I recently received a phone call from a potential client regarding a HARP Refinance who asked me a few questions to make sure the outfit he was contacted by is a legitimate service. He received a letter in the mail stating that he was qualified! After speaking with them they had requested an UPFRONT fee of $3900.00 to start his new refinance. Immediately he thought this doesn't seem right and reached out to me to find out.
My immediate response was, ABSOLUTELY NOT - that's a red flag and you should run the other direction. Closing costs in most circumstances don't even exceed 3000.00, why would you pay an "Application Fee" of $3900.00 and ALSO closing costs. This makes absolutely no sense and I hope this organization is shut down for taking advantage of struggling homeowners.
The first thing I did was CALL them to find out exactly what my client was speaking about. The representative on the phone was very rude and kept providing the terminology of "We offer a service" - So I continued to ask questions on what service they actually provide and why a borrower would need a "Service" to help them with HARP rather than a lender. She immediately changed her tone and said "These phone calls are being recorder sir" so I said "GREAT!!!!" -
As the phone call progressed I said "Please stop preying on underwater borrowers and asking them for a $3000.00 up front fee" - Here's where the interesting part came, she said "I am NOT asking you for $3995.00 up front, have those words come out of my mouth" I repeated "Well that validates what my client told me, I said $3000.00 not 3995.00 so you obviously know what you're collecting from these borrowers up front" After that I was hung up on.
BEWARE OF COMPANIES CHARGING AN UP FRONT FEE FOR HELP WITH A HARP REFINANCE
Typically the only thing that would be charged to a borrower prior to funding the new loan would be an appraisal, in 90% of all cases an appraisal is NOT required as the automated underwriting system determines a value of the property.