The Devil is in the Details - Catching Mistakes During Mortgage Refinancing
by Ellise Walsh

In the last few years with the economy in what seemed like it was going to be a perpetual recovery period, interest rates just kept dropping. So the temptation to refinance has remained strong. By refinancing your mortgage, you can drop your payment by $100-$200 plus your payment is affecting your equity so much better that it’s usually a smart move.

However, just as you and I are having that temptation, tens of thousands of others every day are rushing to cash in on the interest rates. We know they won’t last so we want to lock them in. Mortgage banks and credit providers are equally as eager to provide the service. But because of the rush to the market and the aggressive business going through these agencies, you have to be on guard to make sure mistakes either intentional or unintentional do not get made during the refinancing. Mistakes can cost you money and the step of refinancing is about saving money.

One study in disclosure and compliance reflected that up to three quarters of the loans being refinances are not in compliance with the Real Estate Settlement Procedures Act, in disclosing fees to customers of the lending institutions. If you don’t know about the fees, you don’t know what you are paying for or if you ever got those services. You also don’t know about escrow or down payments that may be refundable when the process ends. If you don’t get those refunds when it’s all over, nobody will make that happen if you don’t.

It isn’t always a deliberate thing that such details get missed. The sheer glut of business can make that happen. There is a massive amount of clerical and technical detail to attend to plus the mortgage companies may be subcontracting out the work or bringing in temp workers who are not their most knowledgeable folks. So it’s up to us to watch their backs and make sure things get done right.

Stay in the Game

Most mortgage companies assume that you do not know what the processes are on a refinancing and or don’t want to know. They base that belief on how blindly most customers trust their system. So the first step is to let your agent know from the beginning to the end of the process that you DO want to know what is going on in the greatest detail possible.

So inform yourself of the legal terminology such as the Real Estate Settlement Procedures Act that we discussed earlier. Get a copy of this and other pertinent laws so you know what they are required to disclose and when. If you come to your first meeting armed to the teeth with this kind of detail, the mortgage company will know that they are not dealing with the routine customer who just applies for the loan and comes back for closing.

Come to each meeting with a check list of what needs to be done and build a calendar on when that is going to be done and by who. Get names, phone numbers and email addresses so you can follow up. The old principle of “the squeaky wheel gets the grease” will kick in and your loan not only will comply with the legalities, it will fly through so they don’t have to deal with your demands. It sounds somewhat nosey but this is your loan, your finances and your money involved, you have a right to know what is happening.

Patient - Professional - Persistent

Now be prepared as you become that kind of “demanding customer” that you might catch some attitude from the clerical crew. Be patient and professional, but persistent. If the clerical people become resistant or hostile to your requests, have the chain of command ready to start working your way up to their boss until the compliance occurs.

Your diligence will pay off when you are at the end of the process and you know no detail fell through the cracks. But don’t let down your guard at closing. Remember that after closing there are numerous documents that will be processed and sent to you to keep you in compliance as well. Keep your lists going so you get everything you need to document this transaction and reference in the future. Also keep your calendar in force because there will be escrow funds released and other refunds that should be on a schedule. If their due dates pass, begin following up.

Finally, as you build you’re filing system, save your checklists and calendars. These will be helpful the next time you refinance and save you time and money as well.

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