Thursday, April 19, 2012

The House Buying Nightmare Part 3

This is the third part of my story regarding how a simple mortgage transaction turned into a nightmare I'll never forget. You can read the first two installments here:

The House Buying Nightmare Part 1

The House Buying Nightmare Part 2

Meeting With the President

When I first received the updated GFE that reflected an extra 2k in closing costs, I completely flipped out. I called Linda, my realtor, and she gave me the cell phone number of the managing loan officer at the Wells Fargo Home Mortgage branch we were working with. 

I called Boss Man, explained what had happened and scheduled a meeting for the following day. I brought with me the first and second good faith estimate (Good faith – ha!) I told him about my conversation with Lucifer and how Lucifer had assured me that I would pay nothing out of pocket at the closing table and, lo and behold, here I sit with a paper saying I owe $2000 in closing costs. 

Boss Man examined the numbers, double checked things on his computer and eventually found a myriad of mistakes. For starters, Lucifer had reduced the seller's contribution by $1000. Why? Well, this is rich. In my state, if your credit score is below 640, the seller can only contribute a certain amount to closing. Even if the seller agrees to pay more, he/she can't legally do it. Ole' Lucifer put me into that loan program. 

My credit score is over 800. 

He made other errors as well. When Boss Man was finished, the total amount I owed hovered somewhere between $400 and $800. Given the sheer number of inaccuracies Boss Man discovered in my loan paperwork, I informed him that I no longer wanted to work with Lucifer. Nor did I want him working on my loan. Boss Man agreed and I left. 

The Revelation

The next day I was getting ready for bed. I'd spent the better part of the day seething, but I was actually feeling better. It hit me like a cinderblock thrown off a turnpike: 

He has an investor who wants that house.

During my first meeting with Lucifer he mentioned to me that he worked with an investor who purchases property in the same area I was purchasing my home in. He was perfectly pleasant until one incident occurred that should have stopped the loan cold – but it didn't. It was during this time frame that it dawned on me that Lucifer probably called his investor and told him about the house and had him poised to pick up the contract when my loan fell through. 

I know it sounds like a conspiracy theory, but its the only thing I could think of that made any sense. I ran it by Linda, expecting her to tell me I was being paranoid and thinking crazy, but she didn't. She got very quiet and agreed that, yes, that would make sense. 

Not good. 

Lucifer Keeps Going

After he'd been informed that he was not to contact me and that I would be doing business with another loan officer, Lucifer began calling me several times a day and emailing me at least once a day. He's never been the slightest bit communicative before. It was almost spiteful how hard he worked to talk to me about my loan. This was to show me that he hadn't been removed. 

I talked to Boss Man two more times, demanding that Lucifer be removed from my loan. Boss Man assured me both times that he would take care of it, but it never happened. In the process, Lucifer lost two more sets of my bank statements. 

Closing Looms

Finally, finally all the paperwork was in and underwriting cleared my loan to close. The closing was set for tomorrow and I was feeling good about all this mess being behind me. All I was waiting for was the formal statement noting the exact amount that I needed to bring with me to closing. Imagine my surprise when I got the statement and discovered that the closing costs had climbed another $1000 to $3k. Not the $0 that Lucifer originally assured me it would be and not the $400 to $800 that Boss Man later assured me it would be. Nope, closing costs rose to $3000.

The loan was completed on a Tuesday morning. We decided to schedule an early closing for the following Friday. The attorney has to have the paperwork in hand a minimum of 48 hours before closing. I wanted to hurry and close because my interest rate expires on Saturday and has already been extended once. 

Lucifer did not send off the paperwork package to the attorney until Wednesday evening. It sat in that office for two days. Because the attorney did not receive it until after hours on Wednesday, the earliest we could close would be Monday and my interest rate would expire in the interim. 

Here and Now

I've spent the day trying to track down Boss Man so that I can get him to sit down with me, look me in the eye and tell me what the hell is going on. I faxed all the paperwork over to the managing loan officer at a different bank. That loan officer looked over the paperwork and was appalled. She said that these kinds of mistakes are the sorts of things that inexperienced loan officers do, and that a lender as large as Wells Fargo should know better. 

Now I see how Wells Fargo got so big. 

The problems in the final settlement statement have to be fixed and delivered to the lawyer tomorrow for us to close on time. Because this has been our fifth extension, the seller has declined to give us another one. If it doesn't close on time, we lose this contract. If I'm right and Lucifer has someone waiting in the wings to pick up this house, he's going to do everything in his power to make sure this loan can't close on time. 

Either way, I'm calling the BBB. I've worked helping people fight shady and unethical collection agencies for more than a decade and I have never encountered a single collection agency that was worse than Wells Fargo has been to me. I have excellent credit, a stable income and should be the ideal mortgage candidate. Instead, I've spent four months trying to get a simple mortgage. 

This is insane. 

Tuesday, April 17, 2012

The House Buying Nightmare Part 2

This is the second part of my story regarding how a simple mortgage transaction turned into a nightmare I'll never forget. You can read the first installment here: The House Buying Nightmare Part 1.

The Email System

When Linda (my realtor) sends or receives an email regarding one of her client's home purchases, her email system automatically sends a copy of the email to her client, the loan officer working with the client and the selling agent. It's a brilliant system because it ensures that everyone knows what's going on and everybody's on the same page.

So Linda sends an email to Bob (the selling agent) letting him know that the appraiser was not able to complete the appraisal because the utilities were not on. Bob comes back with "Yes, they were on. All he had to do was flip the breaker." Because of how Linda's system works, copies of these emails were sent to both me and Lucifer. Lucifer got extremely angry when Bob suggested that the appraiser had to flip a breaker. He sent an angry email to both Linda and Bob telling them that wasn't how appraisals work and it was Bob's responsibility to flip the breaker beforehand.

Keep in mind that both Linda and Bob have been real estate agents for a very long time. In general, real estate agents know far more about appraisals than loan officers. Linda was perfectly polite, but Lucifer's unprofessional tone set Bob off, and Bob fired back accusing Lucifer of being completely ignorant (which was true) and having hired an appraiser who didn't know the first thing about appraising a house. Lucifer then went off on him, again through email, like an angry third grader.

Me? I just quietly made copies of those unprofessional emails, figuring I might need them later.

What I didn't find out until a couple of weeks later was that, following this altercation, Lucifer called Linda and  demanded that she terminate her ingenious email system. He did not like me receiving updates on the house. It wasn't necessary, he said. Linda politely refused to comply. Lucifer got angry, and hung up.


When you apply for a mortgage, turning in your loan application and your preliminary paperwork (pay stubs, W2s, etc.) isn't always enough. When the loan goes through underwriting, the underwriter can request any number of additional documents. This happened to me. While I have no problem providing the additional documents the bank needs, Lucifer had a real problem keeping up with them. He managed to lose my bank statements three times and just about everything else I turned in he lost at least once. The result? We had to file for extension after extension on closing.

He was also uncommunicative. He didn't return calls and he didn't answer questions. I had to take any questions I had about the process to Linda.

The Good Faith Estimate

Remember in Part 1 how I stated that Lucifer drew up our estimated closing costs in the very beginning? He had all the numbers he needed because I brought the exact – not estimated – EXACT escrow numbers with me. I did this to ensure that there wouldn't be any surprises. But guess what? After the repairs were completed and everything was on track to close, I got an updated good faith estimate in the mail for $2000 more than Lucifer originally quoted me.

I nearly had a heart attack. The price of the loan had gone up by roughly $6000, but that isn't enough to merit a $2000 increase in closing costs. I called a friend of mine who works as a managing loan officer at another bank (the only reason I didn't go through her in the first place was because she was so far away) and faxed her the paperwork to look over. Her answer was simple: Lucifer never included the escrow costs in his first estimate. I asked if he did – twice – and he assured me that he had, but he didn't. She also sent the paperwork to another loan officer who came back with the same story. Both of them warned me that he would try to claim that he didn't make a mistake and that the increased home price was the culprit. They said not to believe it for a second. He just screwed up.

I tried calling Lucifer and emailing him, but he was conveniently MIA.

I called Linda and told her what had happened. I had thought for a long time that Lucifer had made it his personal mission to make sure that my loan did not close, but I couldn't think of any reason why he would do that. After all, he only makes a commission if the loan closes. It didn't make any sense and it sounded like a conspiracy theory. Surprisingly, Linda was the one who brought the subject up. She said, "Lee, I hate to say this, but I get the feeling Lucifer doesn't want this loan to close. I have no idea why, but he doesn't want you to have this house."

I was done with Lucifer. Linda gave me his boss's cell phone number and I decided to take the matter over his head.

Calling the Boss

I called Lucifer's boss who happened to be on vacation. Still, vacation or no, I needed help. I explained what had happened and he assured me that he would look into it. He also apologized profusely for the fact that we had not been able to get in touch with Lucifer.

I guess the Boss Man called him about it because I got a call from Lucifer later that afternoon that was syrupy sweet and apologetic. Until I brought up his $2000 mistake, that is. As expected, he tried to blame the $6000 loan increase for the additional $2000 in closing costs, but I was prepared for that. When I told him I'd sent his paperwork to two other loan officers for review and both said that he would say that and that it wasn't true, he hit the ceiling, demanding to know why I did that. I calmly told him that when you don't trust what your doctor says, you get a second opinion and that my money was important just like my health.

When I pressed for an answer regarding the closing costs (I just wanted him to admit his mistake) he repeatedly told me that "was not an issue" to which I replied that it most certainly was an issue to me. He then pretended that my phone was cutting out and he couldn't hear me.

It doesn't get more juvenile than that, folks.

Here's the thing: Wells Fargo wants a 60 day paper trail for all money in your bank account that you use to pay closing costs. The loan had been extended four times at this point, and had Lucifer gotten the numbers right to begin with, I could have deposited the cash and used it at closing. Because he didn't get the numbers right, I wouldn't be able to close on the home until that $2000 had been in my account for 60 days because there was no paper trail for the money. The day before the updated good faith estimate was mailed, he requested additional copies of my bank statements. He knew what I did and did not have in the account. If I couldn't close on the home (and he knew I couldn't at this point) then the loan would fall through. Most loan officers would call the client and say "Hey, we have a problem," but not Lucifer. He only requested additional bank statements (he'd sent the others to underwriting) to make sure that I didn't have an additional $2000 and a 60-day history to back it up.

It was crystal clear at this point that he was intentionally tanking my loan...but it would be a few more days before I figured out why.

Monday, April 16, 2012

The House Buying Nightmare (Part 1)

I was very foolish. Let me tell you what I did. I assumed that because I have all my money ducks in a row (so to speak), have credit scores of 800+ and am very familiar with how the lending industry works, that getting a mortgage would be a snap. I figured I'd walk into the bank, slap down all my paperwork, they'd put in the loan application and boom! Three days later I'm approved and its smooth sailing until closing.

Ladies and gentlemen, I am an idiot.

I am about to tell you a horrifying story. I may even need to split this into sections, but let this tale be a warning to anyone who finds their dream home and tries to...::gasp!:: buy it.

The House

Locating the house was no simple task. It took me three years to find the home I wanted. It's not that I'm overly picky and required certain features, like a pool or a big backyard. What I was looking for was a foreclosed home in an excellent school district that sported only cosmetic damage and was worth at least $100k more than the asking price. That's a tough thing to find. My goal, of course, was to buy the house, make it pretty, live in it for two years (to avoid the capital gains tax) and then sell it and make a profit.

I was searching over a pretty large area that consisted of about 15 different towns. I didn't enlist the aid of an agent because I knew this was going to be time consuming. I figured I'd get the agent after I found the house. And at long last I did find the house. The agent who showed me the home had 20 years experience and excellent reviews from other consumers. Her name is Linda, and without Linda I'd be in big trouble right now.

The house was a Fannie Mae property. I put an offer in on the home and it was accepted. Linda informed me that another offer was pending on the property, but that it was an investor and his offer was roughly half of what ours was. We put the investor out of our minds and got the contract.

The Bank

The next step was to get the loan. I did my rate shopping and ultimately ended up at Wells Fargo. After what I have been through for the past four months, I now believe its best to take out all of your loans with the smallest small-town bank you can find. That small-town bank has a far better grasp on what's going on with its loan officers than a large conglomerate.

For simplicity's sake, we're going to call my loan officer Lucifer.

At first, Lucifer was perfectly kind. He went over all of my paperwork, said everything looked good and put in the loan application. He was pushing, however, for a fixed-rate loan that I did not want. Although I know that adjustable-rate loans are a bad idea in most situations, it was perfect for me. The home was worth over twice what I was paying for it, and that's without any repair work. Selling it for enough money to cover the mortgage wouldn't have been a problem even in a terrible market. Plus, I'd never, ever be upside down on the home. I planned to move in two years, and the loan didn't adjust until five years were up. It also had a rate cap.

I did my homework. I wanted the ARM. Lucifer, however, kept pushing me to take the fixed-rate mortgage. I made it clear that the fixed-rate loan did not suit my needs and I wanted the ARM. He then ran the numbers and gave me my projected closing costs. Because closing costs include escrow costs, I brought the property tax and insurance costs with me. I wanted an accurate closing costs estimation from the beginning. He assured me that he had factored these costs in and that my closing costs came to roughly $4500. The seller's contribution was almost 5k, so that suited me fine. I asked twice, "Am I going to be responsible for anything at closing?" Lucifer said no.

A week later my loan approval paperwork came in the mail. Instead of glancing at it and putting it in a safe place, I went through it with a fine-tooth comb. Lo and behold, Lucifer put me down for the fixed-rate loan that I'd told him repeatedly I did not want.

I called Lucifer at his office and told him that I did not want the fixed-rate loan. He assured me he would change the loan and send me a new approval letter. The new approval letter arrived and it was still an approval for the same fixed-rate loan. We went through the "fix this loan please" telephone call again and again, I got an approval letter for the fixed-rate loan I did not want.

This is when I should have gone to a different bank. I should have, but I didn't. I figured we were only two weeks away from closing and I didn't want to push closing back. I wanted to move into my new house and be done with the whole mess. Linda, my realtor, already had a bad feeling about Lucifer. She'd never worked with him before, but the whole thing just rubbed her the wrong way. I am now kicking myself for not listening to her women's intuition.

The Appraisal 

The bank needed an appraisal, of course, so I wrote out a $500 check and waited for the appraisal to take place. I had no doubt that the appraisal would come through fine. After all, this house was worth far more than I was paying.

In case you don't know, utilities don't always stay on in foreclosed homes. What normally happens is that prior to the appraisal, the selling agent will ensure that the utilities are on, but that the breaker to the house is cut off. The appraiser then goes inside, flips the breaker, checks what he needs to check, turns the breaker back off and leaves.

The appraiser did not, however, do this. He wrote down that the utilities were not on and that he could not conduct an appraisal. He had no trouble at all cashing that $500 check though. I called Lucifer and he said the utilities were not on, it was the selling agent's fault and that I'd have to pay for another appraisal.

I don't think so, little buddy.

I called Linda and I was livid. After all, none of this was my fault but they expected me to pay to fix it. She emailed the selling agent, we'll call him Bob, and told him that the utilities were not on. Bob said they were on, the appraiser just didn't do his job. And then Linda's ingenious email system caused Lucifer's horns and pitchfork to start really showing...

Sunday, April 1, 2012

My Apologies

I'd like to apologize to my readers and especially to everyone whose comments and questions I have not responded to. I try to respond to all questions, but I've reached a point where doing so would take me hours each day.

I have not been around because I am in the process of buying a home. Normally, this wouldn't be that big of a deal, but I'm purchasing the property from Fannie Mae and the selling agent is completely incompetent. If I have an incompetent buyer's agent, I can do his/her job for them. I can't do that for the selling agent. I have to just grit my teeth and suffer through the stupid.

It's been nightmarish, but with any luck it will be over soon and things will go back to normal. Until then, my free time is wrapped up in this sticky, garish, house-buying mess. Hang in there, guys and gals. I will do the same.