Thursday, December 16, 2010

bait and switch? query via email from K

I have an unusual situation regarding a recent refinancing on my home that I would appreciate your advice on.
I refinanced to a lower interest rate.  This was a no-cost refinancing and there was no dispersion of cash to me.
I closed on November 20th.  I signed the appropriate paperwork and HUD statements electronically with a notary present.  As part of the final transaction I wired $400 to the title/escrow company (line 303 on HUD statement).
The HUD that I signed had a broker credit for NRCCs (non-reoccuring closing costs) of $6000 (lines 204 to 206).  My closing costs/settlement charges (line 103) were $8000.  The breakdown of the settlement charges included $4200 for an initial escrow account deposit, $1000 in daily interest charges, $800 origination fees, $1100 for title and title insurance, and $900 in misc charges (appraisal, recording fees, ...etc).
Here's where it gets weird.  Today I was contacted by my title company and my mortgage broker that the NRCCs credit that they placed on my HUD was incorrect and the actual amount should have only been $2800 -- enough to cover closing costs not including my initial escrow deposit and daily interest charges.  They sent me a "revised" HUD that basically had two changes, the new NRCCs credit and a new balance (line 303) on HUD that shows I now owe them an additional $3000.  This is all now happening approximately 1 month after I closed.
My questions are
1) Does this sound suspect to you? And what are the legal ramifications for me refusing to pay the additional $3000?
2) Does this give me right to void my contract and go back to my old mortgage? (Im weary of dealing with this title company and my mortgage broker anymore)
3) Can I apply the old NRCCs broker credits to my initial escrow deposit? or ask for the old NRCC broker credits in cash?
Thank you in advance for your responses.  
Two things come to mind when I read this.
  1. What did the Good Faith Estimate say? 
  2. Is the lender giving you another right to cancel period?
Considering both of those questions should help you decide which of the two HUDs most closely resembles the transaction you bargained for.  If based upon your review you think the lender is engaging in bait and switch, then contact HUD and report them.  You can also report them to state authorities.  Your rights under the cancellation rules would terminate the refinance and return your money to you.  If the lender gives you any grief about that, again seek assistance from HUD or state regulators or hire an attorney.

If after consideration you determine that the corrected HUD is essentially the deal you originally bargained for and not a bait and switch, then this is really a matter of human error.  You should still be entitled to your right to cancel, so either way, if you don't like the deal, in my opinion as a non-attorney title agent blogger you can get out of it.  [Seek the advice of a competent attorney.]

I hope this helps and thank for reading!


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