How to Handle a Florida Home Loan Scam

This question and answer exchange is meant to shed light on an experience no buyer wants to go through: Florida home loan fraud.

Question: I was quoted a three-year fixed mortgage that was not supposed to change for 36 months. I also was quoted a margin of 2.75 percent. The real estate agent changed the rate to a 3 percent margin and the three-year fixed was changed to a monthly rate. This caused me to pay extra interest of $19,949.95 for the first year. Next year will be even more. What can I do?

Answer: Sounds to me like you are victim of abusive lending practices, otherwise known as “predatory lending.” But is it possible that after being told you qualified for the less expensive loan, you agreed at the last minute to the more expensive one because for some reason you no longer qualified for the less expensive one?

Whatever if the case, if what you say is true, the Florida home loan broker changed the terms of your mortgage without your permission or knowledge. But why on earth are you waiting until now - apparently a year after the fact - to complain?

Anyone who believes something’s amiss with their mortgage should begin asking questions right away.

Unfortunately, most of the kind of skullduggery you describe is committed by mortgage brokers, who originate upwards of 60% of today’s home loans. Of course, not all brokers are guilty of this kind of fraud. In fact, most are on the up-and-up and abhor the kind of thing you have experienced. But the few bad actors spoil the basket, which is why many states have either enacted or are trying to enact laws to prevent the miscreants from preying on unsuspecting borrowers.

Victims of this kind of conduct should follow the money. That is, complain to the loan agent’s boss, if he has one. Next, gripe to the funding lender. Brokers don’t actually make Florida home loans. Rather, they do all the paperwork and other tasks, and then take the complete loan package to a lender, which actually supplies the money.

If you still don’t get any satisfaction, determine if the loan has been sold on the secondary mortgage market. If so, take your story to the new lender. I know this sounds like a lot of work, but somewhere along the line, someone may set the matter straight.

Also, take your case to the authorities, both state and federal. Most states license mortgage brokers, and the FBI will go after anyone who is linked to a broad pattern of fraud. The Mortgage Bankers Association has a list of state agencies that oversee the finance sector. Check out the MBA website.

Lastly, I’d like to get back to the hypothesis I posed at the beginning of my response; that is, something might have happened between the time you were approved for financing and the closing.

People tend to think gaining Florida home loan approval is the last hurdle in the footrace to buy a house. But it’s not. Settlement is. And lenders often run a second credit check on applicants a day or two before closing to make sure nothing new has popped up that would change their credit standing. Borrowers who don’t know this - or aren’t warned about it by their Florida home loan brokers - sometimes go out and buy furniture, new cars or other big-ticket items that change their credit scores and push them into a higher-rate mortgage.

If something like that occurred in your case, your loan terms may have changed. But you should have been told, so always keep a sharp eye out and report any questions you may have.