Wednesday, March 18, 2009

An Exercise in Frustration for Getting a New Loan

Around December 16th or 17th, I talked to a mortgage broker about refinancing. Told him our situation: I have a condo, very little left in the mortgage, my wife has student loans about to be due and I have a ton of equity in the house. Adding it all up, the broker was ecstatic. This was a gimme. Our mortgage is about less than 1/7th of what our place is worth (I bought in 1993 and never refinanced), our school loans added the debt up to about just over half of the equity and I make about 1/4th of what our loan amount was going to be.

Should've been a cakewalk, right?

Well, now it's March 18th, exactly three months later and do we have the loan? No. Are we throwing good money into the ether by paying interest rates on loans we're planning on paying off with the new house loan? Yes.

Here's what happened with the first guy. Yes, I'm on my second broker and that was part of the problem but in a Karmic kind of way, we were blessed when we changed brokers.

In Jan. the first lender calls me up to say that we're locked in at a 5.5% interest rate. "Huh?" I asked, knowing that rates were about the 4.75 to 5% range. He convinces me that this is the absolute lowest we can go (This entire time, I distrusted what he was saying) then tells me what I need to do. I go ahead and do what is needed and then waited. And waited. And waited.

Two weeks after I was supposed to have gotten the loan docs, I called him up and asked what was going on. He replied that the association was slow in getting the paperwork to us. I asked why didn't he call me and enlisted my help since he knew the student loans were coming due and that I didn't want to pay interest on those loans. He just hemmed and hawed.

Two days later, he calls me up and says "Umm, trouble. Because your condo has a 29% tenant occupancy, this lender won't give you the loan. However! I can get you another loan."

I gave him until noon the next day to tell me there was a solution. He called me at 12:02 and tells me that there wasn't a solution, BUT he's working on it. I fired his ass and called up my senators to complain about the arbitrariness of assigning 25% tenant occupancy as a condition for giving out loans to OBVIOUSLY qualified individuals.

My new broker then gets me a 4.5% rate. This confirmed to me that first broker was full of shit.

Everything is chugging along decently when, due to a DISPUTE I STARTED 2-1/2 years ago, which OBVIOUSLY had been settled because the property didn't go into foreclosure and we are current with our payments, my credit reports get flagged and the loan stopped dead in its tracks. I call up my mortgage company, get them to rescind that little blurb in the credit reports and then find out that two of the three credit agencies DIDN'T remove the dispute notice.

So two credit agencies (Experian and Transunion) are holding my loan hostage due to the fact that they can't update credit reports in a timely manner.

My broker just called me up a day ago to say that the account manager at the lending co. has figured out how to bypass this little hurdle.

It turns out that Fannie Mae's underwriting program cares about these little items but Freddie Mac's underwriting program doesn't. (We're talking SOFTWARE programs here). And apparently even though HUMANS can see the dispute as something to be disregarded (for it makes no difference), software cannot be bypassed by humans. However, there was a debt to income ration that Freddie Mac cared about.

Someone had entered in the student loans as debts that still will be incurred AFTER we get the loan, so that made my debt skyhigh. It's now fixed and supposedly, I'm to get loan docs tomorrow or Friday.

You know, I'm not going to hold my breath. I should've just declared myself a bank holding company. Bah! Oh and if this loan doesn't come in, there goes our vacation in Tahoe next weekend.



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