“What are your lender fees?” I asked the loan officer (LO) at the credit union. I was shopping for a mortgage for one of my coaching clients, and I explained the scenario: No cash out refinance, 15-year fixed rate, 80% loan-to-value, A credit.
“We don’t have any fees,” said Ms. LO.
I thought that was impossible, so I replied, “I am not talking about having no points. I need to know what your lender fees are, such as underwriting, processing, and any other fees.”
Then to be crystal clear, I added, “I need to know the dollar amount that will show on the Good Faith Estimate, page 2, #1, ‘Our Origination Fee’.”
“Just a minute, let me go check with my manager,” she said.
I waited. When she came back, she said, “My manager says we don’t have an origination.”
“Wow, that’s great! I’m going to have my client call you,” I said. I proceeded to tell her my client would call in the morning, because it was just a few minutes to closing time. Ms. LO thanked me and said she’d look forward to helping her.
You can imagine my shock and surprise when my client emailed me the Good Faith Estimate she received from Ms. LO at the credit union the next day. Take a look for yourself:
YOUR ADJUSTED ORIGINATION CHARGES
1. Our origination charge 1,954.00
This charge is for getting this loan for you.__________
Instead of a zero charge, there was a $1,954, almost two thousand dollars!
Outraged, I called Ms. LO to ask about this switcheroo.
“You remember quoting me a zero origination fee,” I reminded her. “So why does the GFE show a $1,954 origination fee?”
Long pause. Then, “I don’t know.”
“That is a very big different, almost two thousand dollars,” I said.
“Yes it is. Hold on while I go ask my manager,” she said.
After several minutes, she was back. “My manager says we changed the fee yesterday.”
“You changed the fee from zero to $1,954 all in one day? From 4:00 p.m. to the morning, it changed that much, all at once? I don’t think so,” I said.
“Unfortunately, it changed,” she said.
“Changed, as in bait-and-switch?” I asked.
What is bait-and-switch? It is when a company baits you with one cost and then changes it to something else when you try to get it.
Bait-and-switch is illegal. But it is still happening.
The new lending laws have not extinguished all the liars. Liars are lurking in all institutions: banks, brokers, and yes, also in credit unions.
This is why I tell people they cannot choose a mortgage by the type of lending institution. I don’t name names on my public blog, but if you would like to know the name and location of this credit union and the loan officer, send me an email via my Ask a Question page (in the toolbar above), and I’ll be happy to tell you so that you can avoid this crooked institution.
If anyone tries pulling a bait-and-switch on you, I would encourage you to report them to the Consumer Financial Protection Bureau. That is what they are here for, to protect you. The handy online complaint form is here.