The purpose of this website is to document Junk Bank Fees at Banks such as Umpqua Bank in the Pacific Northwest region of the United States.
I recently obtained a pre-qualification and an approval on a home loan from Umpqua Bank.
However, whilst closing costs were disclosed at approx. $3100 in October 2010 by an Umpqua loan person ($3660, to compensate for points on a loan for a home with a higher purchase price) ... on the actual loan, as of 9 days before close of escrow, closing costs have escalated to approximately $6500, based on 2 Loan Disclosure documents that were received in December 2010, along with a Federal Truth-in-Lending document.
To figure out what happened, I think back to the fees mentioned in our original conversations. These fell in 3 categories, as listed.
Closing Costs, Marketing Phase
loan origination fee $600
title company fees $800 to $1100
points $1500 (for a loan of $100K on a purchase price of $125K)
Total, approx. $2900 to $3200
(Definition of points: money you pay to buy down the interest rate on the loan.)
A copy of my January 4 email to Umpqua Bank President & CEO Ray Davis -
Subject: Help with Fees on Umpqua Bank Home Loans
Dear President Davis,
I am writing to ask for your help in limiting the closing costs
on an Umpqua Bank Home Loan.
During initial conversations regarding a home loan in the Grants
Pass Area, I was told that my closing costs would be approximately
$3100 ($3080 and change). That was for a purchase price of $125K
with 20% down - a $100K loan. I have since made an offer on a
property for $165K, so with 20% down the loan amount is $132K.
The Seller agreed to pay $4000 towards my closing costs. Therefore,
I thought I was protected from additional out-of-pocket expenses
related to the home purchase - that it was just my job to write a
check for $33,000 at close of escrow ... minus the $1000 I paid up-
front = $32,000.
I understand that 'points' are proportional to the amount of the
loan. 'Points' on my current loan of $132K are $2310 - the 'Points'
is 1.75. For a loan amount of $100K with the same interest rate,
my 'Points' cost would have been $1750 - a difference of $560. I
can understand, therefore, how the closing costs would rise to
$3080 + $560 = $3640.
I also understand that it is my job as the buyer to pay
for such costs as home and septic inspections.
Given that the Seller in this case has agreed to pay up to $4000
towards my closing costs, it would appear that that concession
would be enough to limit my up-front costs at close of escrow to
coming up with the rest of the 20% down.
However, although your loan person has been diligent and patient
in helping me through the loan process at Umpqua Bank, my closing
costs have escalated considerably.
I thought that Umpqua had a promise to customers of "No Junk Fees".
I am dismayed to find closing costs of $7000 to $6000 on the
Disclosure and Federal "Truth in Lending" documents.
I am also dismayed to find that most of the fees - for example,
the appraisal - continue to experience "mission creep". I provided
my credit card number to pay for an appraisal, based on the
statement that the appraisal cost would be $500. I am now told
that the appraisal cost is nearing $600 - and this is for a
manufactured home.
Since I gave an Umpqua bank employee my credit card #, I believe
that Umpqua Bank has a fiduciary responsibility to limit my
appraisal costs, as stated prior to the appraisal, to $500.
Therefore, I am writing to ask you to intervene in my loan to
limit my closing costs. I request that the bank absorb appraisal
fees in excess of $500.
I also request that Umpqua Bank reduce the loan origination fee
of $595, if necessary, and provide additional credits to keep my
closing costs at $4000 or less.
From my experience in and with the banking industry, I know that
bank managers have considerable discretion in setting fees, and
even in allowing a customer to receive a better interest rate.
Please, can you use your discretion as a Bank manager to keep
my closing costs under control ?
Sincerely,
Roger *****
Closing Costs, Actual (Disclosure Document Dated December 23, 2010)
Loan Origination Fee $595
Points $2310
Appraisal $510 (A)
Misc. $21.50
Title Services $924.
Owner's Title Insurance $613 (B)
Recording Charges $165
Initial Deposit $334.03 (C)
Daily Interest $528.90 (D)
Insurance Prepay $400 (E)
Total $6401.43 (F)
Total, Adjusted $5788
Notes
(A) Appraisal - this was originally estimated by the Umpqua loan person at $510. I have since been told it will increase to near $600 - for a manufactured home. Note - Chase charges $475 for an appraisal on a frame-built home.
(B) Paid by Seller, according to Umpqua loan person.
(C) Has something to do with pre-paid property tax.
(D) First month's interest on home loan.
(E) Estimate of home insurance.
(F) This total includes an amount that might be paid by the Seller - not by the Buyer. Umpqua Bank did the math.
G. Note - these amounts are not final.
Why are the Actual Closing Costs so much higher than the "Marketing" Closing Costs ?
It appears that the Definition of Closing Costs changes, to include several fees not shown in the "Marketing" Closing Costs.
Sequence of Events:
1. Initial Meeting with Umpqua loan person, preliminary Disclosure of estimated Closing Costs @ $3100.
2. Finding a Nice Home, Budgeting based on the estimated Closing Costs.
3. Investment by the Buyer of approx. $2275 in the purchase, before the purchase ($1000 Earnest Money + $325 Inspection + $350 Septic Inspection + $100 Inspection Follow-up + $500 Appraisal = $2275 ... based on a conservative estimate of the Appraisal Fee.)
4. Umpqua provides "Disclosure" & "Federal Truth in Lending" Documents. The first disclosure document, dated December 16, 2010, had a total Closing Cost estimate of $7415.
5. Buyer K'vetches to Umpqua loan person about the increase, i.e., the Doubling, of Closing Costs.
6. Umpqua loan person points out that Buyer has the right to not sign the loan.
In other words, Umpqua Bank promises low & affordable closing costs to a buyer on a limited income. The buyer makes commitments of considerable time and money ($2275) based on that original estimate. The buyer also discloses that he is vision impaired (bad outcome from LASIK eye surgery) and needs to make reliance on the Verbal Statements provided by the Umpqua loan person.
Umpqua Bank then literally changes the Definition of Closing Costs and includes several fees not originally disclosed. Closing Costs approximately double.
To the Buyer, this seems like Extortion. The Umpqua loan person points out that the Buyer can still "back out". However, in essence, that is a false statement - the buyer is fully committed, with $2275 invested in the prospective property, along with making a considerable time committment to the transaction (details such as putting all personal possessions in storage, giving notice to a previous landlord, cleaning the apartment, and packing the truck).
It appears that Umpqua Bank has a current and standard business practice of promising low & affordable closing costs to home buyers, and then Doubling the Closing Costs once the Buyer is fully committed to the home purchase.
The purpose of this website is to document my home-loan experience with Umpqua Bank, and to publicly request that Umpqua Bank adhere to promises made regarding Closing Costs during Initial Marketing Conversations.
In other words, I want Umpqua Bank to pay all closing costs in excess of the $4000 which the Seller is paying, so that my sole duty at close of escrow is to write a check (that doesn't bounce) for the 20% down (=$33,000), minus the $1000 Earnest money (=$32,000).
Sincerely,
Roger *****