RESPA Changed Circumstance deadline missed

[gt9589]

What is the name of your state (only U.S. law)? Hawaii

I'm in the middle of a refinance. The original Good Faith Estimate was based on a loan to value ratio of under 60%. When the appraisal came in lower than expected, the Lending Organization reissued a GFE with higher points in the Origination Box.

The thing is, 5 business days passed between when they discovered the Changed Circumstance and when the GFE was reissued. RESPA only allows for 3 business days. The lender accidentally forwarded me an email that shows exactly when they learned of the appraisal amount.

So far all I've done is to request a copy of the RESPA Changed Circumstance detail form. I haven't let on that I know they missed an important deadline. They gave me two weeks to sign off on the new lock-in agreement. I'm supposed to get conditional approval from the underwriter within that same timeframe.

What I'd like to have happen is for the lender to approve the loan under the original terms. However, I don't want to jeopardize getting the loan. It's better to accept the less favorable terms than to have the refinance denied.

Should I point out the missed deadline to the loan officer and ask him to honor the original GFE?
If I wait until conditional approval, will it decrease the likelihood of them panicking and backing out?

My other options would be to open a mortgage complaint with the CFPB or wait until after closing to sue for damages. I'm afraid that signing off on the revised fees will limit my options for recovery.

 

[gt9589]

By the way, I'm not nitpicking this missed deadline just to be a dick. The loan officer tried to do a bait-and-switch by initially offering a low Good Faith Estimate based on an inflated estimate of my home's value. None of the following was disclosed to the borrower:

- The estimate used to generate the GFE
- The fact that they even offer better terms when the Loan To Value ratio is less than 60%
- What the terms would be if the LTV came in at 60% - 70%, 70% - 80%, etc.

The appraisal came in right about where I expected. When the lender then surprised me with a less favorable counter offer, I began investigating the RESPA regulations and discovered that they were not in compliance.

 

[gt9589]

Wow, I'm having a hard time finding a lawyer that I can pay for advice. Either they don't know much about RESPA or they think it's too small of a job.

If I don't get any legal advice, my plan is to wait for the conditional loan approval (expected this week) and then go speak to the loan officer in person about the RESPA violation. Probably he will take it to a manager and get the additional fees waived. My understanding is that banks don't want to take any chances by originating non-compliant mortgages. Another option is to send an official "Notice of Error" letter.

If I have the conditional loan approval in hand and meet all of the conditions, then I expect this loan will close. If it doesn't they would have to explain the reason for denying the loan to the Consumer Financial Protection Bureau. Saying "the borrower caught us violating RESPA" or "we didn't like our own Good Faith Estimate" aren't good reasons for denying a loan.

This particular violation is handled as a RESPA Section 5 violation: The lender has up until 30 days after closing to cure it by refunding the overcharge to the borrower. So I could go ahead and sign the re-issued Good Faith Estimate, close the loan, and then notify the lender of the error (getting the CFPB involved if necessary). This would minimize the risk of them backing out but I fear that signing the revised GFE could weaken my bargaining position.

Any opinions?

 

[Zigner]

Wow, I'm having a hard time finding a lawyer that I can pay for advice. Either they don't know much about RESPA or they think it's too small of a job.

If I don't get any legal advice, my plan is to wait for the conditional loan approval (expected this week) and then go speak to the loan officer in person about the RESPA violation. Probably he will take it to a manager and get the additional fees waived. My understanding is that banks don't want to take any chances by originating non-compliant mortgages. Another option is to send an official "Notice of Error" letter.

If I have the conditional loan approval in hand and meet all of the conditions, then I expect this loan will close. If it doesn't they would have to explain the reason for denying the loan to the Consumer Financial Protection Bureau. Saying "the borrower caught us violating RESPA" or "we didn't like our own Good Faith Estimate" aren't good reasons for denying a loan.

This particular violation is handled as a RESPA Section 5 violation: The lender has up until 30 days after closing to cure it by refunding the overcharge to the borrower. So I could go ahead and sign the re-issued Good Faith Estimate, close the loan, and then notify the lender of the error (getting the CFPB involved if necessary). This would minimize the risk of them backing out but I fear that signing the revised GFE could weaken my bargaining position.

Any opinions?

Keep looking for an attorney.