will show on your credit history. And most likely when she tries to explain her default to whomever finds it on her credit report.......I am sure they will not take her word for it.

I wonder what their thought process is behind this?? I wonder if it is an in-house refi??

Reply by Maureen_nh on 2/3/09 9:52pm
Msg #276478

See if this scenario makes sense to you guys.
Some of these Respa folksare doing hardship ie "bailout" loans. The way to show hardship is to miss payments. Then you may or may not have a delinquensy letter to show.
I have picked up a few hints of this little go round.
I believe maybe someone on one the board had written that that is how some folks who otherwise couldn't finance at a lower rate because they were upsidedown were going to get around it even though they were well able to make payments on their currant mortgages.

Reply by CaliNotary on 2/3/09 7:55pm
Msg #276464

"The borrower is currently paid up thru Jan 2009 on current mortgage. L/O was telling her to skip Feb and March payments."

But that's completely normal for refi's that are done at the beginning of the month. February's payment is taken care of when the loan closes, and the new loan's first payment would be due April 1. If she chose not to sign the loan papers she wouldn't even be hit with a late charge for February.

Am I missing something?

Reply by Pat/IL on 2/3/09 8:07pm
Msg #276465

"Am I missing something?"

You are missing something. This was a RESPA signing.

Reply by CaliNotary on 2/3/09 8:11pm
Msg #276467

D'oh! n/m