Fees due after canceled refinance

Real Estate Matters

August 31, 2008|By ILYCE GLINK | ILYCE GLINK,thinkglink.co

I was going to refinance my loan on my house. The day I was going to sign the closing papers, I asked again what the loan amount and monthly payment would be. It was higher than what I was told originally, so I canceled the refinance. My appraisal fee was going to be free, but now they're saying I have to pay it since the loan was not closed. But the only reason I did not close was because the figures changed. Do I have to pay it?

You may have to. Often, when you sign an application to do a loan, you agree (in the fine print) to pay any out-of-pocket costs associated with underwriting the loan if you don't wind up closing. Typically, an out-of-pocket appraisal fee would fall under the category of "out-of-pocket costs," as might the cost of pulling your credit history and credit score. Please go back and look at your application to see what it says.

However, I'm troubled that your numbers were different at the closing table than what you were promised. Do you have the Truth In Lending statement that the lender should have given you when you applied for the loan or within a couple of days from that date? Did you lock in your interest rate when you applied for the loan or sometime after you applied? Did your monthly payment change or did the closing fees change? If your closing fees changed, do you know why? If your monthly payment changed, do you know why it changed?

If you have answers to these questions, you are better able to determine whether you should or should not pay for the lender expenses.

If you failed to lock in the interest rate for your loan and interest rates went up, your lender did nothing wrong. You would have been entitled to not close, but might be responsible for the lender's out-of-pocket expenses. But if you locked in your interest rate, did everything you were supposed to do, and the lender changed the loan amount, changed the interest rate or added fees, you might not have to pay those fees and may have a claim against the lender for violating the terms of your loan and the terms given to you under the good faith estimate of fees.

If you aren't sure of what your application says, a real estate attorney may be able to help.

I am currently in default on my first mortgage for my condo. I bought a one-bedroom condo for $220,000 in 2005, and recently married and moved out of state. There's another unit in the building that was foreclosed on last October. It is listed for $89,000 and has not yet sold. What will the ramifications be if I choose to default on my home equity line of credit? I'm already taking the credit hit for the foreclosure. How much worse can it be?

I suppose the silver lining is that if you also default on your home equity line of credit, your credit history and score won't be much worse than they are right now.

The concern I have for you now is how you wind down your relationship with the lenders. You must make certain that your primary lender takes back the house as the sum total of what you owe. Once you do that, you will have to negotiate with the home equity lender to make sure that this debt is forgiven.

What you don't want is for these lenders, or the private mortgage insurance company that insured the top 20 percent of your loan to come after you several years from now demanding repayment. A real estate attorney should make sure that all of your loose ends are tied up.

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