An Underwriter’s job is safe, no matter how many delays, no matter how many pieces of papers they need to approve a loan no matter how long it takes to understand laws in a state where a property is located. The Underwriter, and Bank suffers NO REPERCUSSIONS for delays caused by banks when trying to obtain a loan.
They are forgiven, regardless of the cost to the potential borrower. Let’s examine some of those costs:
- Existing Liens and Extension fees, balloon payments and other penalties.
- Breaking leases, hotel and other temporary living expenses.
- Bank mandated Fees, not paid for by the bank but paid by YOU, the borrower, thus you are stuck with just one bank that you choose, the bank you INVESTED your faith in.
Existing Liens and Extension Fees, Balloon payments and other Penalties.
Where the underwriters can sit on their tushy’s saying they need this, then they need that, our time bomb is clicking. We either have a balloon payment, a hard money loan with extension fees and continued high interest payments. In my experience, I submitted a very STRONG application (admitted to by the bank on 12/21/2016) with good credit a valid rental property that everyone knew was supported by a hard money lender with payments at almost 12% interest. The holidays caused some delays, and on 1/3/2017 I was approved for a loan. 2.5 months later, I still haven’t closed.
I had a hard money loan with extension fees that were to go into affect on 2/28/2017. The bank said there was plenty of time to close by 2/28. Of course, here I am, mid March and this bank STILL can’t refinance on a loan that was 40% LTV – an appraisal that took on month to complete because the bank I dealt with didn’t have good contacts with local appraisals (Truth be told, they moved the lending opertation from Florida to Texas because I live in Texas, yet this bank doesn’t have a rolodex of appraisers, NOR understand the law in the location of the property, which was Florida.)
OK, one full month to get an appraisal. Still not enough. This bank didn’t understand the survey requirements in Florida. Given they moved the location from Florida to Texas, these underwriters needed to be proved to them that the laws were different and the Texas rules do not apply to Florida properties. Another good 2 week delay for them to try to understand the laws.
COST TO ME: 4 MONTHS OF PAYMENTS TO HARD MONEY LENDERS: $1400*4=$5,600
COST TO ME: 1 EXTENSION FEE TO HARD MONEY LENDER $1,250 + Late fee, $400 = $1,650
APPRAISAL FEE: $400 (ORIGINAL FEE PRESENTED TO ME WAS $700)
TOTAL COST TO ME TO DATE: $7,600
And that was because I believed this bank could close in the time frame they promised.
THERE IS NO RECOURSE FOR ME, OR PEOPLE LIKE ME FOR A BANK’S FAILURE TO PERFORM.
Breaking leases, hotel and other temporary living expenses
Let’s forget about me, and other investors. Let’s look at the poor people trying to buy a home to live it, and possibly raise a family. Again, they have rental leases, they give notice to their landlords, the landlords find new tenants and the BANK’S UNDERWRITERS need more information that could have been given to them months prior. They have to move their furniture into storage, they have to stay in a hotel and the costs cause these people not only emotional upset, but extra expenses. Then the bank pulls their credit one more times, and they see a lot of charges on their credit cards (since the bank didn’t move in a timely manner) and then cancel the loan or question why the additional debt. SMH (SHAKE MY HEAD).
SHAME ON YOU, LAZY UNDERWRITERS AND INCOMPETENT BANKERS.
Bank mandated Fees
In addition, the banks charge fees that don’t allow normal credit qualified people to create an environment for healthy competition. They make the buyer pay for an appraisal fee, and the borrower has no control on who the bank chooses. How many banks can I hire at the same time and how much will it cost me to have a bank actually close in the timeframe they promise? At anywhere from $400-$700 per appraisal (even if you have an appraisal from the previous month), how many applications can I run concurrent to ensure the bank will close in the timeframe they promised?
Not too many.
And then the Mortgage Brokers
Are about as evil as the banks themselves. I’ve seen a broker keep delaying a buyer’s closing date while they continue to shop around a mortgage to give the broker the highest payout. Yes, my buyer got strung along for months, as I had to face hard money extension fees and the poor buyer unable to close on the property.
THIS IS AN OPEN CALL TO BANKS, MORTGAGE BROKERS, UNDERWRITERS AND REGULATORS TO THE ATROCITIES THAT OCCUR DUE TO LAZY UNDERWRITERS, BAD MANAGEMENT, UNLIMITED PRIVILEGES OF THE BANKS AND NO RECOURSE FOR PROMISES MADE.
Please join me on a social media campaign using the hashtag #BANKSABUSE and tell your story. Thanks.