Mortgage officer screwed us over. Help me not have a total meltdown.
March 17, 2017 10:21 AM   Subscribe

The upshot: we are first-time homebuyers. We were diligent in asking questions and turning in our paperwork, but our loan officer dragged his feet and gave us misleading information about the loan process. Interest rates have been climbing...and we ended up on the wrong side of this week's rate hike. I am so angry that we didn't get better guidance. The extra costs aren't going to kill us, but thinking about how much it's going to cost us in the long run is making me sick with anxiety. How can I deal with this?

My partner and I are first-time homebuyers. After shopping around, we decided to use a smaller, less commercial bank because we prefer their values, and because they offered an interest rate discount to first-time buyers.

We're not financial experts, and obviously we've never tried to get a mortgage. We tried to do it right. From the very beginning, we asked and asked when we could lock our interest rate. Our loan officer never explained the process to us, never gave us any guidance (and now we know we weren't asking the right questions). So—after another round of asking about locking our rate—we got a mortgage commitment letter with an interest rate and a deadline, so we thought our interest rate was locked. That was about a month ago, but they needed a little more paperwork. Throughout the process, we were quite diligent in submitting everything, but the bank would stall, or tell us that they actually needed a different piece of paperwork than they had initially asked for. We finally got the last little thing in on Monday. Radio silence. We nudged them on Wednesday morning about finalizing our mortgage. But on Wednesday, the Fed raised interest rates. So when the bank finally got back to us about our rate that afternoon, it was .65% higher than on our letter.

As far as I can tell, there's not much we can do about our rate now. (Please tell me if there is! I know about buying points, which doesn't seem worth it in our situation.) Do we have any other options?

More importantly, please help me deal with my anger and shock. I know we are luckier than most people, and that higher interest rates also help with our invested savings, and that our home (in a currently hot neighborhood) will probably gain value, etc etc etc. But I can't stop crying. I feel betrayed and heartbroken. I keep thinking about everything the lost money could pay for. About the little things we could have done better (even though we basically did everything right). About the loan officer who could have explained how rate locking actually works, and who had to have known that the Fed was predicted to raise rates on Wednesday (as I now know...). And now we're stuck in a relationship with this bank, a relationship that's always going to feel bitter.

How can I get on with my life? I'm a total mess. I go to therapy; I take anxiety meds; I've done CBT. I know I'm overreacting, but rationalizing the situation hasn't helped so far.
posted by sockity sock to Work & Money (19 answers total) 4 users marked this as a favorite
Well, you're not stuck with this bank and this loan forever. My current home loan has been sold at least twice since I got it 2.5 years ago! Also you can always refinance to a lower rate in the future, especially if you are in a hot market where you suddenly find yourself with a lot more home equity.

And in case a sob story from someone else helps you, here is mine: yesterday I put in an offer on my dream home and I was outbid with an all-cash offer that was $130k over my maximum bid, PLUS $100k of cash for the sellers (not even earnest money, just bonus bribe money to sweeten the pot). I don't even think I'll get to a point of getting a new mortgage because I can't even compete in this market! I was pretty heartbroken yesterday but today is another day.
posted by joan_holloway at 10:32 AM on March 17, 2017 [4 favorites]

I'm sorry this happened to you. No matter how you look at it, buying a property is SUPER stressful. And buying your first property? Even more stressful because you basically learn as you go. Forgive yourself for crying, okay? It's completely okay to feel heartbroken for a bit. It will pass - especially when you get into your new home.

Some brokers are better than others. When my husband and I bought our first home together, we had an excellent broker. This time around? Not so much - kind of a flake, and caused us both a lot of grief and anxiety.

But the grief and anxiety just seems so much more INTENSE when you're in between homes. Let me guess: you're a very thorough person who is reliable, gets the details right and works hard, right? Of COURSE you're going to feel thrown from a hurricane when you don't have control over such a huge decision with long-term ramifications. It's a normal reaction.

Breathe. You're in a gap between two lives - the life at your old place, and the life in your new place. Last night I pulled the "No-thingness" tarot card from Osho Zen Tarot (recommended somewhere in the blue), it resonated with me (also between homes) and it might give you some comfort:

“Being "in the gap" can be disorienting and even scary. Nothing to hold on to, no sense of direction, not even a hint of what choices and possibilities might lie ahead. But it was just this state of pure potential that existed before the universe was created. All you can do now is to relax into this no-thingness...fall into this silence between the this gap between the outgoing and incoming breath. And treasure each empty moment of the experience. Something sacred is about to be born.”

Good luck - this will pass and you WILL feel better.
posted by Dressed to Kill at 10:39 AM on March 17, 2017 [4 favorites]

Just as an anectode, when I was refinancing last year, also with a small local bank, the interest rate went up by .25 point or so between when I submitted the application and when we would receive the lock. I got on the phone with the loan officer and asked them if we could get the lower rate and they gave it to us.

I don't really know why they would care since the profit they make is from the loan application processing and documentation fees. When they resell the loan to another bank, they have already made their money so giving a lower rate doesn't really affect the originating bank.

If I were you, call the bank, or go there in person, and ask to speak with this mortgage officer's boss. Ask for the lower rate, ask to work with a different officer if you don't think this one is going to step up and do their job correctly, or look for a new lender. They're not doing you any favors by lending you money to buy a house, you're doing them a favor by giving them interest payments for the next 15/20/30 years or whatever, so make them work for you!
posted by eatcake at 10:40 AM on March 17, 2017 [23 favorites]

The extra costs aren't going to kill us, but thinking about how much it's going to cost us in the long run is making me sick with anxiety. How can I deal with this?

By knowing you can refinance later on. A mortgage is a very, very long term endeavor.
posted by DarlingBri at 10:40 AM on March 17, 2017 [5 favorites]

It's hard because you haven't said what state and what step you're up to.

Have you signed the purchase and sale agreement for the house?

If so you're probably stuck. If not, tell them what you want (i.e. the rate sans 0.65% - which is obscene given the rates were only hiked a quarter point). Investigate other mortgage brokers in the meantime. There are plenty of people out there that will move mountains because it's an easy way for them to make five grand in an afternoon. There's also online lenders where you can get good faith estimates and quotes.

If you can walk, don't be afraid to walk. I was on a tight timeline and my mortgage broker, who I had been working with from the start, came back with 3.825%. This was absolutely ridiculous because there were comparable advertised rates (which in a lot of cases you may not get) of 3.5% on the market. The problem was our time. I found someone quick, they said if we submitted everything (that we had already collected) to them they could have something back to us in 48 hours. I went back to our broker with this information and funnily enough he came back with 3.625%.

He probably thought it was a dick move. I thought it was a dick move to try and shaft me with a quarter point.
posted by Talez at 10:41 AM on March 17, 2017 [8 favorites]

First time homebuying is hard! Heck, homebuying is hard in general. My wife and I went to a mortgage workshop while shopping for our first house, got preapproved, only to find out after closing had already been scheduled that it was a scammy lender with a bunch of fees and rate hikes. So we had to rush to get a different lender in place. (Later when we sold the house we found out that the seller and his lawyer had colluded to falsify the certificate of occupancy!) Just hang in there. It's stressful. If you can still afford it, it's all good. You can't control the rates going up or down, or the timeline, or the market. You just have to do what you can with what you have. Sounds like you're doing that.
posted by rikschell at 10:44 AM on March 17, 2017

I don't really know why they would care since the profit they make is from the loan application processing and documentation fees. When they resell the loan to another bank, they have already made their money so giving a lower rate doesn't really affect the originating bank.

Hmm? Why do you think the bank that purchases the loan would pay the same amount for a loan with an interest rate of X% as for one with a rate of X+.025%?

OP: Chalk it up as a lesson learned. Stop treating your interactions with corporations as if they were interactions with human beings who might care about you or who might be trusted or whom you should rely on in any way whatsoever to do right by you. You'll save yourself a lot of heartache. They do everything in their power to make you think that way, so please don't take this as blame, but it's not true.

Also, this isn't entirely clear in your post, but if your mortgage was affordable before but not after a (relatively!) small hike, you should probably be reconsidering whether you should be taking it out.

All that said, the Fed raised the rate 25 bp, so I don't know why they're asking for 65. That's the kind of thing that would make me pause and reconsider whether I could manage the process with a different bank. May or may not be feasible depending on where you are in the process.
posted by praemunire at 10:50 AM on March 17, 2017

I'll give you a friendly heads-up right now: the closing process is even worse.

Numbers that you think can be determined ahead of time will be computed at the very last minute. Nobody will have any details until that moment. Things go missing. The appraiser messed up. Things are delayed. You're $17.25 short on the balance and the closer won't take a personal check or cash. Everyone sits in a room waiting for a single key piece of paper to arrive via a fax machine teleported in from 1985. It will drive you absolutely freaking insane.

I know this sounds crappy and completely the wrong thing to say at this very point in your process. Just know that we've all been through it, it completely sucks, and it has always been this way.

The upside is getting your house key at the end of the last signature. Focus on that.
posted by JoeZydeco at 10:51 AM on March 17, 2017 [25 favorites]

We were shocked by how sucky our mortgage broker was. She forgot stuff, wouldn't answer our questions, clearly gave us an intentionally low estimate about what property taxes would be, got defensive when we asked questions. When we refinanced we had someone who seemed to have more integrity and better communication skills, plus of course we understood the process slightly better that point, but even so, ultimately his interest was not in making things best for us. The whole process just sucks.

Some of this is not the broker - weird last minute paperwork changes are de rigueur. But... you could try complaining and see if the mortgage broker will cover some of your closing costs to make it up to you. Also you can fire this person and move on.
posted by latkes at 10:59 AM on March 17, 2017

Unfortunately, you're unlikely to be able to refinance for less in the future. We're no longer at the rock bottom rates that we were but they're still quite low and they're likely to continue to rise in the future.

Assuming this is a physical bank near you, the first thing I'd do is go speak with the branch manager in-person and ask them to make things right for you.

I'd also recommend shopping around for loans elsewhere - unless there's a reason why you *have* to use this particular bank like an imminent closing date, you probably have time to shop around for better rates elsewhere.

And yes, expect the underwriting process to suck and be unpleasant.
posted by Candleman at 11:04 AM on March 17, 2017

Hi, I'm a co-founder of a new mortgage lender working to solve this exact problem of lack of transparency to borrowers. We haven't launched yet, but here's a few tips for you:

1. How much time do you have until closing? There's nothing preventing you from applying from a mortgage with someone else if you can find better rates. The broker will strongly insinuate that you are committed to them, but there is no legal reason you can't walk away. You may have to pay another appraisal fee, but that's about it. I had a similar situation where my rate mysteriously went up 0.5%. Went to another lender, which was much faster since I had all the paperwork ready, and got a rate that was 0.375% lower. Still 0.125% higher than where I started, but much easier to swallow.

2. The fed rate and mortgage interest rates aren't directly correlated. While there is a bit of correlation, it's very distant. It has been known for awhile that the fed was going to raise rates, so that was probably already priced in. It could be any of a wide variety of unpredictable reasons that your rate went up, so you should let yourself off the hook for that.

3. That said, it's also possible your lender is unscrupulous and trying to pull a fast one on you, using the fed as an excuse. Letting them know that you're going to shop around should straighten them out pretty quickly.

4. Depending on what state you live in, you can do a no-cost refi after 1 month with an online lender like PenFed and get a better rate and divest yourself from this bank. If you're in NYC or another area with high mortgage taxes, then this won't be an attractive option.

5. Don't bother with points unless you know absolutely for a fact you will be living in the home long enough for it to be worthwhile.

Feel free to MeMail me with further questions!
posted by AaRdVarK at 11:05 AM on March 17, 2017 [13 favorites]

As others have said, if you can, look for another mortgage.

Note that national average market rates actually dropped by 0.12 percentage points on Wednesday, according to this source. So it could be not a matter of rates increasing but the broker citing you a lower rate than they could actually get. (Rates do vary by region, type of house, etc., so it is possible that your rate did go up, but 0.65 percent is a big jump, so I'm suspicious).
posted by Mr.Know-it-some at 11:28 AM on March 17, 2017 [2 favorites]

We went for a small company for our mortgage and were mostly happy with them. The mortgage was sold 2 months later to Citibank. It's possible that this will happen with you and then you won't be stuck dealing with this bank that has disappointed you so badly!
posted by getawaysticks at 11:30 AM on March 17, 2017

Good suggestions above. But, as my husband (who has bought several homes over the last couple decades)reminds me, even after the hike this rate is lower than it's been for most of our lives. Except for the years after the 2008 recession, it's still lower than it's been since I've been alive.
posted by late afternoon dreaming hotel at 12:27 PM on March 17, 2017 [5 favorites]

Agree with everything Candlemas said -- I'd have strong words with the bank (which I did with mine at some point during the mortgage negotiation process, and while they didn't do anything immediately, at that point they gave me a bribe, maybe $100, and apologized and said they hoped I would enjoy dinner out on them that night...!!), and then line up some other banks and some other brokers in a hurry.

Ruthlessly play them off each other. It's business; there are no loyalties required for the nice guy when shopping for a mortgage. Keep going around. "Hey, original bank. Bank of the Pacific can do X%." "Oops, sorry, Bank of the Pacific -- I've been offered X% by Susan Smith Mortgage Brokers. Can you better that?" I ended up with my original bank in the end, but with a lowered rate for all that calling around. (At the end of it they offered a tiny smidge less than the lowest rate I could find elsewhere.)

Good luck; buying a house is neat but the process is not a lot of fun.

(I'm in Canada, sorry if my strategy is unworkable where you are)
posted by kmennie at 12:54 PM on March 17, 2017

MeFi, thank you a million times. I want to mark everyone's answer as best. Thank you for sharing your war stories, for reminding me that homebuying is hard, for telling me to breathe, and for educating me further on the process of getting a mortgage. I checked in (via our broker) with another lender who had already pre-approved us, and they can offer us a rate that's .40% lower than the one from Original Bank AND turn it around very quickly. (They have a strong relationship with our broker.) Which certainly does take the edge off, plus gives us a bargaining chip with OB. I wouldn't have even known I could ask if you hadn't told me.
posted by sockity sock at 1:08 PM on March 17, 2017 [20 favorites]

When we refinanced our house in order to cash out some equity to pay for some home improvements, we used the same credit union that held our initial loan. We'd had a great experience with them when we first purchased the house, and figured we'd have no trouble with the refinance.

By the end of the process, which took about three months from start to finish, we dealt with no fewer than four different loan officers. Every one of them quit without warning at particularly crucial moments in the process, leaving us to discover their departure only when a new name suddenly appeared on the emails we got.

The penultimate of the four strongly implied that we had a rate lock that it turns out we didn't actually have (the credit union didn't offer a rate lock; if the rate went up the day you were set to close, you got the higher rate). When her replacement quoted us a not-insignificantly-higher number, I exorcized my icy fury by forwarding to her the email we'd received from her predecessor with this note: "This is our rate. Please correct our documents to reflect that." Because I was officially Done Asking.

We got the lower rate despite them having no actual legal reason to give it to us.

In short, you have nothing to lose by asking them to honor the initial rate. The worst thing they can do is say no. And you have a lot to gain by asking--doing something always helps me mitigate my anxiety more than simply watching things happen around me.
posted by jesourie at 1:12 PM on March 17, 2017

First, the Federal Funds rate is NOT your mortgage rate. Most mortgage rates are related to how bonds are performing.

What a broker initially quotes vs. where it locks at depends on timing, of course, but sometimes credit scores or other personal economic data can require a slightly higher rate. It's happened to me with a GREAT broker that I know very well.

So it's entirely possible this is the best rate they could have given you and the quote was inaccurate.

That said, you can ask the broker to suck it up and pay points on your behalf to buy down the loan. Maybe it will only be .25 or something, but you could ask. Look at the origination fee - that's the money you are negotiating. It's the broker's paycheck. Or maybe the broker has a marketing fund or something they tap to make happy clients.

Good luck.
posted by littlewater at 6:38 PM on March 17, 2017

You are lucky in many ways, because this mortgage broker has demonstrated what a crap job he/she does early enough so that you can move on to someone else. Find another bank asap because this won't get better and the process only gets more stressful from here. Ask your real estate agent who he/she likes to work with and who is easy to work with and responsive (they will know!). I know you won't get the rates you want, but you'll save so much in blood pressure medicine in the future. It'll be worth it, trust me.

Also as someone who had a crap time with a small "ethical" bank and a great time with an evil big bank, I say don't be afraid to do what will work best for you.
posted by Toddles at 8:48 PM on March 17, 2017 [1 favorite]

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