Consumer complaint received 2021-10-06
Company: MEGASTAR FINANCIAL CORP
State: MN
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Closing on a mortgage

Complaint:
Megastar Financial increased our closing costs {$1300.00} from the final Loan Estimate to the Closing Disclosure, without justification. We believe the Loan Estimate was knowingly false, and would like this to be remedied.

Background : We were shopping 3 different lenders in this home buying process. 

1. After we signed a purchase agreement XX/XX/XXXX, Megastar sent us a new loan estimate with an increased {$4500.00} in closing costs from previous estimates. 
- We said no - Discussions continued with Megastar and other lenders 2. On XX/XX/XXXX, Megastar offered to lower closing costs by {$1200.00} ( rates had moved ). We locked in a rate with them and gave the go ahead. 

3. XX/XX/XXXX we received a new final loan estimate from Megastar confirming these fees and costs. ( Everything great! ) 4. XXXX XXXX XXXX, zero further communication on closing costs with Megastar 5. XX/XX/XXXX, Friday evening we received the Closing Disclosure, with a request to sign it by midnight in order to keep the early close on track - Buried in the closing disclosure was a {$1300.00} closing cost increase - back up to the level we rejected on XX/XX/XXXX - The cost categories had changed, there was now a much larger escrow requirement ( from 5 to 7 months ) and loan title insurance had increased 40 % - Closing disclosure also stated we had shopped around for title insurance, which we did not. 

6. From XX/XX/XXXX to XX/XX/XXXX, Megastar was unresponsive, rude, and dismissive when we asked about these increases. Unfortunately, we had no choice but to close with them or lose the home. 

7. On XX/XX/XXXX, getting nowhere with our Megastar rep, we reached out to their branch manager via their website. Response was continued obfuscation and incorrect information.

8. On XX/XX/XXXX at the closing table, we were surprised by yet another Closing Disclosure dated XX/XX/XXXX, which addressed none of the concerns and contained the same inaccuracies as the XX/XX/XXXX disclosure. 


In summary : Attached XX/XX/28 and XXXX disclosures show the {$1300.00} increase in closing costs. 
-- We locked in our rate XX/XX/XXXX -- XX/XX/XXXX disclosure, closing costs of {$14000.00} -- XX/XX/XXXX disclosure, closing costs of {$15000.00} primarily two items changed substantially : Lender title insurance increased {$300.00} ( 40 % increase ) -- We went with Megastar 's title company, and did not shop for this service.

-- Megastar 's business is mortgage loans, and they know what title insurance costs on a {$400000.00} loan. The loan costs provided to us were very misleading. 

Property tax escrow increased {$1300.00} ( 40 % increase ) -- Every estimate and disclosure from Megastar, going back to XXXX and including the post-rate lock disclosure of XX/XX/XXXX, showed 5 months of escrow -- We were not informed of any increased escrow requirements at any time, or the potential for any increased escrow requirements. 
-- Closing disclosure on XXXX increased the escrow to 7 months.

Company response to consumer: Closed with explanation