Assessed Attorney Fee After Refinance Didn't Close

[REFIGONEWRONG]

STATE OF MASSACHUSETTS

I applied for a mortgage refinance in the amount of $260K. I was approved for the mortgage and signed the Good Faith Estimate, which provided my Estimated Settlement Charges at $3617.01, my Pre-paid Interest at $1,202.01and my other Estimated Settlement Charges at $2415.00.

At the time I requested my refinance the bank provided a payoff of my existing mortgage at $241,860.63 and a HELOC of $9,743.32, which totals $251,603.95.

Since my total refinance was $260,000.00 and my total payoff was $251,603.95, I would have had $8,396.05 to pay my Estimated Settlement Costs and have some cash DUE BACK TO ME AT CLOSE.

On the day of the closing I receive a call from the closing attorneys office stating that I need to bring a check to the closing for $5,029.00, which of course I did not have and was never informed by the bank or attorneys office previously that I needed to bring any money to close, since I had SIGNED THE COMMITMENT LETTER THAT STATED I WOULD BE GETTING UP TO $2,000.00 BACK AT CLOSING.

I called the bank where I requested the mortgage and spoke with the loan clerk who processed the paperwork and asked her why I need to have $5000.00 at close and she said that she did not know why and that she is only the loan processor. She told me to call the closing attorneys office, which I did. I am then told by the administrator in the attorneys office that my current mortgage has a pre-payment penalty and in order for me to refinance and pay off that mortgage, then I need to bring $5k to the closing.

I informed her that I would not be able to come up with $5K and that most likely it would not benefit me to refinance if I am going to lose $5k+ right off the top.

I called the bank where I applied and spoke with the VP and asked him why I was not informed of the issues with my current bank upfront. I told him that if his staff were doing their job, then they should have found out that there would be a pre-payment penalty and he then goes on to tell me that the bank I currently have is known for charging very high pre-payment penalty fees. I told him that he should have informed me about this before proceeding with any appraisal or closing. I informed him that it is not financially sound for me to pay $5000.00 plus in order to refinance.

I then receive a bill from the attorney’s office today for a total of $916.50, which states I need to pay for 2.5 hours of service at $225.00/hour and two other fees, which they state as $354.00.

I really feel the bank was negligent in this entire process and since they knew that the bank I am using charged large pre-payment penalties, then they should have know what the actual payoff was before telling me the day of the closing that I would need to provide a check for $5000.00.

I did not close on this refinance, because I could not afford to pay the additional $5,000.00 to do so and I informed all parties of this.

Can I fight this bill from the attorneys office? I signed a Commitment Letter, which provided me with money at closing and now the bank is stating that the Commitment Letter also states: “By signing you agree to pay all reasonable fees and costs of the banks attorney, whether or not the transaction is closed.”

I feel the bank should pay this bill since they were negligent in the way they have handled this entire process from the very beginning. (The attorney for the closing is on the board of directors for the bank, which I know is not illegal, but it is unfair practice to treat consumers like this.)

Sorry that my explanation is so long, but I wanted to make sure you had all of the details.

[BlueCrystal]

Why would it be the bank's fault? You are the consumer and it is your responsibility to address all the fine details of the situation. You signed an agreement stating the attorney will be paid whether or not the closing took place. The attorney was there to render a service it is not his/her fault that you failed to research the details of the mortgage's pre-payment penalty, nor was it the bank you tried to refiance through. I suggest you pay for your own error. Don't feel you paid for nothing you got a education in this matter.

[REFIGONEWRONG]

Is this a true Judge Judy verdict? Love her....

Thank you for the response, but I am still having an issue with paying this fee. At no time during my discussion with the bank VP did he ever ask or alert me to a concern of a pre-payment penalty. I know they are aware of their mistake, because I spoke with the VP of the bank today and he stated they are now asking all refinance customers if they are aware of any pre-payment penalties before they go forward with appraisals. The other thing that is really maddening is that when I got the call from the closing attorney about bringing the $5000.00, I then called the VP of the bank and he said they have had many issues with my current mortgager and pre-payment penalties.

Now it is very easy to blame the consumer and woulda, coulda, shoulda,,but this bank has had issues with pre-payment penalties from other customers and I think it is their dutie to alert a consumer to the facts they know before having the consumer go through the appraisal process and paying that fee and then almost closing, but having to stop because the bank did not do their job.

I really feel they did not do their job. I signed all of my paperwork in November and then was told two days before my interest rate expired that I was finally closing (scheduled for January). Then the attorney's office calls on closing day to tell me I need to bring $5,000.00 to closing.

The Commitment Letter I received stated the following in my Terms and Conditions: #4. Subject to cash out given to borrower directly at closing not to exceed $2,000.00.

I signed the Commitment Letter because I was agreeable to the Terms and Conditions of the letter as it was provided to me.

My feelings are that since they did not follow anything in the Commitment Letter, then they should not be able to act on the paragraph in the Commitment Letter, which states:
BY SIGNING YOU AGREE TO PAY ALL REASONABLE FEES AND COSTS TO THE BANKS ATTORNEY, WHETHER OR NOT THE TRANSACTION IS CLOSED.

I Believe in the above statement, if not closing the refinance was due to me not doing my job. In hindsight, you may look at it as my fault, but I see it as the banks fault. They were quick enough to take my business and they should be responsible for everything in reference to the refinancing, including getting my payoff from the bank within a reasonable time period.