Consumer complaint received 2022-01-02
Product: Mortgage — Other type of mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — 
Company: Brightfunders, LLC (LA)

I recently completed a refinance and HELOC with Lower LLC and believe that I was the victim of what can only be described as a classic bait-and-switch. On XX/XX/2021, I contacted Lower.com and received loan estimates for two options : 1 ) Cash Out Refinance ( see Exhibit A- Cash Out Refinance Loan Estimate ) and 2 ) Traditional Refinance/HELOC combo ( See Exhibit B - Refinance/HELOC combination ). The terms on the Cash Out Refinance Loan Estimate reflected an APR of 3.125 %, a loan amount of {$270000.00}, origination fees in the amount of {$1600.00}, and ZERO mortgage points. The same terms applied to the Traditional Refinance/HELOC combo, however, the final HELOC amount would be determined by the appraisal. To be clear, these were the only loan estimates that I received throughout the entire transaction. 

On XX/XX/2021, after shopping and comparing rates of several lenders, I contacted Lower to indicate my intent to proceed with Option 2, the Traditional Refinance/HELOC combo, by leaving a voicemail and sending an email to loan officer, XXXX XXXX XXXX ( see Exhibit C - XX/XX/2021 Email from XXXX XXXX to XXXX XXXX ). I also informed XXXX that my mortgage payoff amount was slightly higher at a little over {$250000.00} instead of the {$230000.00} I originally estimated. XXXX assured me that a revised loan estimate was not needed because it would not affect the actual terms of the loan. 

For the next two months, I received no other documentation, notice, revised loan estimates, or communication - verbal or written - regarding any changes to the terms of my loan. However, on XX/XX/2021, just three ( 3 ) days before closing, I received a Closing Disclosure Statement that varied drastically from the initial Loan Estimate. Not only had the APR increased to 3.25 %, but the lender had added {$3700.00} in fees for mortgage points representing 1.625 % of the loan amount. ( See Exhibit D - Closing Disclosure issued on XX/XX/2021 ). Also, the loan amount of {$230000.00} was significantly lower than my current mortgage balance. I immediately contacted XXXX via email and by phone to point out these discrepancies and to request that Lower honor the rates and fees quoted in the initial Loan Estimate. ( See Exhibit E - XX/XX/2021 Email from XXXX XXXX to XXXX XXXX ). Although Lower ultimately agreed to correct the loan amount to cover my mortgage balance, they refused to correct the APR or remove the fees applied for mortgage points. 

The matter was then escalated to XXXX supervisor, XXXX XXXX, who informed me that XXXX apparently waited almost four weeks after I confirmed my intent to proceed to lock the interest rate on XX/XX/2021, despite representing to me over the phone that my rates were locked at the time I indicated my intent to proceed on XX/XX/2021. Nevertheless, at no time did XXXX or his team provide me with a revised Loan Estimate, which under Section 1026.19 ( e ) ( 3 ) ( D ) of Regulation Z, must be disclosed to the consumer within three business days of an interest rate lock. On XX/XX/XXXX, XXXX XXXX emailed me a copy of a loan estimate dated XX/XX/2021 that was apparently in Lowers system, but had not previously been disclosed to me. ( See Exhibit F - Undisclosed Loan Estimate date XX/XX/2021 ). On XX/XX/2021, I responded to inform Mr. XXXX that the revised Loan Estimate dated XX/XX/2021 was never disclosed to me. ( Exhibit G - XX/XX/2021 Email from XXXX XXXX to XXXX XXXX ). I also forwarded to Mr. XXXX a copy of XXXX email wherein XXXX admitted his failure to provide me with the updated disclosures regarding the terms of my loan. ( See Exhibit H- XX/XX/2021 email from XXXX XXXX to XXXX XXXX ). Specifically, XXXX stated the following : I had been under the impression that the updated loan program had been sent out to you previously. This is my fault as there should have been better attention paid to what had been sent out and what you had previously seen... I feel horrible that the loan program has not been disclosed or discussed with you previous [ sic ] ; I take full blame on that... 

As such, it was very clear to Mr. XXXX, and to Lower, that XXXX and his team failed to properly disclose a revised Loan Estimate within three days of locking the interest rate. This resulted in me becoming aware of significant changes to the terms of my loan for the first time just three days before closing when I received the Closing Disclosure Statement, leaving me with no time to find an alternative solution. Despite XXXX admitted failures, Lower still refused to issue a lender credit to resolve clear violations of the TRID regulations. However, XXXX admitted failures were apparently serious enough as he either resigned or was let go just days before my closing date. ( See Exhibit I - Email from XXXX XXXX to XXXX XXXX dated XX/XX/2021 stating XXXX, I must have you know I am no longer employed by Lower.com ) When my attempts to get the terms of my loan corrected through Mr. XXXX proved unsuccessful, I felt I had no choice but to proceed. By then, it was XX/XX/XXXX and almost two months had passed since I initiated the transaction with Lower. By the end of XXXX, the market rates had increased, and the rates previously offered to me by other lenders were no longer available. To start the process over with another lender at that time would have certainly subjected me to higher rates and additional closing costs, including lender fees, mortgage points, and appraisal costs. Also, not only would cancelling the refinance and HELOC at such a late stage in the transaction forego my ability to obtain a lower rate, but it would have also caused two separate pending purchases of an investment property and home that were dependent on the proceeds of the HELOC to also fall through. To mitigate my damages, I felt I had no choice but to proceed. To add further insult to injury, the mortgage points unexpectedly increased again on the closing date on XX/XX/2021 to {$4700.00}, representing 1.875 % of the loan amount. ( See Exhibit J - Revised Closing Documents dated XX/XX/2021 ). By consummation, the fees for mortgage points had increased from zero fees that were represented on the initial Loan Estimate to almost {$5000.00} upon closing, almost doubling my total closing costs. 

Lowers actions outlined above constitute clear material violations of the TILA-RESPA Integrated Disclosure ( TRID ) Guidelines, making them strictly liable for penalties and damages. Under 1026.19 ( e ) ( 4 ) of Regulation Z, if a lender wishes to increase or add a fee that was not disclosed on the initial Loan Estimate, the bank must re-disclose within three business days of learning of the fee increase or new fee. In addition, Section 1026.19 ( e ) ( 3 ) ( D ) of Regulation Z requires that, no later than three business days after the date the interest rate is locked, the creditor shall provide a revised version of the disclosuresto the consumer with the revised interest rate, the points disclosed, lender credits, and any other interest rate dependent charges and terms.

Here, Lower failed to properly disclose a revised Loan Estimate to me within three days of locking the rate as required by Section 1026.19 ( e ) ( 3 ) ( D ) of Regulation Z, and consequently, becoming aware of changes to the APR, loan amount, and mortgage points. Despite awareness of its admitted failure to timely provide me with a revised Loan Estimate within three days of locking the interest rate ( See again Exhibit H - XX/XX/2021 Email from XXXX XXXX ), Lower refused to adjust the APR and to issue lender credits fees to offset the increased lender fees. Therefore, as of the date of filing this complaint, Lower remains in knowing and willful violation of the TRID Guidelines.

Under 1024.7 ( e ), a creditor is liable to pay damages in the amount equal to the sum of any actual damages sustained by a person as a result of the failure AND statutory damages, limited to twice the finance charge, but not less than {$400.00} and not more than {$4000.00} for failures to provide proper disclosures to the consumer. See 15 U.S.C. 1640 ( a ) ( 1 ), ( 2 ). Material violations that are grounds for damages include, but are not limited to, improper disclosure of amount financed, finance charge, payment schedule, total of payments, annual percentage rate, and security interest disclosures. Under TILA, a creditor is considered strictly liable for any violations, which means that money damages are imposed for violations, regardless of the creditors intent. 

As such, I am specifically seeing an adjustment of my interest rate back to 3.125 % and a refund of all amounts paid in fees for mortgage points in the amount of {$4700.00}. I am also seeking any and all civil penalties to which I may be entitled to, including but not limited to, statutory damages up to {$4000.00} for Lowers failure to provide me with timely updated disclosures regarding changes to the terms of my loan.