Mortgage broker On the Level?

July 27, 2012 1:21 PM

Is my mortgage broker drawing out the process on purpose? Is he getting paid now or is it a commission type business?

I have been trying to get a mortgage refinance for over 2 months. I know my situation is unusual: after my father's death my mother (they were long divorced) put up the money to allow me to buy out my siblings.
My mother got a loan on her house and used the money to buy the duplex in my name. There was a mortgage schedule for the loan and I made the payments faithfully. I think this was recorded as a mortgage on the building, not as a private matter.
There were other complications, but I'm not sure they are relevant to my question.
It seems that every day he asks me for more documentation for this and that, some of which I think should have been asked for at the beginning but always seem to hold up the closing. Now he says he is trying for a whole different type of loan and the building must be appraised again. What is going on?

posted by Kazimirovna to law & government (7 answers total)

It sounds like he's not able to secure financing. You keep talking about a closing date, do you know what financial institution will be holding your note? Have you received your good faith estimate yet? Do you know exactly where you'll be signing your paperwork?

If you know the answers to those questions, then the financing is in place. If you don't , he's stalling because he doesn't have an institution lined up to underwrite your loan.

Mortgage brokers get paid when the loan closes and it's a commission. So no, he's only hurting himself by drawing this out. A good broker gets you closed quickly.

Why aren't you asking your broker these questions?
posted by Ruthless Bunny at 1:25 PM on July 27, 2012

Oh, did you lock in a rate? That's very typical and it's time sensitive.
posted by Ruthless Bunny at 1:25 PM on July 27, 2012

I was about to ask him but I wanted more opinions first from more knowledgeable people. Fiscal matters are a total mystery to me and I felt he could confuse me more than he already has. Can I approach my credit union for a refinance without giving up on him? Is that allowed?
posted by Kazimirovna at 1:29 PM on July 27, 2012

Hard to answer, but remember that your broker is often times asking you for things that someone else (the bank) is asking him for.
posted by NotMyselfRightNow at 1:39 PM on July 27, 2012

Did you sign any paperwork? If so, what was it?

While fiscal matters may be mysterious, you really need to understand what's going on so you don't get taken advantage of.

Typically what happens is that you sign preliminary paperwork and provide documentation (bank statements, pay stubs, credit reports, etc.) Then your broker says, XYZ Company is going to be funding your mortgage. Then you get a good faith estimate for the closing costs, monthly loan payments, interest rate, and other details.

The funding institution will have an appraiser come out to determine if the loan amount is appropriate for the property. You will pay for this. There may be a need for a survey of the property, title insurance and a flood certificate. If you have a mortgage now, find your title insurance policy. It should still be good and you can save about $350 in closing costs.

These are all signs that the wheels are turning.

Then, when the bank is secure that the value of the property covers the loan, your broker will call you with a firm closing date. Come hell or high water, it's going down. With 24 hours of closing you'll go to the bank for the cashiers check to cover the closing costs.

Then you show up at the lawyers, or title company (depending on where this is happening) and you sign your name 100 times. Then you get a thick packet of papers and a promise to be on the look out for the official warantee deed from your county registrar.

NEVER do a financial transaction if you don't understand what to expect. Only do business with institutions and people who will take the time to explain the process to you. Ask as many questions as you want and if you feel uncomfortable, don't do the deal.
posted by Ruthless Bunny at 1:44 PM on July 27, 2012

I'd like to start with the current status of the property you're living in. You live in half the duplex, right? And your mom your mom lives elsewhere? It sounds like your mom borrowed money from the equity on her house. She might have mortgaged her home or taken out a home equity loan to do this. She used that money to pay for your home in full, so you currently have no mortgage. Informally, you owe her and she owes the bank. To save an extra step, you've agreed to send a check directly to her bank instead of paying her and having her pay the bank. Is all that correct?

Next, you are trying to get a mortgage on your home in your own name so you can pay back your mom all at once and just owe a bank? Is that correct?

If you aren't sure, many areas have real estate transaction records and mortgage records available online. You can look for your mom's records in her area and your records in your area. Things you'll want to check on:

- Is the title for your home listed in ONLY your name?
- Are there any loans currently on your home? (For example, your mom borrowed money to pay off your siblings and you've been paying on a mortgage on your property in your late father's name, so all the work of settling the estate and formally transferring ownership hasn't been done yet.)
- Are you listed on any loans on your mom's home?
posted by Gable Oak at 3:56 PM on July 27, 2012

I closed on my refinance in January. I first applied for the refinancing in early September. My coworker just closed on her own refinance, and it took her six months. Both of us experienced the endless repeated demands for documentation (pay stubs, tax returns). Neither refi was complicated at all, and we did not do any form of cash out.

Neither of us used brokers; we applied directly to the lenders (credit unions).

I think it just takes that long. They aren't handing out refis these days like they used to.
posted by caryatid at 5:12 PM on July 27, 2012