Be savvy about mortgage lender's closing fees
By SANDRA BLOCK gary gardiner | Bloomberg News Service
Just about anyone who has purchased or refinanced a home has a mortgage-closing horror story. Unexpected fees. Last-minute surprises. A settlement document that contains more pages than "The Brothers Karamazov."
The Department of Housing and Urban Development has embarked on a renewed effort to make the closing process simpler and less costly. An earlier effort to update the rules generated such a buzz saw of opposition that HUD withdrew the changes last year.
This time around, HUD Secretary Alphonso Jackson plans to confer with as many industry and consumer groups as possible. While it won't be possible to satisfy all the constituencies, "We're looking for consensus," Jackson said. Last time around, he said, "I couldn't find anyone who was with us."
There's already a consensus on one point: The Real Estate Settlement Procedures Act, which governs mortgage closings, is overly complicated and outdated. But there's widespread disagreement on how to fix the problem because so many players have a financial interest in the outcome.
Jackson said he hasn't set a timetable for releasing proposed changes to the rules.
The efforts may improve the chance for reform, but it also means the change could be a long time coming. So if you're planning to buy or refinance a home in the next few months, you'll have to go into the market with the rules that you have, not the rules that you want.
BE INFORMED
USA Today
First-time home buyer Lisa Gramlich and her husband, Steve, listen as a loan officer explains what papers they are about to sign as they buy an existing home in Columbus, Ohio.
To protect your interests, make it clear upfront that you're an informed borrower, says Allen Fishbein, director of housing and credit policy for the Consumer Federation of America. Some closing costs may be negotiable with the seller, lender or closing agent, he says. While closing costs vary depending on where you live, raise questions if an item is significantly higher than average, Fishbein says.
Other tips for borrowers:
Ditech.com, a subsidiary of General Motors Acceptance Corp., has offered a $395 flat fee for its mortgage refinancings for several years; last week, it extended the deal to home purchases.
Bank of America's Mortgage Rewards program waives most closing costs for Bank of America customers.
ING Direct's Orange Mortgage guarantees its closing costs, says Arkadi Kuhlmann, chief executive of ING Direct USA. If the estimate is too low, "We pick up the difference," he says.
ABN Amro Mortgage Group allows borrowers who obtain mortgages through its online channel, www.mortgage.com, to lock in closing fees at the same time they lock in the interest rate. The guarantee is also available through its LaSalle Bank and Standard Federal Bank subsidiaries.
