You have the legal right to see the price of a mortgage before providing any personal information or having your credit report pulled. Some shady loan officers are trying to get people to commit to them before providing a cost estimate — and that is ILLEGAL.
Recently, I heard from two different book readers in two different states about loan officers who tried pulling tricks. I share their stories with you so that you won’t fall prey.
Loan Officer Asks For Money Upfront — Illegal!
When the home buyer asked for a cost estimate (the Good Faith Estimate has been retired), the loan officer pressured her for her credit card information. He refused to take any of her criteria (loan amount desired, etc.) or let her make an application until she paid for an appraisal report with her credit card. “I want a commitment from you first,” he said.
This is illegal, and the home buyer is filing a complaint with the Consumer Finance Protection Bureau against this large national direct lender.
Loan Officer Sidesteps Questions with the Runaround
Another home buyer had a different kind of trouble when she asked for an upfront estimate.
The loan officer said, “How can I give you an estimate when we don’t have a specific house, specific loan amount, and I don’t know which lender I am going to choose?”
The home buyer then asked what the lender fees would be.
“I don’t know, because I don’t know which lender I will broker out to,” she (dishonestly) replied.
This unprofessional individual was recommended by the real estate agent. Here’s a valuable tip: do not choose your mortgage advocate by who the agent is friends with. You make your own choice.
First, the loan officer should give an estimate for the maximum home price the buyer may want. No address is needed at this point.
Second, the loan officer knows the lender fees and should provide the figures when asked.
What You Can Do
If you encounter this type of nonsense, walk away. Don’t reward a dishonest shark with your business. Loan officers are paid on commission, so when you walk away, it makes a big impact. There are plenty of good, ethical mortgage professionals who are state licensed and trustworthy.
You can also file a complaint with the CFPB. I would not advise filing against someone who gives you the runaround, but if a loan officer asks for any type of payment (including collecting your credit card info) before providing you with complete disclosures, that is a violation of federal lending law — and therefore, that person and the company they work for should face consequences.
No More Good Faith Estimate
The GFE has been replaced with a different form: Cost Estimate, Fees Worksheet, Cost Worksheet, whatever they want to call it. Ask for a Cost Estimate and an ethical, honest loan officer will provide you with the information you need on the form their company uses. We don’t care what title they put at the top of the page: the information you need about the loan is there. (Do not ask for the Loan Estimate. That comes later with your disclosure package after you have a purchase contract.)
No one would think of putting money down on a car without first seeing the price tag. The same applies to a mortgage. You have the right to see the terms of the loan before making a commitment.
If you would like my help, I am state licensed (NMLS 1284134) in California and Washington.