Lemon Mortgages/Tricks of the Trade

Have you had closing day surprises concerning your rate and closing costs? Unfortunately, surprises are not a unique experience. With Colorado choosing to leave its mortgage industry unregulated, many borrowers are finding themselves on the paying end of exremely high costs and rates. Disclosure is the safeguard that protects many homeowners from paying outrageous fees come closing day. However, all too often borrowers are lead to believe in one set of costs and come closing day are given another. This bait and switch technique is used often to bring business in the door and borrowers are left with little recourse at the closing table.

If one of the following sounds familiar, you are probably getting a lemon mortgage. Look over each scenario and find out a few mortgage broker's tricks of the trade.

• Trick: "We have reduced our closing costs to $395 per loan with no broker fees and no points."

  Answer: There are many ways for a broker (lender) to make money on a loan. There are 3 places alone on the Good Faith Estimate: the Origination Fee, Discount Points and Mortgage Broker Fee. Most people believe that the origination fee and "points" are the same, but in fact they are very different. The origination fee is the fee (usually a percentage of the loan) that is charged by the broker for completing the loan. (Discount) Points are what the broker (lender) receives from the bank for placing the borrower into a certain interest rate. The mortgage broker fee is rarely used, but is quoted a dollar figure as a cost to the borrower. As you can see above only two of the three are listed. However, the easiest answer to the above statement is to read the fine print. At Syndicate, we never charge an origination fee (percentage of the loan) and we rebate any discount points that we receive from the bank.You pay only a flat broker fee for our services. In addition, we have eliminated the extra junk fees that are ususally associated with large or national lenders

• Trick: "Hurry, we are offering a very special 3.95% rate"

  Answer: Usually these rates are subject to change after loan closure. Typically, immediately after loan closure. They're short term adjustable rate mortgages (ARMs) that have a nice sounding interest rate to borrowers. It is not a fixed rate. In addition, many of these loans become negative amortization loans. This means you can pay your monthly mortgage payment and end up owing more than the original loan amount.

• Trick: "We have a below market fixed rate of..."

  Answer: If you see a fixed rate that is not in the area of other lenders fixed rate, you are probably being sold an adjustable rate mortgage that is fixed for a short time. Probably a little longer than the scenario above but just good enough to make the lender appear to have a better rate.
  
  At Syndicate, we have no sales people, no loan originators. You will simply receive the most cost effective loan with the lowest rate possible. Our advantage is in how we do business. We are a company that values its customers. We do not sell value. We place it in every mortgage.

• Trick: "Other brokers are quoting much lower closing costs than your flat fee costs"

  Answer: Perhaps the most deceptive practice in the market today. When most brokers quote closing costs they are quoting only there cost, NOT all of the costs it takes to close a loan. Most brokers do not quote all of the title, underwriting and closing costs associated to complete a loan. The other concern is that they do not include all the closing costs until closing day. They like to remind people on closing day that the Good Faith Estimate is just that, an ESTIMATE.

In addition to our Flat Fee pricing we also offer superior savings for those with less than perfect credit. Syndicate knows you have a choice when it comes to mortgages and we would like to service those needs. That is why we streamline our costs, offer flat origination fees and provide updated mortgage rates on a daily basis. We are a part of a small group of mortgage brokers known as Upfront Mortgage Brokers and this is our commitment to you.These qualities are all part of the Syndicate Advantage.

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