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View Diary: How Low Can They Go? Banks Accused Of Defrauding Veterans for Half A Billion. (76 comments)

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  •  I'm helping my mom on a refi (17+ / 0-)

    just today I reviewed the loan docs with her from Bank of America.  The same title insurance fee that cost her $280 five years ago was now up to $980.  Now I know why.  They also were trying to charge her $1300 in discount points.  I made sure she understood that over the life of a 30 year loan she would have to pay $100,000 in interest on a $100,000 finance amount and that the bank would not sacrifice that interest if she refused to pay the discount points.  

    Really, these bankers are scum of the lowest order.

    •  To clarify, title insurance and title fees are (5+ / 0-)

      different, albeit related, things.

      IANAL, but this is my civilian understanding.

      A title search involves an attorney or other title searcher looking through public records related to the property to make sure there is "good title".  These records include all previous deeds, mortgages, and descriptions going back a certain number of years.  The point of this is to make sure there is a clear chain of ownership, that all mortgages have been (or will be as part of the sale) paid off, that the property has known boundaries, and that the property described is the same property that has been bought and sold all along.  The fee for a title search should be a flat fee.  (You might pay extra for an attorney's time to fix any flaws in title.)

      Title insurance is protection against any flaws in title that might not have shown up in the search.  For example, if one of the owners of the house didn't agree to one of the sales.  Title insurance addresses such issues, usually by paying off the person with the competing claim, so you don't lose your home.

      The title insurance agents -- who may or may not be the same attorney who certifies the title -- are paid as a percentage of the value of the property.  So it may be that the title insurance agent fee has gone up along with the value of the property?

      •  thanks for explaining (4+ / 0-)
        Recommended by:
        jpmassar, pickandshovel, Seamus D, lcork

        How could title insurance fees near quadruple in 5 years?  The story linked in the diary says banks are hiding inflated fees in the title insurance category of costs.  Comparing the title insurance costs from 5 years ago to now, I think the same thing was happening with my moms refi quote.  It doesn't help that BofA owns the title insurer and has a pool of "select" (read subsidiary) appraisers.  They won't accept an appraisal from any one else.  

        I helped a friend review her refi quote last week.  I told her to challenge the origination fee, discount points, appraisal costs and title insurance costs that were quoted to her from Wells Fargo and get another quote from a competing (locally based) bank.  She questioned Wells Fargo on these costs and got the competing quote.  Wells Fargo cut their quoted origination fee, discount points, and title insurance costs in half immediately. The quote she got from the local bank was at a lower interest rate with no discount points, no origination fee, $100 less on the appraisal and title insurance.

        And really, isn't and 100% return on the value of the loan enough profit?  Ever read an amortization table?  At current interest rates, you'll pay almost the entire value of the loan in interest on a 30 year note ($100,000 loan costs $100,000 in interest).  And almost every dime of your payment for the first 20 years goes to interest.  Isn't that enough?  I recognize the right of any business to make a profit, but all these nickel and dime fees are just too much when combined with the total interest cost.

        •  That is a very good question. (1+ / 0-)
          Recommended by:

          I'm sorry I can't answer it.

          I also don't know if you can get title insurance from someone other than who your bank demands.  

        •  I can't speak to the appraisal (1+ / 0-)
          Recommended by:

          but depending on where you live, you may be entitled to choose the settlement company.  In Virginia it is the law that the buyer (or borrower in your Mom's case) gets to choose.  The lenders try to get around this by offering "free owner's title insurance" which is pointless on a refi anyway.

          Call a settlement company and ask if they have someone who can explain what your rights are in your state with regard to choosing a settlement company for your refi closing.

          If you really feel like your Mom is being jerked around, cancel the refi and take her to a credit union where they typically don't play these games and they have better loan rates to start with.  You can almost never beat the service and rates you will get at a credit union.

          Sometimes, even if it's inconvenient, you're just way better off firing your lender and starting over rather than tying yourself to them for the next 15 or 30 years.

          You hear about crazy, but it's rarer than you think. -Jon Stewart 1/10/2011

          by lcork on Wed Oct 05, 2011 at 08:30:01 PM PDT

          [ Parent ]

      •  what property value has gone up that much? (3+ / 0-)
        Recommended by:
        jpmassar, cai, cany
        •  Lender's Title Insurance (2+ / 0-)
          Recommended by:
          jpmassar, Friend of the court

          is all you need on a refi - unless you didn't get owner's title insurance when you originally bought the property and you want to buy it now.  Owner's is always optional, but a very good idea, particularly these days - but that's another discussion.

          The charge is based on the loan amount and also the type of search.  Since there is a loan on the property, there is a prior lender's title policy and since it is less than ten years old they should give you a discounted rate because they will only be searching title up to the point of the last insurance policy, which was five years ago, and only one owner.  It is called a "re-issue" rate because it essentially a re-issue and extension of the policy you bought previously.  Any decent title company will know this and if you give them a copy of your current title policy or even the HUD-1 from the earlier transaction that shows you purchased a title policy, then they should give you the discounted re-issue rate.

          As for what they charge for the search and the title examination, if it is excessive, point out that they are doing a one-owner search that covers only five years and challenge the excessive charges.

          You hear about crazy, but it's rarer than you think. -Jon Stewart 1/10/2011

          by lcork on Wed Oct 05, 2011 at 08:23:03 PM PDT

          [ Parent ]

    •  the "title insurance company", is owned by BofA. (8+ / 0-)

      they charge a fat appraisal fee, too.  the appraisal company is owned by the BofA.  then they force place "home owner's insurance", read mortgage insurance that only pays the bank.  the insurance company is owned by BofA.  they also collect fees for an escrow account that is opened to stick all the fees on to your loan amount so they can charge interest on these fees at a daily rate in addition to the loan balance interest.  refinance at a different bank can be made difficult because BofA owns a credit reporting agency.  i could go on.  my mom's estate was a nightmare due to a relatively small loan from BofA.

      Get away from them as far as you can, as soon as you can.

      •  Yeah (1+ / 0-)
        Recommended by:

        I am never comfortable with that scenario.  It is just too easy to have a joint venture like that become a conflict of interest.

        For refi loans, I always think the best place to go is a credit union if you are a member.  If you're not, it's a great time to think about joining one.

        You hear about crazy, but it's rarer than you think. -Jon Stewart 1/10/2011

        by lcork on Wed Oct 05, 2011 at 08:46:47 PM PDT

        [ Parent ]

    •  You don't need to buy title insurance (1+ / 0-)
      Recommended by:

      through the bank.  Get your own title company to do the closing and have them get the insurance.

    •  whoa whoa whoa (1+ / 0-)
      Recommended by:

      Ask about a re-issue rate on the title insurance.  You should be able to get a discount on the title insurance premium because the earlier policy was less than ten years old.  Find her old title insurance policy and get it to the settlement company that is closing the loan and issuing the title insurance.

      Also, why is the title insurance more this time around?  it is based on the amount of the loan.  Is she borrowing more than she did before?  Are they issuing both owners and lenders title insurance?  If they are, why are they doing that?  Did she not get an owners policy when she bought the property?  It is good for as long as she owns the property, you only need lender's title insurance when you refi.

      If you have not chosen your own settlement company to close the loan, ask if that is possible, and then call a few settlement companies and ask about their rates.    Even if you don't go with someone else, call a settlement company and ask what the charge would be for lenders title insurance for your Mom's loan.  The rates are pretty standard from company to company, they're regulated in some states, if I'm not mistaken, and they are based on the loan amount, not the property value.  Unless your Mom's loan is more than twice what it was five years ago, there really should not be that big of an increase.  Rates may have gone up because of the terrible housing market and the economy but double?  More than double?  Hard to imagine that.  Seriously.

      Here's a link to a rate calculator.  But if it's confusing, call a title company.  They will ask you about the transaction and should be able to give you a quick quote.  

      Title insurance calculator

      You hear about crazy, but it's rarer than you think. -Jon Stewart 1/10/2011

      by lcork on Wed Oct 05, 2011 at 08:12:54 PM PDT

      [ Parent ]

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