Mutual assent or meeting of the minds is destroyed by such actions as fraud, undue influence, duress, mutual mistake, or misrepresentation.
1. In the Final closing documents, the proposed new payment is compared side-by side with the existing payment (pre-refi).
a. On this document, there are separate boxes to break down the payment and escrow.
b. The existing payment was broken-down to show escrow, interest, and principle.
c. The new payment was simply shown as a sum, thereby concealing the fact that it was not an accurate comparison of both payments because it did not include the information required by the instructions listed on the document.
d. The closing contract lacked "mutual ascent" first, by including all parts of the existing payment, and second, by excluding those parts from the new payment.
e. This exclusion of important information, or misrepresentation had the effect of making the new payment appear to be more affordable (the point of refi).
f. If the new payment "properly" included the same amounts as the existing payment by comparison, it becomes obvious there was no "Net benefit" to refinancing.
g. The false comparison of payments, or misrepresentation of the total payment amount enabled the lender to collect $18,000 in closing costs without providing any benefit over the existing loan for the borrower.
2. The Initial GFE (before closing), offered a loan at XXX, and closing costs at XXX, with a stated discount fee of 1.5-points or approximately $2,500. The final HUD1 shows an increase of this fee to 2.5-points or approximately $4,500, without any justifiable change in interest rate or closing costs over the initial GFE.
a. The false comparison of payments, or misrepresentation of the total payment amount enabled the lender to deceptively increase the $4,500 loan discount fee or "settlement charges", by allowing the borrower to rely on a false payment comparisons that made the charges less significant when considering the month to month affordability of the loan.
b. The lender failed to deliver the closing documents in a timely manner that would have allowed borrow to thoroughly research these charges. Instead, the borrower was rushed to the closing table under misleading instructions by the lender affixed to the opening page of the closing documents. The instructions read:
--To make your closing easy, we have prepared the following documents for you:
- Two complete closing packages
-one for you to open and review prior to your closing
-and one your closing agent to open -please keep this package sealed until your closing agent arrives
So here's what happens next...
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 normally takes 30-45 minutes. That's all there is to it!
If you have any questions the closing agent cannot answer, they may contact us at 1-800-xxx-xxxx.
c. Prior to loan closing the loan representative informed the borrower that the closing agent would review and explain all the closing documents, and answer any question that might arise. Affirmed by the aforementioned disclosure in the closing package, the loan representative also stated that in the event the closing agent could not answer any questions they would contact the lender and verify.
d. At closing, the closing agent simply open the closing documents and began making on dozens of pages. Borrowers friend (not an attorney) also reviewed a separate closing package (there were 3) while borrower signed as instructed. While borrower signed x, x, x, etc. Friend, attempted to ask closing agent questions, to which closing agent sighed, showed obvious frustration, began flipping pages faster, and finally responded in a sarcastic response, "I am not allowed to answer any questions concerning the mortgage." Closing agent appeared with her husband(whom also slaimed to be a notary) in borrowers home for closing. Borrower paused the closing for a brief phone call to the loan rep., and lon rep. stated that he would be happy to answer any questions. The closing agent would not answer questions, and was very rude when confronted with the loan rep's statement that they would answer questions. The loan closing took approximately 30 minutes, and not a single page reviewed, or question answered.
e. Despite the lack of transparency and the closing agents' obvious need to get through with the closing, borrower feared postponing the closing because borrower had lost a $400 deposit with a previous lender when they were unable to come to closing after 30+ days of negotiation. Borrower feared losing her current $350 deposit in the same circumstances if closing was not completed, and therefor postponed questions with the expectation that the loan rep. would fulfill his promise to clarify, explain, or ratify any errors or misunderstandings after closing.
3. The Lender agreed to provide $3,000 cash at closing for the purpose of paying an upcoming property tax assessment (Not lien). The taxes were not delinquent. Through false representations, the lender claimed that a request for cash-out disqualified borrower from obtaining a 30yr. traditional fixed mortgage.
a. The contract lacked mutual ascent because the lender misrepresented the Fact that up-to $3,000 cash-out is allowable on a 30yr. fixed-rate mortgage.
b. The contract lacked mutual ascent because the lender used the cash-out stipulation as a pretext for disqualifying the borrower on a 30yr. fixed rate mortgage. However, just hours before closing, the lender informs borrower that lender decided to roll-in the tax payment as part of closing costs added to the cost of the loan, and would issue a check for $3,000 instead for borrower to use for any other purpose. This change in mutual agreement was not negotiable.
c. The loan rep misrepresented, that even if the borrower had not opted for the cash-out option, a 30yr. fixed-rate mortgage would still be unobtainable because such a program would require a 20% down payment.
4. The Lender misrepresented the initial payment term of the loan by promising 5yr's interest only, implying that payment would be fixed for the initial 60 mos of the loan.
a. The closing documents payment schedule shows the initial interest-only period of 54 mos. The lender was contacted during closing and informed of this problem. The lender insisted this was the "standard" and that the initial interest only period could simply be extended the full term. or 60 mos. by paying an additional $200 per month.
b. These representations made by the lender were completely lacking any truth in an obvious attempt to convince borrower to finish signing the closing documents, under the duress of the two closing agents (husband and wife) sitting across the table insisting they were in a hurry and needed to finish closing.
c. This serious issue and misrepresentation was exacerbated by the fact that borrower was not afforded the required 3-days to review closing documents and uncover any problems with the agreements and was forced to resort to a last minute phone call to the loan rep for answer.
5. The contract lacked mutual ascent because the borrower relied on a fraudulently appraised value given to borrowers home.
a. The appraiser relied on false representations of the home's value, size, condition and amenities.
b. The appraiser also choose unrealistic comparables, some far outside subject neighborhood without explanation required by USPAP.
c. The appraiser misrepresented amenities that were actual offered in comparables, and not available in subject property, i.e. swimming pools, car washing facilities etc.
d. The appraiser grossly inflated the cost to rebuild value of the subject property by ignoring current insurance estimates used in borrowers home insurance policy and increased the rebuild cost by 62%, thereby arriving at the lender's predetermined value needed to achieve the required level of equity. Note: The appraisers rebuild value was the exact amount of the lenders ALTA loan policy amount, or negative amortization ceiling.
The note holders breach of agreed upon terms in the contract.
6. The original documents signed at closing state that any subsequent transferee of the mortgage will honor all terms and conditions of the mortgage and note. The only exception being an interest rate recast, or increase or decrease in escrow.
a. The principle balance of the loan was increased several hundred dollars, with no corresponding increase to the amount of interest, interest rate, or missed mortgage payment. There is no explanation for this loan balance increase.
b. As a result of the increased loan balance, the monthly interest payment has increased to reflect the additional, undisclosed loan balance increase.
c. The loan balance increase and monthly interest increase are in breach of the closing documents agreed upon terms.
d. The loan balance increase and monthly interest increase upset the anniversary dates of the loan's interest rate recast dates, by causing the loan to reach its negative amortizations ceiling prematurely, and cause the loan balance to exceed its ceiling which increases the amount of interest paid over the life of the loan.
e. The increase to the balance of the loan is in violation of the Truth in Lending disclosed amount of interest, and triggers the TILA's "interest rate disclosure tolerance."
7. The note holder, and or, lender failed to timely respond to a properly documented and served "Notice of Borrowers Right to Cancel" sent prior to the 3-yr anniversary date of the mortgage.
a. Notice was sent, and parties failed to respond within the time limit, by
b. finally responded after the time limit, but failed to respond as is required under TILA by providing borrower with the accurate disclosures that were required at closing, or
c. failing to respond as is required under TILA by not taking action to reflect a cancellation of their security interest in the borrowers property.
Perhaps mutual ascent is a stretch of my understanding of the legal definition of it. There are more circumstances that I have not listed to save some anonymity in my case. This is just what I could think of, off the top of my head. I am not saying i have a case for breach of contract, and in no way am I implying these are causes of action. I'm simply highlighting a few of the issues regarding my situation in hope of answering your earlier questions, and receiving your feedback. -floridapathy