Ann’s Story - Scene 3 - How could Ann have been overcharged?
To: Ann’s story - Scene 2 - Why did I say the loan was easy?
How Could Ann Have Been Overcharged?
First one could ask what is overcharging? using a $300,000 loan as an example, what would you say? What do you think you paid in fees to your lender - loan officer? Some think 1 point or per cent, some think two. Paying two points on $300,000 is $6,000.00. Is that competitive? I think I will leave this up to you to comment on for a while.
I can make my point now though.
When you are like Ann: obviously new at the mortgage process, unfamiliar with loans that don’t require employment documentation, in a needy situation, in a hurry, and sorry to say - a single woman you are in a position to be charged more.
There are other situations than Ann’s that play into overcharging. For example: those that have difficulty speaking the English language often pay very high fees by their circumstances. Having credit issues is another.
When you are willing to accept a higher rate, you are usually causing or increasing a rebate situation for the lender.(see article on reabates. Were Ann willing to pay an extra 1% in interest, she would have possibly allowed the lender to make a 2% rebate. This might not be disclosed. Overcharging for sure is when a lender charges a two per cent origination fee and takes a two per cent rebate. That is four points. Four points on $300,000 is $12,000.00. As my granddaughter Savannah might say, YUK. I guarantee that is overcharging. I guarantee this happens to unsuspecting or unaware borrowers. I guarantee this is wrong. I guarantee that there are loan officers that do this, I guarantee they will boycott our site.
I don’t care about them. I care to expose and undress them. I care to make things more transparent. I care to educate you.
I spoke yesterday with attorney John Long. He is an industry expert. He is excited about what we are doing on this site. We will be meeting next month to see how we can support each others efforts to help the consumer and clean up the industry. John has some exciting initiatives underway.
After retiring our mortgage company I audited over 2,000 files. I decided as it was time to shred them, I would take 6 or 7 files a day; shred and look at each file closely. I already had a process to audit a high per cent. Here is my conclusion: 93% of the loan officers are straight shooters. They care about integrity. I believe one reason we grew fast in our company was that I made it clear, no hanky panky. We attracted the good ones.
These 93%, the good ones, I believe will welcome this site and what we undress. These are the ones we plan to endorse and bring to you here eventually. These are the ones you should be doing business with.
Larry Cragun
