Closing Costs and Banks are Disgraceful

[Lisa loves Pooh]

Is that legal? I honestly don't know. I can understand saying "if you want $7K in closing costs paid for you, use 'x'.", but can they say you can only get your mortgage from 'x' company?

The OP still should have gotten an good faith estimate, the costs should not be a surprise days away from closing.

I don't see now it would be illegal. Consumers are always permitted to forgo the incentive and go with their own lender. Catch is that going for a new home loan on new construction isn't always easy. Haven't tried lately, but our usual lender does treat loans for new construction differently than an already built home. So if we wanted that brand new home, the official lender for the builder is typically our best chance.

 

[TAX GUY]

Salesman told me the most I would pay towards any closing costs would be around $500....!

I'll just leave this part right here...

 

[pooh6890]

Did they have to update any of your tradelines on your report, to show something was paid off, or closed, or update a payment amount or anything?? If not, then no, I have no answers.

No, it was last week for both. All credit cards are paid off and I am a co-signer on a Sallie mae loan for my nephew which has been paid timely for 4 years....I can't imagine how they can charge $200 for a report. I am fighting it.

 

[DebbieB]

I bought a townhouse 2 years ago and most of my closing costs were taxes and fees that didn't go to the bank. Transfer taxes, property taxes due. The HOA charged over $700 capitalization fee. The one that stuck out to me was the title search & insurance, $1900 I think. It only was only 10 years old and 1 owner!

 

[pooh6890]

I'll just leave this part right here...

LOL....I know! I purchased this condo back in May and much of the people I have dealt with have been really great. I go down every weekend and have watched it being built. It's very nice, natural preserve in my backyard, sun comes up in the East...yada yada yada.....I can't wait to get thru the bank crap and have my first morning coffee on my patio. Bank told me not to panic and the GFE and the hud statement will pretty much be the same....whatever!

 

[sam_gordon]

I don't see now it would be illegal. Consumers are always permitted to forgo the incentive and go with their own lender. Catch is that going for a new home loan on new construction isn't always easy. Haven't tried lately, but our usual lender does treat loans for new construction differently than an already built home. So if we wanted that brand new home, the official lender for the builder is typically our best chance.

That's what I said. I can understand saying "you must use our lender to get $7K off", but I would think it would be illegal to say "you must use our lender or can't buy.".

 

[pooh6890]

I bought a townhouse 2 years ago and most of my closing costs were taxes and fees that didn't go to the bank. Transfer taxes, property taxes due. The HOA charged over $700 capitalization fee. The one that stuck out to me was the title search & insurance, $1900 I think. It only was only 10 years old and 1 owner!

My escrow for insurance, taxes, CDD fee was only around $1,500. They waived the HOA fee of $155/month for a whole year. It's the bank fees like title insurance, loan origination fee, appraisal (really?? it's new), processing and underwriting, courier, capital contribution, builder's fee, flood determination (really?? think they know that)....It is what it is....I'm just venting...

 

[pooh6890]

That's what I said. I can understand saying "you must use our lender to get $7K off", but I would think it would be illegal to say "you must use our lender or can't buy.".

My option was to pay cash to them at closing, but then no closing costs paid by Lennar. Again, a lot of banks do not want to write condo loans.

 

[Gracie09]

My escrow for insurance, taxes, CDD fee was only around $1,500. They waived the HOA fee of $155/month for a whole year. It's the bank fees like title insurance, loan origination fee, appraisal (really?? it's new), processing and underwriting, courier, capital contribution, builder's fee, flood determination (really?? think they know that)....It is what it is....I'm just venting...

of course the bank wants an appraisal. After the real estate bottoming out they were left holding the bag on a lot of properties. (right or wrong I'm not going to debate it). Just because something is new doesn't mean that the price you agreed to pay is what it is worth. Same with flooding. I had a friend who bought a band new house that over looks a retention pond. The builder when building the homes changed the grades and she ended up with 4 feet of water in the basement because the pond overflowed and came right into her window. That is something that might have been caught if there was a flood determination (the builder lowered her grade).

 

[sam_gordon]

My option was to pay cash to them at closing, but then no closing costs paid by Lennar. Again, a lot of banks do not want to write condo loans.

I'll take your word many banks won't write condo loans, but that doesn't mean NO banks do so. I'd be surprised with your credit score that you couldn't find SOMEONE else to write the loan. Of course, you would then sacrifice the '$7K', but that doesn't mean you're forced to use their lender.

ETA: Does the bank have an answer why the good faith estimate of costs is so much different than the actual costs?

 

[Mickeyluver37]

I bought a townhouse 2 years ago and most of my closing costs were taxes and fees that didn't go to the bank. Transfer taxes, property taxes due. The HOA charged over $700 capitalization fee. The one that stuck out to me was the title search & insurance, $1900 I think. It only was only 10 years old and 1 owner!

We bought our current house from my parents who were the original owners. The title insurance was over $2,000. Ridiculous. I think the biggest expense we had was state transfer stamps, that are cheaper if you are a first time home buyer, which we were not. Not sure of the logic in that one.

Every single item on that sheet annoyed me! Before going into the transaction, we had a private appraisal done at $300. The broker couldn't use that. Ok, fine. But then we had to pay $450 up front (couldn't even wait until closing) for an appraisal. The numbers and reports are almost identical. I actually would suspect that I paid more for my appraisal than they did for the 2nd one. The broker probably made $200 on the deal. And no, I don't think they should be charging you for crap like credit reporting or shipping. I got charged a $25 overnight fee when it was all local. Credit reporting and shipping should not be itemized to a customer and should be part of a company's overhead. I can't imagine the company I work for billing back shipping to our clients. That would be tacky. But all of this stuff is "normal" in the lending industry.

 

[eliza61]

Op, question? Did you use a realtor for the sale. I just brought a townhouse in Philly. Looked at condo's also. My realtor have me ball park closing cost every time we thought about putting in a bid. I've never heard of 800 bucks on closing cost especially since most cost includes sales taxes and a bunch of other stuff.
You would have had those fees regardless to the promotions
Good luck it does seem obscene

 

[elgerber]

We bought our current house from my parents who were the original owners. The title insurance was over $2,000. Ridiculous. I think the biggest expense we had was state transfer stamps, that are cheaper if you are a first time home buyer, which we were not. Not sure of the logic in that one.

Every single item on that sheet annoyed me! Before going into the transaction, we had a private appraisal done at $300. The broker couldn't use that. Ok, fine. But then we had to pay $450 up front (couldn't even wait until closing) for an appraisal. The numbers and reports are almost identical. I actually would suspect that I paid more for my appraisal than they did for the 2nd one. The broker probably made $200 on the deal. And no, I don't think they should be charging you for crap like credit reporting or shipping. I got charged a $25 overnight fee when it was all local. Credit reporting and shipping should not be itemized to a customer and should be part of a company's overhead. I can't imagine the company I work for billing back shipping to our clients. That would be tacky. But all of this stuff is "normal" in the lending industry.

I work in mortgage, and we are not allowed to do that. For appraisal, credit, etc, we have to charge the borrower what is on the invoice, no more. The invoices are included in the files before we send them to closing. We cannot inflate the fees.

 

[tvguy]

I was so excited to purchase a new condo from Lennar. I was so excited to get $7,000 towards closing costs and upgrades on carpet, tile, appliances and cabinets....UNTIL I saw the closing statement and costs. Why give me $7,000 towards closing costs when they knew darn well it would be eaten up in the additional costs. I have only owned one home in my life. I have been a renter for many years. Some of the fees are outrageous! What bank charges a loan origination fee of $1,480 when they are the only bank I could go to? Who charges $200 for a credit report when they are basically free? Lennar charged me a 1.75% builders fee which was around $2,700!!!!! I am supposed to close next Monday on (10/27) and don't even have a HUD statement yet. Has anyone been able to negotiate these stupid fees that they are imposing or am I just stuck??? Thanks all!

I underline and bold the HUD part. I don't think lenders can turn down HUD, but some sellers here.... out and out say... they won't sell to someone with HUD financing because of the cost and requirements.
It a delicate balance, not knowing your specifics, you may have gotten into that condo with as little as 3.5% down, instead of the more traditional 20%, just seems to me that is the tradeoff for some of the fees you are seeing.

I ran into that with a traditional mortgage, that was a promotional mortgage when I bought my house. Got in with only 5% down. Fast forward 5 years and I go to refinance with the same bank and the lending officer insists I must be wrong on what I put down and paid for the house because "we don't do mortgages with only 5% down". Until he finally pulled our original paper work from their archives, and just shook his head. I later learned the bank took a bath on those mortgages because there were a lot of defaults, and there was no way that 5% down was going to cover the banks costs if they had to foreclose.

 

[JanaDee]

Yeah the bolded is my point when all these "lenders" want to talk to me about how beneficial it would be for me to refinance. Maybe to them but not me.

I have paid on my house for 6 years now and by putting an extra amount toward principle each month have effectively knocked my 30 year mortgage down to 22. But no one wants to refinance for 20 years, which would be a benefit to me, only 30 years. That only benefits the bank.

When I get them to actually listen to me and go through the math of the way I make my payments now the get all red faced and tell me "we can't help you after all".

No joke.

Can you pay off your mortgage at any time with no penalty? When we refinanced to a 15 year mortgage a few years ago, that was a requirement for us in who got our business.

 

[pooh6890]

of course the bank wants an appraisal. After the real estate bottoming out they were left holding the bag on a lot of properties. (right or wrong I'm not going to debate it). Just because something is new doesn't mean that the price you agreed to pay is what it is worth. Same with flooding. I had a friend who bought a band new house that over looks a retention pond. The builder when building the homes changed the grades and she ended up with 4 feet of water in the basement because the pond overflowed and came right into her window. That is something that might have been caught if there was a flood determination (the builder lowered her grade).

As far as the appraisal goes, why would they have to charge so much since they are the only bank writing the loan? They obviously know the appraisal amount. The one good thing is my unit is going for $20,000 more than what I paid in May...

 

[pooh6890]

Op, question? Did you use a realtor for the sale. I just brought a townhouse in Philly. Looked at condo's also. My realtor have me ball park closing cost every time we thought about putting in a bid. I've never heard of 800 bucks on closing cost especially since most cost includes sales taxes and a bunch of other stuff.
You would have had those fees regardless to the promotions
Good luck it does seem obscene

I did not and found out later I should have. I figured since it was brand new and Lennar, didn't need one. I did!

 

[pooh6890]

I underline and bold the HUD part. I don't think lenders can turn down HUD, but some sellers here.... out and out say... they won't sell to someone with HUD financing because of the cost and requirements.
It a delicate balance, not knowing your specifics, you may have gotten into that condo with as little as 3.5% down, instead of the more traditional 20%, just seems to me that is the tradeoff for some of the fees you are seeing.

I ran into that with a traditional mortgage, that was a promotional mortgage when I bought my house. Got in with only 5% down. Fast forward 5 years and I go to refinance with the same bank and the lending officer insists I must be wrong on what I put down and paid for the house because "we don't do mortgages with only 5% down". Until he finally pulled our original paper work from their archives, and just shook his head. I later learned the bank took a bath on those mortgages because there were a lot of defaults, and there was no way that 5% down was going to cover the banks costs if they had to foreclose.

No, they required 20% downpayment. It's the bank that is gouging me.

 

[tvguy]

No, they required 20% downpayment. It's the bank that is gouging me.

Okay. I agree with others than I would have explored other financing options.

 

[elgerber]

I underline and bold the HUD part. I don't think lenders can turn down HUD, but some sellers here.... out and out say... they won't sell to someone with HUD financing because of the cost and requirements.

The HUD is the HUD-1 Settlement statement, that itemizes all costs to buyer and seller, and is signed by both parties at closing. It is done on every file closed, no matter what type of loan or financing you have.