Estimated read time: 2-3 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
John Daley ReportingBe careful and consider going with a mortgage company you know and trust. That's the advice tonight after a large California-based mortgage company shut down last week leaving hundreds of Utah homeowners in a lurch -- locked into record-low interest rates the company couldn't meet.
With mortgage rates so low, many homeowners wanted to refinance. Some signed up with the company Capitol Commerce Mortgage. The question for them is what can they do now that the company has gone under?
With mortgage rates at record lows there was a rush nationwide, and here in Utah to refinance, a stampede to get the lowest rate.
Kristie Howell Peterson locked in at 5.25 percent with Capitol Commerce Mortgage, lowering the couple's house payment three hundred dollars -- enough to buy a new truck. But last week the company suddenly went out of business.
Kristie Howell-Peterson, Homeowner: “I was in tears. I could not hold onto my pen at work. I was just heartbroken.”
Capitol's demise, perhaps caused in part by a sudden sharp rise in rates, easily cost some homeowners hundreds of dollars a month; over the course of the loan perhaps 30 to 60-thousand dollars.
The state's top mortgage regulator says his office got several calls and an investigation is underway to determine if Capitol misled its clients. He fears other companies could face similar troubles.
Dexter Bell, Director, Utah Division of Real Estate: “With rates going up, as they are sure to continue doing, this will happen possibly again.”
Rory Hackett, a mortgage broker, says he was startled that Capitol--a competitive company in business for years with no outward signs of problems--went under. He says the safe path for homeowners may be to opt for a slightly higher rate.
Rory Hackett, Mortgage Broker: "You would want to lock in loans for extended time periods at this time, maybe that's going to be at a higher rate, which is generally true. At least though, you'll be guarding yourself against big interest rate movements."
Dexter Bell, Director Utah Division of Real Estate: "Maybe this is an example where you know the rate isn't everything and you want to have a little trust in who is buying your mortgage, in who is originating your mortgage."
There was no answer when we called the company's corporate office today. As for customers, they can file a complaint with the Department of Commerce. Some customers say they are considering a lawsuit.
