Legal Question in Real Estate Law in California
escrow fees and good faith estimates
i signed the fed truth in lending form with a good faith estimate which included escrow fees of $500. 2 weeks later, i get my final settlement papers that showed escrow fees to be $1,100. when i asked how they doubled, they said the mortgage company made a mistake and based on my loan amount, their fee is $1,000+. I asked, then, how the escrow officer could go over those fees before we signed, acknowledging their fee of only $500, not once, but twice on two different forms. They say I'm outta luck. I think it is a breach of some sort re: truth in lending act or something. contemplating small claims action.
3 Answers from Attorneys
Re: escrow fees and good faith estimates
The escrow company will argue that an estimate is only an estimate, and that a mistake, if made in good faith and without intent to deceive (or any other bad faith) does not make them liable. They may point to other disclosed pricing somewhere in their paperwork shared with you where the $1,100 figure appears (of course, there may be no such document!). The burden will be on you to show lack of good faith. An honest mistake is only slight evidence of bad faith.
Nevertheless, a small-claims judge may be sufficiently incensed to grant judgment in your favor on the basis that the double mention of a $500 fee amounted to an offer, and thus they were in contract to perform at that price. This should be your argument -- that $500 was the agreed contract price for their services -- unless there is some other document, signed by you before they performed their services, showing the $1,100 figure would apply to your escrow.
Re: escrow fees and good faith estimates
They will argue that it was a "good faith estimate". However, you don't have to go through with the deal because of their mistake. This loan was probably, if I am right, precipated by an advertisement that they had low escrow/closing fees. That is a material misrepresentation, if it in fact occurred. Make sure before you get out of the deal that there are no penalties. Good luck and thanks for inquiring.
Re: escrow fees and good faith estimates
based on THEIR mistake, there is no excuse for wrong estimate on their own costs, unless a change. Therefore, I would not accept this.
Joel Selik
Attorney/Broker
www.seliklaw.com
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