Overpayment of Closing Costs
Ask the Real Estate Lawyer: Real Estate Law Q&A
REM #LAW 679
By Ilyce R. Glink and Samuel J. Tamkin
Summary: A reader purchased a second home
in another state and has realized that some of the closing costs were paid by
both the bank and the escrow company. Now they are wondering if they can get
their money returned. Sam and Ilyce explain how to read the closing costs document
and how to file a complaint.
Q: Several weeks after closing on a vacation home in Hawaii, I discovered that
I had been double-billed for some of the closing costs.
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The bank paid the broker's fee and the flood certificate fee out of our home
equity loan, but the escrow company charged us for these same fees as part of
our closing costs.
I contacted the bank and they indicated that it was not their problem. I contacted
the broker, but got no action. The escrow company is located in Hawaii and they
have not been communicative with us as we live in California.
Is there someone who is culpable, or have I just learned an expensive lesson
for not reading the loan and closing documents prior to signing?
A: I don’t know if this was an expensive lesson for you. You will need
to do some more research. You mentioned that your bank paid a broker’s
fee and flood certificate fee in the home equity loan. Was your equity loan
part of a series of loans in which you got a first mortgage and also an equity
If you obtained two loans, it’s probable that both loans had similar
fees and that your payment made through escrow was appropriate. If you only
closed on a home equity loan and no other and you closed the equity loan through
escrow, the escrow company would have a record that the payment made for the
broker’s fee and the flood certificate were paid to your lender to reimburse
them for the fees or directly to the broker and flood certificate company.
You might think that you paid it twice, but you need to make sure that your
lender did not credit you at closing for these prepaid fees and then had the
escrow agent pay them to the appropriate parties. Also, you need to make sure
that any amount that you prepaid the lender was for these fees and was not applied
to other fees that you did not pay at closing. Frequently, money paid upfront
to a lender is used to pay for appraisals and credit reports.
Before you move forward and accuse the lender of double-billing you, make sure
you understand the closing statement and fees and understand what you paid for
at closing and what you paid for prior to closing.
If you determine that there was only one lender in your deal, that the escrow
company paid the fees out of your funds, that you had previously paid the lender
for these fees by check, and that the escrow company followed your lender’s
instructions, then you will have to contact the lender to be reimbursed.
You’ve indicated that the lender was non-responsive to your communications,
but if you have verified the double payment and they still won’t respond
to your requests, you can file a complaint against the lender with the Hawaii
Department of Financial Institutions (http://www.hawaii.gov/dcca/areas/dfi),
with the attorney general’s office of Hawaii (http://www.state.hi.us/ag)
or with the Department of Housing and Urban Development (http://www.hud.gov).
Frankly, if the lender over-billed you, you should start with the lender and
ask to speak to a supervisor. Follow up each of your calls with a written letter
that requires a signature receipt and make sure you keep copies of all of your
documentation and who you speak to.
Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce
R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your
Home Faster and For More Money In Any Market. If you have questions for
them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022
or contact them through Ilyce’s website www.thinkglink.com