Legal question (any lawyers on the board?)

[Maury Ballstein]

The broker/banker should have advised him of his options once it was close to the lock expiration date.

 

A simple lock extension at a cost and redisclosure of APR could have kept the 3.25%. As opposed to the other option of no additional costs but rate could be subject to worsening. At least he would understand how 3.5 came into play and close anyways as opposed to having bad taste in mouth after getting blind sighted at closing w higher rate.

 

It's bush league if he didn't know of rate change at least 24 hours before closing IMO.

 

[Chef Jim]

I didn't sign the final loan documents because of the incorrect rate....I'm not sure if I can be anymore clear....I sat down at closing....saw the rate was 3.5 not 3.25 which it was supposed to be....alerted the closing lawyer of the error...he contacted my mortgage consultant....she confirmed the error....said she will fix it.....11 months later still waiting for the fix but am repeatedly told she is working on it and it will happen

 

Oh you're clear you're just not understanding my point. The reason your rate was not what you agreed to earlier was because the lock expired and the rate on the docs was the current rate. The fact that you've been waiting 11 months on this boggles my mind because the great rate offered on your loan docs is long gone. You should have been aware of the lock time and worked with your broker to either get the case in escrow ASAP or see what they could do to extend the locked rate. Rates change daily and because of that you should have not been surprised when your rate changed.

[ExiledInIllinois]

 

I didn't sign the final loan documents because of the incorrect rate....I'm not sure if I can be anymore clear....I sat down at closing....saw the rate was 3.5 not 3.25 which it was supposed to be....alerted the closing lawyer of the error...he contacted my mortgage consultant....she confirmed the error....said she will fix it.....11 months later still waiting for the fix but am repeatedly told she is working on it and it will happen

 

Honestly, I don't think it is gonna happen... You think? Sorry to sound like a smart-azz. Too much time went by. IMO, you don't have a leg to stand on. It is expired. You probably should have pressed them before expiration.

 

All for a 1/4 point? Doesn't seem worth it @ this point. Good luck

[ICanSleepWhenI'mDead]

This is fairly old but may have some useful basic info anyway:

 

http://www.bankrate.com/brm/news/mtg/20020124a.asp

 

My oldest brother Darryl suggests that somebody might be able to give you better guidance if you posted answers to the following questions:

 

1. What state are you in?

 

2. Did you get a written Good Faith Estimate ("GFE") from the bank?

 

3. Did you sign a written rate lock agreement?

 

4. If you signed a written rate lock agreement, did the bank then give you a revised GFE?

 

5. If you signed a written rate lock agreement, how many days did the agreement lock the promised rate?

 

6. Did you ever actually pay a fee to the bank in return for the bank's promise to lock the rate for a specific length of time?

 

7. Did the aborted closing occur before or after the written rate lock expired?

 

8. Do you have copies of any of the closing documents that were presented to you at the aborted closing?

 

9. Did you sign any documents at the aborted closing before you got to the one(s) with the wrong interest rate?

 

10. What was the name of the lender on the aborted closing documents, and was it the exact same name as the name of the bank that employed the person who admitted the "mistake?"

 

11. Are you certain that the bank employee is sick, and not gone because he or she was fired for incompetence or some other reason?

 

Darryl's a bit of a moron, so you shouldn't rely on anything he says or suggests. But even a blind giraffe finds an acorn now and then. Darryl found this:

 

https://www.aba.com/aba/documents/abaworks/ABAWorksonRESPA.pdf [excerpt below from page 12]

 

Expiration of the GFE: The terms disclosed in the GFE are not binding if the borrower does not accept the GFE by expressing an intention to continue with the loan application by the date stated in box 2 of the Important Dates section on page 1 of the GFE.

 

Interest rate dependent charges and terms: The loan originator must provide a revised GFE to the borrower after the borrower agrees to lock in the interest rate. The following may change in the GFE when the interest rate is locked:

 

The first box will change to specify the lock expiration date

The third box may change to reflect the number of days within which the borrower must go

to settlement . . .

[more at the link]

 

and at page 14:

 

Rate Lock: The interest rate may only be locked through a separate agreement with the borrower. Disclosing an interest rate in the GFE does not necessarily mean that the interest rate is locked. When a customer agrees to lock in an interest rate, a revised GFE must be provided to the borrower. See Interest rate dependent charges and terms on page 12 for more information. If the rate lock expires, a new GFE should be issued.

Edited February 8, 2014 by ICanSleepWhenI'mDead

[zevo]

 

 

Oh you're clear you're just not understanding my point. The reason your rate was not what you agreed to earlier was because the lock expired and the rate on the docs was the current rate. The fact that you've been waiting 11 months on this boggles my mind because the great rate offered on your loan docs is long gone. You should have been aware of the lock time and worked with your broker to either get the case in escrow ASAP or see what they could do to extend the locked rate. Rates change daily and because of that you should have not been surprised when your rate changed.

This is going nowhere...thanks for your input.

 

This is fairly old but may have some useful basic info anyway:

 

http://www.bankrate.com/brm/news/mtg/20020124a.asp

 

My oldest brother Darryl suggests that somebody might be able to give you better guidance if you posted answers to the following questions:

 

1. What state are you in?

 

2. Did you get a written Good Faith Estimate ("GFE") from the bank?

 

3. Did you sign a written rate lock agreement?

 

4. If you signed a written rate lock agreement, did the bank then give you a revised GFE?

 

5. If you signed a written rate lock agreement, how many days did the agreement lock the promised rate?

 

6. Did you ever actually pay a fee to the bank in return for the bank's promise to lock the rate for a specific length of time?

 

7. Did the aborted closing occur before or after the written rate lock expired?

 

8. Do you have copies of any of the closing documents that were presented to you at the aborted closing?

 

9. Did you sign any documents at the aborted closing before you got to the one(s) with the wrong interest rate?

 

10. What was the name of the lender on the aborted closing documents, and was it the exact same name as the name of the bank that employed the person who admitted the "mistake?"

 

11. Are you certain that the bank employee is sick, and not gone because he or she was fired for incompetence or some other reason?

 

Darryl's a bit of a moron, so you shouldn't rely on anything he says or suggests. But even a blind giraffe finds an acorn now and then. Darryl found this:

 

https://www.aba.com/aba/documents/abaworks/ABAWorksonRESPA.pdf [excerpt below from page 12]

 

[more at the link]

 

and at page 14:

 

1) NYS

2) Yes

3) yes

4) No

5) 60 days

6) Yes I paid bank fees for rate and appraisal

7) Before

8) No...the closing lawyer kept the incorrect documents

9) No

10) Same

11) yes...person is a senior consultant at the bank and is still employed

 

Thanks for your help

[NoSaint]

Would you qualify the 3.5% showing up as the lock timing out, or as the paperwork having inaccurate info put in it (typo, intentional switch, or otherwise)?

 

Edit: I see you answered, and it's what I thought you were trying to say- they somehow flubbed it not you.

 

At this point I suspect they are hoping if they kick it far enough down the line you'll give up. Not that they are doing anything to try to remedy it in the slightest behind the scenes.

Edited February 8, 2014 by NoSaint

[Chef Jim]

This is going nowhere...thanks for your input.

 

 

 

1) NYS

2) Yes

3) yes

4) No

5) 60 days

6) Yes I paid bank fees for rate and appraisal

7) Before

8) No...the closing lawyer kept the incorrect documents

9) No

10) Same

11) yes...person is a senior consultant at the bank and is still employed

 

Thanks for your help

 

See now I may be wrong and maybe it was because it was late after a long day but your answer to #7 changes everything. I was trying to get from you if the final loan docs were presented before or after the lock expired. Did you ever mention that? If you had I apologize for going on and on about that but that's what I was trying to figure out.

[ICanSleepWhenI'mDead]

As I mentioned upthread Darryl's a bit of a moron, but he's no fan of banks. He's been cogitatin' on this from time to time (mainly during luge runs in the Olympics), and based on the fact that he once knew a guy whose neighbor's third cousin dated a gal that worked down the street from a guy who once sold office supplies to a law firm, Darryl wanted me to pass along the following thoughts:

 

1. The comments upthread about evaluating whether a suit is worth your time and expense are spot on. But you may have an argument for somewhat bigger damages than some here are giving you credit for. In most circumstances, somebody who suffers an economic loss caused by wrongful conduct of others has a responsibility to take any reasonably available steps to reduce the amount of damage incurred. The fancy legal mumbo jumbo term for that concept is called "mitigation of damages." If you were to sue your bank, you can expect them to argue that even if the bank wrongfully caused you to be paying a higher rate than the 3.25% they promised you, you presumably could have refinanced with some other lender at 3.5%, effectively allowing you to reduce your losses to 3.5 -3.25 = 0.25%.

 

2. But Darryl thinks you've got a strong counter argument. The fact that your bank has repeatedly CONTINUED to represent that they are going to make things right by giving you the originally promised 3.25% rate may prevent the bank from simultaneously arguing that you could have minimized your losses by refinancing at 3.5% elsewhere. If you reasonably relied on the bank's promises and actually expected the bank to make things right, your failure to refinance elsewhere at 3.5% was reasonable, even though your existing mortgage is at 4.375%. In fancy legal mumbo jumbo terms, the bank is arguably "estopped" from raising the failure to mitigate damages issue by their own continued promises that they would still give you the 3.25% rate.

 

3. Your best case scenario for claiming monetary damages would be if you could show that the bank was continually promising to still give you the 3.25 % rate, while market rates rose from the 3.25% you were originally promised until they reached the 4.375% you have been paying on your existing loan. Isn't 4.375% about the current market rate if you were first applying for the refi today? If so, that would make your potential damages 4.375 - 3.25 = 1.25% of the remaining (and declining) principal balance every year for the remaining life of your existing mortgage (assuming you have no plans to sell the house). Depending on your existing loan balance on the date of the aborted closing and the remaining term of your existing loan, that could be a sum you are willing to fight about.

 

4. If you want to pursue a potential legal claim, you shouldn't delay finding a lawyer who handles consumer claims, preferably with some experience in disputes with lenders. Some types of legal claims have statutes of limitations as short as 1 year (and in uncommon situations even less) - - and the clock probably starts to run from the date of the aborted closing for most types of claims you could bring.

 

5. The NY statutory version of the federal deceptive trade practices act may not provide a private right of action for monetary damages, but it may allow you to bring a claim for "rescission." That's a fancy legal mumbo jumbo term for putting both you and the bank back in the positions you were both in just before you applied for the refi mortgage. That could get you back anything you paid out of pocket during the refi process, even if it leaves you stuck with your existing 4.375% loan.

 

6. Sometimes a demand letter from a law firm spurs action, so even if you don't want to invest the time and effort to file suit, paying a lawyer a small sum to simply write a stern demand letter might get you something. If you take that approach, ask your lawyer to include a request that the bank put a "litigation hold" on all email messages (including any stored on computer backups) that relate to your refi loan application and/or aborted closing. It's amazing how many people will make incriminating statements in internal company emails that they would't dream of putting in a letter - - requesting a litigation hold should prevent anything like that from disappearing.

 

Whatever you decide to do, good luck! If you have time, let us know how it turns out, and I'll pass the word on to Darryl.

[zevo]

Wow..,thanks for the thoughtful response....I really appreciate it....I'm still waiting...I will let you know the resolution...thanks!

[ICanSleepWhenI'mDead]

1. Like I said, Darryl ain't too bright - - note that in the post above, 4.375 - 3.25 = 1.125% (not 1.25%). Oops. Maybe he did the math while an American guy was making his luge run.

 

2. If you think you might want to contact a lawyer about this, stop waiting. If the bank was gonna fix it based on your own inquiries, they would have done so by now. It probably takes time to find a lawyer you are comfortable with, and if he/she is any good he/she is already busy. You want to leave the lawyer some time to try to work out a resolution before the 1 year clock expires.

 

If it turns out you do have good grounds for a lawsuit on a legal theory that has a 1 year statute of limitations, you will 100% lose the lawsuit and get nothing if the suit is filed even 1 day later than a year after the date of the aborted closing - - at least that's what Darryl thinks. Some legal theories have statutes of limitations longer than 1 year. Until you consult with a lawyer with expertise in consumer suits against banks, you have no way of knowing whether you will lose any right to recover that you might otherwise have, if you wait more than 1 year to file suit. Why risk it?

[stuckinny]

i refid with quickenloans and it took about 45 days. Not sure it would be worth the legal process to get the rate you agreed upon. Maybe see the best rate they can offer you now, and ask them to pay all closing costs because of their documented mistake!