DEAR BOB: You are very unfair to us hard-working mortgage brokers. We do our best to provide home loan borrowers with honest “good-faith estimates.” But it is the actual lenders who tack on the junk or garbage fees that you often discuss. Please stop blaming the mortgage brokers who shop the loan applications to find the best deal for our borrowers. We are often just as surprised as our borrowers at all the unnecessary fees that some mortgage lenders tack on to their loan charges – Bruce C.
DEAR BRUCE: When you submit a borrower’s loan application to an actual lender, and the lender replies with a loan commitment, doesn’t it specify the junk or garbage fees, which the lender will insist upon receiving? Of course it does.
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Also, do you always disclose to your borrowers that you will be receiving a “yield spread premium” kickback from the lender when you produce a mortgage with a higher-than-market interest rate?
Mortgage brokers often perform home loan finance miracles, especially when obtaining mortgages for “credit-challenged” borrowers.
But the big drawback some mortgage brokers force on borrowers at the last minute is the unexpected 100 percent pure-profit junk fees charged either by the mortgage broker or the actual lender.
As soon as you know about any unexpected fees for such nonsense charges as administration, documentation, underwriting, preparation, and even a miscellaneous charge, you should notify your borrowers so they can reject that loan.
This problem usually doesn’t arise when a home loan borrower deals directly with a lender. The reason is a direct lender’s “good faith estimate” of loan charges is very difficult for the lender to pad with unexpected, last-minute junk or garbage fees.
PROPERTY MANAGEMENT FIRM’S CHECK SHOULD NEVER BOUNCE
DEAR BOB: When I was in the military, my wife and I bought a house in Virginia. After I was transferred, and eventually left the military, we kept our Virginia house because we thought we might like to move back to the area someday. That was about 14 years ago. Since then we have had the house managed by a so-called professional property management company, which charges us 10 percent of the gross rent for their service. Recently, we have had several months of vacancy. When I phone the management company, I always get their voice mail. If I were a prospective tenant, I would be very upset. When I recently asked the firm to send me a check for the $1,400 balance in my account, its check bounced. What should I do? – Richard R.
DEAR RICHARD: You obviously have a very bad property management company because a property management firm’s check should never bounce. Also, there is no valid excuse for the firm not answering their phone during business hours.
In addition to firing that firm and hiring a better property management company, you should report the problem to the Virginia real estate commissioner for investigation and possible revocation of that firm’s license.
MUST HOME BUYER HONOR EXISTING LEASE?
DEAR BOB: We recently bought a house as an investment. We knew it was tenant-occupied. However, after the title was transferred to us, the tenant informed us she has almost two years remaining on her very low rent lease. The seller and the realty agent never told us about any lease. Can we cancel the tenant’s lease? – Cecil S.
DEAR CECIL: The buyer of any property must honor the terms of an existing lease, even if it is at a very low rent. Your recourse, if any, is against the seller and the realty agent for failure to disclose the important fact of the lease. You could sue for rescission and/or monetary damages. For more details, please consult a local real estate attorney.
The new Robert Bruss special report, “Secrets of Buying Your Home or Investment Property for Nothing Down,” is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet download at www.bobbruss.com. Questions for this column are welcome at either address.
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