The Confusing Closing Process: Rush to Extinction

From a new commentator on our pages:

I just glanced at a few posts and have to wonder if folks are aware of the typical loan closing process that was in place in CA the last several years. Usually a mobile notary would be dispatched to a borrower’s location with two stacks of loan documents and a very brief window of time to “sign up” the borrower.

Borrowers would be given NO opportunity to read or review loan documents and this is precisely how brokers/lenders managed to obtain signatures on documents with information altered by the broker/lender.

I saw this practice first develop in the 1980s when I was a banker and watched it become the standard in the mortgage industry by the time I left banking in 2007. Including a stint at sub-prime lender Aames the very idea that borrowers had ANY meaningful opportunity to read and review their loan documents is so far removed from the truth that it is actually nauseating.

I was able to work on or analyze several loan origination systems and am truly amazed that the public has not been educated as to the absolute control exercised by brokers/lenders over the loan closing process. I make allegations about this process in every complaint I file wherein it is appropriately alleged. The world needs to know about this so the true culprits in this meltdown, the brokers and lenders, can be brought to justice.

5 Responses

  1. Countrywide called my 67 yr old Mom, who was very ill (& recently widowed) and told her that they would give her better terms than her current loan @ wells fargo and wld send paperwork which they did not, instead the notary called her and showed up w/contracts that my Mom was told to sign on the spot. The notary said she had to leave immediately so there was no time to review and left w/the materials and told her that she would receive something in the mail, but it never arrived. She signed something that resulted in automatic payments from her bank… She was not told it was interest only loan… She paid $180k b/f she realized there was no equity and Bof A says they cannot tell her what her payment will be in 2016 (will have paid $360k in excess of value of home) when she is out of the loan. After many attempts to negotiate and apply for modification, of which there is no good faith interest on the part of BofA to process [losing docs, finding them, losing parts, forgetting to tell you about some random doc, leaving v/m for dozens of customer service reps and superiors who are always unavailable, lies, intentional delays, then after all this, they find “errors” (you must write $2500.00 and not $2500 – or you must write “0” instead of N/A) that even a court would not object to] or grant. These banks should NEVER have been bailed out!!! They should be put in prison!!! Cannot understand how they are allowed to operate. I have read countless reports on this subject and it is overwhelming. It is like the student loan racket… These banks all get a huge pay-off from the govt when you default… and when you “consolidate” they tag on massive fees which are not disclosed… No one will work with you. They WANT you to default. They want to take your home and collect from the govt. not to mention the “bail-outs.” They are pure evil and the government is NOT doing enough!!!! These settlement agreements have no teeth. Even if you qualify, the decision to comply is discretionary. You are not entitled to anything… You have no rights. The govt will not enforce your rights or take legal action on your behalf & neither will HOPE – which is a joke – just more cash going to middlemen… Our government and the banking industry are destroying our families and futures…

  2. Very first page of closing jacket reads, and I quote:

    “Two complete closing packages
    –one for you to open and review prior to your closing
    –one for your closing agent to open (please keep this package sealed until your closing agent arrives).”

    also, quote:

    “At the scheduled closing meeting, the closing agent will open “their package” and “review all of the documents” with you. The mortgage documents are signed and any monies due are collected. The “entire loan closing process normally takes” 30-45 minutes. That’s all there is to it!” —end quote.

    Both of these statements are removed from the cover page of the cloaing jacket. We initialled asked the Rep. why we couldn’t look at the “sealed package?” He said standard proceedure and assured us that our copy to review was identical. We didn’t push the issue but we did let him know that we didn’t understand the documents. He said not to worry about it becuase the Closing agent would explain everything at closing, as well as, answer any questions we had.

    The closing agent arrived and asked if we had the “sealed package?” We provided it and asked why we were not allowed to look it over. The agent abruptly asked if we had opened it, and we said no. But we asked again, what if we had opened it? The agent said, “I brought another one with me incase that happened [laughing].”

    As the closing proceeded we raised numerous questions about terms, fees, etc… The agent provided a brief label of some documents as she hurriedly flipped the pages for signature. The agent’s husband remained quiet throughout the process, and the Agent would only return a look of disgust everytime I asked a question. Finally, in the Agent’s frustration, she simply said that we would have to contact our loan Rep. to answer our questions because it was not her job, and she did not have any knowledge of what was negotiated.

    Immediately after closing, we contacted the Rep. and explained our discomfort with the signing process. We also raised numerous questions, of which, he always seemed to have the perfect answer that just served to add to our confusion. He did, however, admit that he was sorry to hear that the closing agent would not answer our questions like he said she would.

    BTW, the entire process did take less than an hour despite trying to get questions answered.

  3. I agree with everyone…on this post…Yes a problem exists and its not getting better. The average consumer does not understand the entire mortgage process/language period. Title companies or a mobile notary lacks the requisite knowledge to oversee signing let alone explain the terms of the transaction. In addition if the blow the signing they will never see business from the lender/broker again. So really whats the solution? The government has been bumbling around with revamping TILA, extra loan disclosures but really is that going to solve the problem? NO!

    Let me give you an example…if you were in the market to purchase a used car from a private party…would you ask the owner of the vehicle how the car runs take his/her word for it and write the check? I would hope the answer is no! I would hope you pay a mechanic a reasonable fee…say $200.00 to inspect the entire vehicle before you buy! So when you take out a mortgage loan and ask the lender if the rate is the best they can offer and are the costs reasonable and is there any dirty little secrets I should know about this loan….what do you think the answer will be? Undoubtably…it will be its a great deal and yes the rate is in line with the market and we have covered everything!…Why is that?…Because both the lender/loan officer and the guy selling you that used car both have something to gain by you transacting business with them.
    The guy sells you that used hunk of junk for 10k he made out like a bandit.
    If the lender/loan officer sells you a 5.5% rate in a 5.0% market and charged you non-esential fees on top of it…he made out like a bandit.

    The only resoultion is for consumers to have the opportunity to consult with an independent mortgage expert whom they(buyer or owner trying to refinance) retain and pay a flat fee to review all the terms and conditions and closing costs with them prior to signing the loan documents. Would you as a consumer be willing to have someone inspect your mortgage? I assume most are willing to pay for a mechanic to inspect that 10k car purchase…how about a 180k home loan and a 30 year comittment?

    All the extra disclosures will never help! In addition, the average consumer can’t effectively shop and compare loan programs…its’s a shell game…lower costs higer rate, Higher Costs, Higher RATE! Higher Costs/Sometimes lower rate.

  4. I signed my mortgage and note that were dated prepared July 31, 2007 on August 7, 2007 and the mortgage was notorized on August 7, 2007. It is my understanding that if any thing is changed on the loan docs it invalidates the signature. The docs should have been signed and notorized July 31, 2007

  5. I remember they sent some flunky notary out here to the house to do the initial loan application. The actual closing took place at the title company.

    Steve Cisko
    San Diego, CA

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