Bank Reluctant to Disclose Mortgage Refinance Costs
by Judy from Marietta, Georgia
Ask Kate about mortgage refinance costs: Do you know your rights if you discover your bank isn't adequately disclosing mortgage fees? Judy is trying to refinance her home and isn't satisfied that she's getting the straight scoop on the closing costs for her FHA loan.
FHA Refinance Fees for Single Family Home By Judy M. from Marietta, Georgia
1. How do I confirm the 3rd party cost associated with my FHA refinancing? Lender is reluctant to provide invoices on escrow fees, document fees, etc.
2. Is the lender required to pay certain closing cost for a refinancing? If so, how can I verify which costs I should be paying and which cost the lender should pay?
3. This lender is charging me $5900 dollars total and unwilling to fully verify all costs associated with this total. Do I have any legal recourse if these charges are inflated?
Ask Kate answers: FHA Refinance Fees for Single Family Home
Before I answer your questions, I'd like to address the lack of trust in the lender already acquired in the early stages of your loan process.
If you do not feel the lending institution is shooting straight with you over document processing fees and other third party charges, it may be a signal to shop for a different company.
The mortgage process is too crucial to your homeownership to settle for a loan originator that makes you feel uneasy. As it is, getting a mortgage is full of mystery
So don't write off your gut reaction. Pay attention to instincts. An enticing mortgage quote is a poor reason to stick with a bank you don't trust, especially if you feel you aren't getting the straight scoop on third party charges.
How to Compare Service Provider Fees
After providing you with the initial Good Faith Estimate (GFE) and Truth-in-Lending (TIL) statements, the cost of third party fees cannot increase by more than 10%, that is, unless you select your own providers, for example, title insurance and escrow or attorney closing services.
More on Good Faith Estimates and fees can be found at Unraveling the Mystery of the GFE Form
Hear what the Consumer Financial Protection Bureau (CFPB) says about third party refinancing fees...
"If the charges that cannot increase have increased or the total of the charges that cannot increase more than 10 percent have exceeded the 10 percent increase limit, the lender must reimburse you at settlement or within thirty (30) days after settlement."
So explain to your loan originator that you need to know which companies they are using to quote the third party fees. How else do they expect you to be able shop the cost which, by the way, is your right.
Here's another tip to help with comparing closing costs. Contact three or four lenders and ask for Good Faith Estimates based on FHA refinancing to compare the charges. Although it will take a couple of hours out of your day, who knows... you may find you'd like to switch to another company for your loan!
Revised FHA Guidelines for Financing Fees Charged to a Borrower
Several years ago, HUD revised their guideline regarding closing costs that could be charged to borrowers. Prior to the revision, specific charges were commonly charged to the seller or in the case of a refinance, the lender.
The FHA guideline now allows borrowers to pay closing costs considered fair and reasonable, as well as customary fees and charges, as unspecific as that sounds
What Constitutes Predatory Lending Fees and Your Recourse
The CFPB states closing costs would fall somewhere under the 3% range. For example, when borrowing $150,000 for a home loan, average upfront points and fees would not exceed $4,500, as a rule of thumb.
But where should you turn if you feel the mortgage company is treating you unfairly? Submit a complaint to the Consumer Financial Protection Bureau
, the federal agency organized in 2011 to ensure fair treatment of consumers by supervising financial institutions and enforcing the law. They publish the names of mortgage lenders with the most complaints and problems encountered.
You can also call the Georgia Housing Finance Authority at 404-679-4940 to express your concerns over the lender's unwillingness to answer your inquiry regarding mortgage fees.
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