One of the things we check for on all cases is the accuracy of the fees disclosed to the borrower.  When a borrower signs there loan they receive a Truth In Lending Disclosure Statement.  This form, which disclosed the APR, etc., satisfies the "material disclosure" requirement of the Truth In Lending Act.  The problem we sometimes see is that the fees on used to calculate this form, often found on the "Itemization of Amount Financed" form, are less than what is shown on the final closing statement.  How can this happen?

It usually requires the "assistance" of a willing escrow company.  Basically, the broker increases his demand to escrow.  This should be caught by the funder at the lender when they review the final Hud1, but what if escrow prepares 2 different versions, one for the borrower and one for the lender?  We have discovered the scam on multiple occassions.  The result of course is that the borrower did not get accurate material disclosures and thus is entitled to a rescission (see my other posts regarding rescission).  The remedy can be significant.

I guess the moral to the story, if you are a mortgage broker, is don't ever change fees after loan signing, even if escrow allows it.