Q:We were quoted a 6.75 percent fixed interest rate on our refinanced mortgage. But the loan disclosure statement says 7.12 percent annual percentage rate (APR). Why the difference?

A: The APR is the loan’s total true interest rate, including any up-front loan fee, usually called “points.” One point equals 1 percent of the amount borrowed. However, the APR does not include additional loan charges such as for appraisal, title insurance, credit report and other fees paid to third parties.

Your actual interest rate used to amortize the mortgage should be the lower 6.75 percent you were quoted. Be sure to double-check by getting an amortization schedule. Never trust a mortgage lender. That’s a horrible thing to say, but there are so many dishonest home loan lenders (including some of the biggest lenders), borrowers must be wary. I could name names, but I don’t want a lawsuit.

Q:With great interest, my wife and I have been following your “discussions” with mortgage brokers about so-called junk or garbage fees that some lenders impose on home loan borrowers. We never thought that would happen to us because we decided to refinance with the same firm that refinanced our home mortgage about three years ago. Their “good faith estimate” only listed an appraisal fee, credit report, title insurance and a few routine fees.

We told our mortgage broker we wanted a “no-cost” or “low-cost” mortgage, just like she arranged last time. But when we were told to show up for the loan closing, the final statement had all sorts of charges such as closing fee, processing fee, transfer fee, underwriting fee, documentation charge, $100 for courier fees (we were in no hurry), and a 1.5 percent loan fee (which we told our mortgage agent we didn’t want because we know loan fees are not immediately tax-deductible on a refinance).

My wife and I refused to sign. The mortgage broker said if we didn’t sign, we would have to pay a $1,500 cancellation fee for all her work. Is this true? She blamed all the extra unexpected junk fees on the actual lender. What would you have done in our situation?

A: I would have done exactly as you did and refused to sign anything. Mortgage lenders know most borrowers are so eager to get the benefits of refinancing, they will sign almost anything. But your mortgage broker pushed you too far. I congratulate you for not signing.

Yes, it is true some of those fees might have been imposed by the actual lender, rather than the mortgage broker who arranged your new loan. But your request for a “no-cost” or “low-cost” mortgage was clearly ignored by your mortgage broker when she imposed that outrageous 1.5 percent loan fee. Instead, you should have been charged a slightly higher interest rate on your mortgage.

Before your mortgage broker takes you to small claims court for the threatened $1,500 cancellation fee, which I doubt she will do, I recommend you file a complaint against her with the state agency that issued her license. Mortgage agents like that, who breach their fiduciary duty by failing to follow their principal’s instructions, give the mortgage brokerage industry a bad name.

Q:I am having trouble getting our mortgage company to send the paperwork to our county deed recorder stating our mortgage has been paid in full. In 1990, I had trouble with our lender and got results from the Office of Thrift Supervision. Is this still the regulatory agency I should contact?

A: Don’t expect much help from your lender’s government regulatory agency. The federal regulatory agencies, primarily the Comptroller of the Currency, which regulates national banks, are toothless. They rarely help consumers because they depend on fees paid by the lenders they regulate.

However, if your home loan was owned by Fannie Mae or Freddie Mac, contact their home office in Washington, D.C., for excellent consumer assistance.

As stated here many times, there is virtually no practical remedy against a mortgage lender who fails to promptly record a mortgage satisfaction or a trust deed reconveyance. A few states have statutes imposing fines on lenders for late recordings. But most borrowers don’t want to sue their lender in small claims court for the statutory penalty, which is only a few hundred dollars.

Since you’ve tried being nice, you might try suing your former lender in your local small claims court and then agreeing to drop the lawsuit when the lender clears your mortgage and pays your filing fees. Other than that, I have no easy remedy to suggest.

To send questions, write:
Robert Bruss
c/o Tribune Media Services
Robert Bruss Questions
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