When I helped Micheal and Pam with the financing of their home almost five years ago, it was a challenging transaction. They were excellent borrowers, except for the particular type of Visa he had (they’re Canadian). Long story short, we wound up doing a 5/1 ARM through Woo Whoo Bank as they were only planning on staying here for about 5 years. About four months ago, Micheal met with me to review his Note and to see about refinancing. They may be staying a few years longer if they have their choice…Michael is having a challenge extending his Visa. Michael wanted to refinance and was concerned about his ARM adjusting. With our current mortgage climate and his current situation with his Visa, I could not refinance him. We reviewed how his ARM and discussed how it functions and at that time, I told him that he has time–he did not to refinance yet. He was still feeling pressured to do something–letting his ARM adjust was not sinking in. He went directly to Woo Whoo to investigate a refinance. Michael forwarded me the first good faith estimate from Big Bank. The rate seemed too high to me; especially compared to his current mortgage. I again encouraged him to wait out a few more months to see what rates do and that by that time,he would have more information on the status of his Visa. Fast forward to the present.
Michael has re-visited Woo Whoo and now has a rate that seems more attractive. After reviewing his Good Faith Estimate and the documentation he emailed to me, I asked him where the Federal Truth in Lending was and he said he never received it. I advised him that he is to receive a copy of his TIL ASAP. He contacted Woo Whoo and here is the emailed response:
Good Afternoon [Michael]
I just got your voicemail. Regarding the truth in lending statement, I believe when you close, the notary will have all of the final documents. The documents you received in th email is strictly for your records only. Basically states that you took an application with [Woo Whoo Bank]. Your closing documents that the notary will bring will have all the correct information including the Truth in Lending statement. Please let me know if you have any questions. Hope all is well with you. Thank you.
[Loan Originator in Downers Grove, IL]
Loan Consultant – Woo Whoo
I informed Michael that lenders have 3 days to provide the Truth in Lending after an application is complete. The TIL should accompany a Good Faith Estimate. It was missing from all of Michaels paperwork. After Michael called Woo Whoo again, this time demanding a copy of his Truth in Lending statement. The TIL shortly appeared disclosing exactly what I thought: a prepayment penalty on this 3/1 ARM for a family who may not be staying in their home for three years. Nice, huh?
Stay tuned for part 2…