We have an elderly couple that went to a mortgage broker to refinance a loan they have with our bank. The mortgage broker gave the couple a GFE after which they decided to keep their loan with us. Now, the mortgage broker is claiming they owe him $4,000 in fees (?). The only thing they every signed was the GFE and no funds were advanced. Does the mortgage broker have a leg to stand on? I would appreciate any thoughts as this is an elderly couple and it seems to me they are being taken advantage of. Thank you!

Did the GFE disclose the $4,000 fee or did the couple receive/sign an Mortgage Broker Agreement which should disclose the fee and the services rendered to earn the fee? Also, it sounds like the couple did not enter into a new transaction, but rather declined to refinance. Is that true? If so, and if the Agreement (if any) stipulates that the fee (if disclosed) would be paid if a loan is placed with a lender, then IMO, no the broker does not have a case.

I agree. Plus if the broker is persistent, they could close the loan and then rescind. All fees paid then would be refundable.

Good idea fisher man. Hmmmm, I wonder if the DOJ would be interested in the way this company does business?

I haven't actually seen the GFE but I will talk to their loan officer. The couple says the only thing they have signed is the GFE. I would say, from what I know right now, that they just declined to refinance. The loan officer and I discussed this for quite some time yesterday because if this is indeed the way this guy does business we want him stopped. So, our next step is to try and figure out who/what to report him to. Thanks for your responses. Being relatively new to compliance the Mortgage Broker concept is a grey area for me.

Who to report him to? That's easy. All mortgage brokers must be licensed by the state that they are doing business in. Report him to your State Attorney General's Office and the State Licensing Board.

Renniks is right on the money. Also, signed a GFE does not obligate a person to anything.

Thanks everyone for the info! It sounds like upper management wants to take action on this (not today though, everybody is golfing ).