I closed on a loan about a couple of weeks ago. i did a no out of pocket closing. So the day of the closing i found out that the mortgage company lowered there origination costs so that i wouldn't have any out of pocket costs. The other day i got a check in the mail from my insurance company with a returned check that the closing attorney used to pay my insurance, however my previous mortgage company had already paid it. So who should be entitled to the refund? The closing attorney is waiting to hear back from the mortgage company because they say that since the mortgage company lowered there origination fee so i wouldn't have any out of pocket expense than it may go to them. But i feel like that when i signed the loan documents that showed the origination fees at closing than anything that is extra should go back in my pocket.

looking to get some advise from people that are in the mortgage knowledge. Please

thanks

Jason Johnston

From what I understand here you refinanced your current mortgage with a different lender.  In this case the Mortgage Company is not entitled to your insurance refund.  The Mortgage Company can only be paid what is first listed on the good faith estimate and what is listed on the HUD1 (settlement statement) at closing.  The mortgage company can not be paid one cent outside of closing, this would be a clear violation of RESPA.

From what I gather you rolled the closing costs into the new loan amount so you would not have to pay any out of pocket expenses.  The refund should be paid to you because in essence you did pay for the closing costs by taking a higher loan amount.

Thanks for your help Mark!

The good Faith estimate weeks before the closing showed the origination fee of $810.00 but on the day of closing it was lowered to i think $400.00 don't have it in front of me. So now two weeks after closing i get a letter in the mail with the check the attorney made out to my insurance company, stating that my insurance was already paid and sending back the check.  So i call the atty's office and tell them if they write me a check for the refund i'll bring them there check back. But they say that since the mortgage company lowered their origination fee so i wouldn't have any out of pocket expenses, that they had to wait to hear back from the mortgage company before they would even consider giving me the refund amount.

I think that since i signed the paper showing the origination fee at closing, that the mortgage company should have no say in where that money goes.

The good faith estimate is just what it states; an estimate.  The HUD1 (settlement Statement) shows actual closing costs.  The lender placed the money into escrow to pay the insurance if there is an overage then it is refunded to you.  It would be a violation of RESPA for the mortgage company to be paid any amount that is not listed on the HUD1 outside of closing.  A real estate attorney should know this.

It is your money since it was taken out of the loan amount and placed in escrow, you should call the attorney and demand that you be paid if not file a grievance with your States Department of Financial Services.