Recourse limited against last-minute home-loan fees

DEAR BOB: I recently sold my home. The buyers made it knownthey needed 100 percent mortgage financing. We agreed to pay $13,000 in closingcosts to help the buyers. The lender gave them a so-called “good faithestimate” that showed this amount would pay their closing costs. But onthe day of closing, the loan officer showed up and informed the buyers theyowed $4,000 more than expected to buy the home. He was very clear the lenderhad just raised the fees to make more profit. The buyers didn’t have the$4,000. Everyone felt helpless. But the listing agent ended up cutting his feeto allow the sale to close. This seems dishonest, dirty and illegal. What isthe possible recourse against the mortgage lender? –Matt C.

DEAR MATT: Welcome to the sometimes-corrupt world of homemortgage lending where bait-and-switch tactics are very much alive, as you andyour buyers discovered.

Purchase Bob Bruss reports online.

Most mortgage lenders are honest. Some are not. The”bad guys” know when they have a vulnerable situation, especiallywhen the home buyer has zero cash available.

That mortgage lender knew he could squeeze $4,000 out ofsomebody, perhaps the listing agent who would lose far more than $4,000 insales commission if the sale fell apart.

Since the extra $4,000 didn’t come out of your pocket, youhave no legal recourse against that lender. Neither does the buyer. The realtyagent who volunteered to pay the $4,000 to save the home sale probably also hasno legal remedy. That dishonest lender should be reported to the regulatingstate or federal agency, but don’t expect any action.

IS A LEASE OPTION THE SAME AS A LAND PURCHASE CONTRACT?

DEAR BOB: Is a lease option, which you often recommend, thesame as a land purchase contract? –Loretta K.

DEAR LORETTA: No. A land purchase contract is not the sameas a lease option. With a land purchase contract–also known as a contract fordeed, contract of sale, installment land sale contract, and a zillion othernames–the property seller retains title, the buyer pays the seller each month,and the buyer can obtain title after making all or the agreed number ofpayments to the seller.

But a lease option gives the property buyer a choice to buyor not buy the property by exercising the option to purchase before it expires.For more details, please consult a local real estate attorney.

SUCCESSOR LIVING-TRUST TRUSTEE MUST ACT TO TRANSFER TITLE

DEAR BOB: My late husband and I held title to our home inour living trust. I recently had a new living trust prepared. The attorney whooriginally prepared our living trust died, so he is not available, but I didnot receive a new deed to the home. Other than hiring an expensive attorney, isthere some way to straighten out the title? –Marcia M.

DEAR MARCIA: Under the terms of the original living trust,if you were named as the successor trustee, then you can transfer the titleinto your name or the name of your new living trust.

Just because you had a new living trust prepared doesn’tmean that living trust holds title to your home and you are its trustee. Youmust act to straighten out the home’s title to be certain it is held in yournew living trust and you are its trustee. Please consult your living trustattorney for details.

The new Robert Bruss special report, “How to Obtain theBest Appraisal of Your House or Condo,” is now available for $5 fromRobert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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