Marianne Mancusi
Fallout tonight from the race to refinance -- the state's highest banking official suspects several loan companies may be misleading borrowers -- and has now ordered them to stop taking new business. What's more, Investigative Reporter Hank Phillippi Ryan has been doing some digging of her own in the refinance world--and she discovered you can lose big money--if you don't know the "Real Deal".
Windy thought she had the refinance deal of the century: such a low rate she'd save $29,000 and get to stay home with baby Julia too!
Windy Harrington
"I thought it was awesome. I thought it was great."
But when the closing date approached, she learned she wouldn't have that low rate after all.
Windy Harrington
"At that point I found I was not locked."
The deal fell through--and so did Windy's plans.
Windy Harrington
"I felt betrayed and sick to my stomach."
And we found hundreds of complaints from people like Windy, all across the state. People who wanted to remodel, pay bills, lower their monthly payments, but instead of benefiting from great rates, they're now bitter over broken promises.
Problem is that when rates hit a 40-year low, brokers and lenders accepted so much new business. Their copiers and fax machines were churning 24-hours a day
And as a result: mortgage experts know, some consumers got buried.
Brian Koss, Mortgage Lender
"People are stressed out and mistakes will be made."
And here's the "Real Deal": borrowers who don't understand the rules of the refi game can lose out big time.
Rebecca Sawyer
"Absolute disaster!"
Rebecca got these two emails from her broker, offering a great 5.25 rate to refinance her Hyde Park home, saving her hundreds a month.
Rebecca Sawyer
"Very excited. It was going to be at that point $400 less."
But she didn't know the rule that state regulations say brokers are not allowed to promise rates, only lenders can do that.
And Rebecca's real offer came in a full point higher than what she was originally quoted.
Rebecca Sawyer
"It's not even worth it at this point."
And look at complaints to the Better Business Bureau -- twice as many as last year. Many say they were promised low rates that disappeared.
Marie is one of them--she thought she locked in 5.3 percent on her Gloucester home--and figured that would save her almost $30,000.
Marie Strauss
"I thought it was excellent!"
But months went by. No one at the company would return her calls.
Marie Strauss
"They just dropped off the face of the earth once I signed the papers."
But Marie didn't know the rule that without a written commitment like this, she did not have a done deal.
Marie Strauss
"I'm just disgusted."
Remember, if you lock in low and the rates go up, the lenders have to make up the difference. So keeping you floating may be in their best interest.
Hank Phillippi Ryan, Investigative Reporter
"So if you don't get it in writing, do you have the rate?"Brian Koss, Mortgage Lender
"If you don't have your rate lock in writing, you have to assume you don't have that rate."
This summer, as Massachusetts refinance madness hit unprecedented levels, so did the number of complaints to the state's Division of Banks. The result: this warning letter to the industry we obtained, telling brokers and lenders to watch it.
Hank Phillippi Ryan, Investigative Reporter
"Why did you issue this memo?"David Cotney, Massachusetts Division of Banks
"To remind the industry what they should and should not be doing."
Now with rates rising again, experts predict more people will end up crunched in this numbers game. If you become a casualty, the state wants to hear about it.
David Cotney, Massachusetts Division of Banks
"If we find that consumers are being misled, we will take action."
In fact, the banking commissioner has already ordered some lenders to keep their low rate promises.
For more information:
The Massachusetts Office of Consumer Affairs has recently issued consumer tips on refinancing and rate locks. You can find them here:
http://www.state.ma.us/consumer/New/pr090303.htm
For more information, including how to file an online complaint against a broker or lender, you can go to the Massachusetts Divison of Banks website at:
http://www.state.ma.us/dob/conserv.htm
