Commissions For Loans and Note Modifications?

Hi, Are there any regulations regarding the disbursement of commissions via a mortgage transaction? Can a company sign up independent agents who work as an independent contractor to market refinance and modification loans for a financial institution and receive commissions from that company as an independent contractor? Please advise... Thanks, Gary

Hi Gary,

It sounds like you are describing a mortgage broker: a person who markets lending services and then places his/her clients with a lender he/she/it (if incorporated) has "Broker Agreements" with. Mortgage Brokers specifically work as Independent Contractors for the lender(s) they have agreements with. They are paid commissions for successfully closed deals. Otherwise they would be employees and bound to sell the loans of that company only...not to mention the myriad of tax/compensation issues the lender's wish to avoid. With regard to the loan modification side of it, I would SUGGEST that the same is true. The Loan Mod industry is relatively new and mostly unregulated. I would venture to guess that ANYONE can collect commission on these files. I have heard talk that some regulatory agencies are looking into regulating this industry...but nothing concrete so far.

MortgageMaster

Escrow Funds, Continued

Hi,

Please see my comments, in YELLOW CAPS, interspersed throughout your letter:

"Hello,


Thank you for getting back to me so quickly. This was, and still is, a complicated situation. From your response, I can see that there were some things that I didn't explain clearly. I thinks it's because I'm so tired of telling my story!!! However, that certainly isn't your fault. As far as the first contractor, you're right in that I didn't allow him to finish all that was on his original estimate. It was mainly the hardwood flooring that he had nothing to do with. The hardwood flooring has been installed and the company has been paid. Once the contract found out that he wouldn't be doing the flooring, he got ticked. I had been in contact on a regular basis with the mortgage company and they were aware that I was not intending to allow him to complete all of the work that was in the original estimate. There is some work still not done, mainly painting. I have since had to have a painter come in and repaint my house because the painting was soooooooooooooooooooooooooo bad, but he only got the upstairs done. I also had to have some other things done that he simply didn't finish. All of that stuff has been paid for out of my pocket. Therefore, there is no money that needs to go back to the insurance company. I even had to pay for part of the hardwood flooring out of my pocket. SEND YOUR RECEIPTS TO THE LENDER WITH A LETTER DETAILING WHAT HAPPENED. SEND IT CERTIFIED, SIGNATURE REQUIRED, TO THE PRESIDENT OF THE LENDER (THIS IS KEY)!


Once the adjuster was told that the contractor would not be completing the floors, he called the contractor and asked for a final bill. DID THE CONTRACTOR SEND HIS FINAL BILL? WAS HE PAID, ALBEIT HIGHER THAN QUOTED, THE AMOUNT HE BILLED? THE CONTRACTOR HAS A RESPONSIBILITY TO BILL IN A FAIR AND TIMELY MANNER. IF YOU HAVE A COMPLAINT, THREATEN THE CONTRACTOR WITH A FORMALIZED COMPLAINT TO THE STATE REGULATORY AGENCY HE WORKS UNDER. NOBODY LIKES "DINGS" ON THEIR RECORD! When I talked to the mortgage company asking for the remainder of the money, they told me that the contractor and I would have to sign off and then they could release the money back to us. I STILL DO NOT UNDERSTAND WHY THEY WILL NOT GIVE YOU THE MONEY, IF QUALIFIED TO BE GIVEN TO YOU, IF THE ORIGINAL CONTRACTOR WAS PAID. IT SOUNDS LIKE HE HAS NOT BEEN PAID YET, OR THAT HE HAS BEEN PAID BUT WILL NOT SIGN OFF ON THE FACT THAT HE HAS BEEN PAID. THUS, LEAVING THE LENDER WITH THE IMPRESSION THAT THE CONTRACTOR MAY STILL MAKE CLAIMS. TELL THE LENDER/ADJUSTOR TO ASK FOR THE FINAL BILLING AND HAVE THE LENDER HAMMER IT OUT WITH THEM. AFTER ALL, THE CONTRACTOR PROVIDED A WRITTEN ESTIMATE (I HOPE!) AND IS BOUND TO HIS ESTIMATE WITHIN REASON. OTHERWISE, IT IS SIMPLY SOUR GRAPES AND I SUGGEST FILING A COMPLAINT AGAINST THE CONTRACTOR. THE LENDER IS RIGHTFULLY FEARFUL THAT A LIEN COULD BE FILED. THEY ARE CAUGHT IN THE MIDDLE. They asked for a whole letter from the contractor since the amount he would be paid was less than the original estimate. I have explained to them that the amounts differ because he didn't do the floors. However, the contractor wrote a final bill for what I supposedly still owed him. The problem is that on the final bill, he didn't take the original bill and subtract the flooring, which would have made perfect sense and would have been fair. Instead, he added charges that weren't on the original bill. For example, on the final estimate, he added a charge for $1,500 for prepping the ceilings and the walls for painting!!!! Basically, he was ticked about losing the flooring money, so he was trying to get the money in another way. I explained all of this to the mortgage company and I asked them to get involved, but they refused to do so. So, the bottom line is: The mortgage company will not release the funds to just me until he signs off because he could put a lean again my property. I think that is wrong of them because I feel they should be looking out for me, but they aren't. AGAIN, IT IS THE CONTRACTOR WHO IS CREATING THE PROBLEM. FILE A COMPLAINT!!!!


I contacted the contractor and we got nowhere!!! I finally got an attorney, whom I asked to simply call the contractor, rather than doing all of the legal paperwork, but she didn't do that. She did call the contractor's worker, who owed me $1,000 for some furniture, but she said the contractor owed me more money so she would have to start in writing. Again, I asked her not to for a couple of reasons: 1) to save me money; and 2) so he wouldn't get intimidated by the legal part of it and feel he had to contact, and in turn, pay his attorney. At the beginning, he was willing to sign off, but once he saw all of the paperwork, he said he would need a week for his attorney to look over the paperwork. When the week was up, she called him back and he stopped returning her calls. I don't know if it's because his attorney found a loop hole for the contractor or what. I have since talked to the attorney and she told me it wouldn't be worth taking him to court because I would spend more than I'm trying to get back!!!! That ticked me off since I have already paid her over $1,000, but the worst part was that after she told me that, she left another message for him saying that if he didn't return her call, then I would file a law suit!!! Why she would tell him that if she told me it would cost that much, I don't know!!!! I am absolutely fit to be tied!!!!

FILE A COMPLAINT ABOUT THE CONTRACTOR! YOU MAY NOT NEED AN ATTORNEY YET!

I am going to contact the mortgage company tomorrow and I am going to ask them for assistance one more time. If they won't help me, then I am going to go to their regulatory agency. Would that be the FTC? Is that the appropriate person for me to contact? I'm not sure if I understood the part you wrote about escrow. You said that's a third party, but I think they are just holding the money in the mortgage company. ESCROW CANNOT RELEASE FUNDS UNLESS THE LENDER AUTHORIZES THEM TO DO SO. I WAS GOING TO SUGGEST CONTINUALLY FOLLOWING WITH THEM, BUT IT ALL STARTS WITH THE CONTRACTOR. Does that make sense?? Should I expect them to give me the money since he won't sign off or not? Should I expect them to help me by contacting him or not? They sure wanted to know everything about him as far as making sure the work would be done properly and all, that he was licensed, bonded and insured, but now that he is being an idiot, they won't help me!!!!! I am not in the wrong in this situation, but yet I can't find anyone to help me. Could I expect his insurance company to help me or my insurance company??

Help!!!!!! Not only am I out all that money, but I STILL have to hire a painter to fix the incredible MESS he made in my home!!!! How can he get away with this???

I would appreciate any help you can give me.


Thank you,



Robin"

Picking Mortgage Insurance Companies

Does a person have the right to try to obtain their own PMI or do they have to accept the lenders choice ?

Don

Don,

I have never, in 20 years, had a client specifically request an MI company. The fact is there are only a few providors of mortgage insurance: PMI, RMIC, CMG, MGIC, and maybe another one or two. The afmorementioned are, however, the larger underwriters. The way the process works is that your lender submits loan files to one or more of the mortgage insurance companies and hopes that they will get an approval. if a MI company will not approve the policy, the lender will not do the loan (unless they choose to self insure, if available). Thus, the loan is really not approved until the MI company says it is insurable.

While you can ask your lender who they use for MI (as most will use several), and say you have a preference amongst their carriers, the real question is who is willing to approve the loan. Generally, the lender will send it to the MI company they feel will get the loan insured. If all are willing to underwrite the loan's MI, I suppose their could be differences in their premiums, but it is probably nominal. In addition to the need for getting approvals, the lenders are likely to lean toward the MI carrier(s) with the lower premiums: lower premiums = lower debt ratios = more approvals = more revenues.

If you still want to pursue this, ask your lender if they will let you select amongst their MI vendors and if there are differences in the premiums.

I hope this helps.

MortgageMaster

Are 10 Year Mortgages Legal In Texas?

Can you tell me if 10 year mortgages are legal in the state of Texas? We were told by our "out of state lender" that they were not legal in Texas, but they gave us one anyway. Since then, Wells Fargo has purchased the mortgage & we have 4 1/2 years left to pay. Due to family illness, we must lower our monthly payments & are trying to work with the bank. If they are illegal will that give us any leverage in dealing with the bank?

Thanks,
JM

Hi Jane,

I say this with the caveat that I am not licensed in Texas. Thus, I am not an expert nor can I offer a legal opinion. I can, however, tell you that I called four separate mortgage companies located in Texas and asked them if a ten year mortgage was possible. Without exception, they all said they could offer 10-year conventional mortgages. The each noted, with prodding, that they could not offer 10-year mortgages on the FHA program. I know you are searching for options. Given that you are currently in a ten year, with a ten-year amortizing payment, I would be pretty surprised if your lender did not offer to modify the loan into a 30 year at a reasonable rate for you...assuming the 30 year payment would be affordable for you. As I have stated many times, lenders do not want to foreclose. If you can make the 30 year payment, I am sure they will work with you.

MortgageMaster

Refund of Escrow Funds

Hello,


In Feb. 2008, I had a pipe freeze and burst, which caused damage to three floors of my home. As it turned out, the pipe did not meet code, but that's beside the point, as far as what I am asking about at this time. My mortgage company held the money paid out by the insurance company for structural damages in escrow until the damages were fixed by the contractor. Because of the poor quality of care shown for my household belongings, not to mention the poor quality of work completed, I decided not to have the original contractor install the new hardwood flooring. As a result, he decided to change many of his original prices and also add new charges to my bill to try to compensate for the money he lost by not being allowed to do the floors. As a result of the changes made, there is still money that my mortgage company is holding. I have provided them with an update on which items the contractor did complete and which ones he didn't. However, since the orignal estimate doesn't match the final one, they will not release the extra money back to me without the contractor's signature, which he is refusing to provide! So, about $4,500 is just sitting in my mortgage company !!!! I desperately need that money back to pay for expenses I have incurred in trying to fix and/or finish the things that the first contractor ruined.

Do I have any recourse in getting the mortgage company to turn the $4,500 over to me??? It does belong to me!!!


Please advise me.



Thank you for your help,



Robin


ALTHOUGH I AM A BIT CONFUSED, IT SOUNDS, OVERALL, LIKE YOU HIRED ONE CONTRACTOR TO DO THE WORK. YOU WERE NOT HAPPY WITH THAT CONTRACTOR AND TERMINATED HIM PARTLY THROUGH THE PROJECT. HE CHARGED MORE FOR THE PORTION OF WORK WHICH HE COMPLETED THAN WAS QUOTED. IT SOUNDS LIKE HE WAS PAID, WITHOUT QUESTION, BY THE LENDER FOR THE PORTION OF THE WORK HE DID COMPLETE. IT SOUNDS LIKE CONTRACTOR #2 FINISHED THE WORK TO YOUR SATISFACTION. I ASSUME HE WAS PAID. IT ALSO SOUNDS LIKE HE CAME IN BELOW THE ORIGINAL CONTRACTOR'S BID. THUS, YOU HAVE $4500 LEFT OVER. HAS ALL THE WORK BEEN SIGNED-OFF BY THE LENDER AS SATISFACTORY? IF NOT, THE REMAINING FUNDS MAY BE NEEDED TO COMPLETE THE WORK. IF ALL THE WORK IS DONE AND SIGNED OFF BY THE LENDER, AND YOU HAVE AN OVERAGE OF $4500, YOU MAY BE ENTITLED TO THE MONIES. PERHAPS THE INSURANCE COMPANY IS ENTITLED TO A REFUND OF THE UNUSED MONIES? I DO NOT KNOW. EITHER WAY, I DO NOT SEE HOW THE FIRST CONTRACTOR CAN BE HOLDING THIS UP (UNLESS HE IS THE ONE SIGNING-OFF ON THE WORK?). I WOULD EITHER SEEK LEGAL COUNSEL OR CALL THE ESCROW OFFICER AND HAVE HER POINT ME TO THE APPROPRIATE PERSON AT THE LENDERS. REMEMBER, ESCROW IS A DISINTERESTED THIRD-PARTY AND SHOULD BE ASSITING YOU IN THIS MATTER.

MortgageMaster

Lender, Who Is Foreclosing, Lost Paperwork!

Hello,

I am sending this as directed from your website. I have been served foreclosure documents (lawsuit) from my lender. They admit in the lawsuit that they have lost the original docuents "but expect to recover them". I understand that what usually has happened is that the docuemnts were not properly filed with a trust as required by The Securities Act and other mortgage lending laws.I also understand that if I allow this foreclosure to proceed, I may find yet another creditor on my doorstep demanding payment as the current plaintiff may not be the correct plaintiff in this case.I'm not denying that I have a mortgage, just want to make sure the plaintiff is indeed the plaintiff.What law, Securities Act section or other case law can I refer to in my response to the court? Thank you for your assistance.

Doug

Hi Doug,

This is a case where contacting an attorney may prove invaluable; particularly an attorney that is specializing in "loss mitigation" or "loan modifications". You can listen to your talk radio or simply google: "attorney, loss mitigation, Los Angeles (or wherever you live). Given that they cannot locate the documents, you may have the upper hand. An attorney can make the most of this error. Also, you generally do not have to pay for many of these loss mitigation services up front, but rather when they are settled. Attorney's however, may require a "retainer" to start negotiating. The Esq. following the attorney's name carries a lot of weight and may be worth the upfront investment.

MortgageMaster