First Guarantee Mortgage / Mortgage bait and switch
My original request for a mortgage refinance was for the property at 8 Nevada Street. I own this property and rent it to my daughter and her family. It is a single family home, four bedrooms, bath, kitchen, living room. It is currently appraised at $235, 000. It needed a lot of work on the inside. When we bought the place four years ago, I had done some work on the second story. Now, I want to take out some money and redo the downstairs. I calculated approximately $40, 000 to do the work. Plus put in a new driveway.
I had filled out the application on the web site LendingTree.com. One of the first to answer was First Guarantee Mortgage. I discussed the re-finance with the broker. After several phone calls and discussions the broker indicated that it would be much easier if I took out some money for my primary property at 88 Harbour Avenue. I was not too thrilled with this procedure but he convinced me that it would make the loan on 8 Nevada Street property much easier. He wanted to use the money to pay off a few of the outstanding credit cards and bills that I had at that time. After some discussion, I finally agreed to this plan. Refinance the 88 Harbour Avenue residence first.
So, we went ahead and did this and completed the transaction. I then asked the broker to go ahead with the refinance on the 8 Nevada Street property. We scheduled and did an appraisal which I paid for. This happened during the month of June 2007. I also sent more documentation concerning my income.
I then waited for the closing on the refinance of the property. But, I was told by the broker that we would have to wait approximately 30 days for the payoffs to be shown on the credit report and that would make my credit rating better. (The first delay).
I waited until July. I was informed that my credit rating was much better and I was assured that the paperwork on the loan had been submitted and we should be closing in about a week to ten days.
Well, this did not happen. I was asked to submit more paperwork and since we had gone for longer than 30 days (at the brokers insistence), further employment documentation was needed. I had all the required documentation, scanned it into a JPEG file and e-mailed it to the broker. Again, he said it all looked good and that we should close in a week to ten days. Now it was getting into late July and this had been going on for more than two months at this time.
At this point, I didn’t get any calls from the broker for several weeks. I keep calling and leaving messages at the numbers that I had. Then, one night I got a call from First Guarantee and was asked if I completed the closing on my refinance on 88 Harbour Ave. I told the caller that it had been completed and that I was waiting for a closing date on the property at 8 Nevada Street. He said that he didn’t know too much about that, but would have some one get back to me.
During this period I had also e-mailed the broker asking for information on the status of the refinance. I did not receive any e-mail from the broker, but received two e-mails from another broker telling me that the status was the same and that she would be helping me. Then, that line of communication stopped.
Another broker called and said that the original broker had left the company and that he would be taking over all of his loans/projects. He said that he would look at the paperwork and see what would be needed to complete the refinance on 8 Nevada Street and we should get it going and we could be finished with it in approximately 2 weeks. We are now in August.
The new broker advised (again, it had been too long for some of the paperwork) that we would need another appraisal, plus other paperwork. I agreed to that and gathered and sent the paperwork to his e-mail address (I scanned the needed documents as JPEG files and e-mailed them). The broker had an appraiser contact me and we had the house on 8 Nevada Street appraised again (another $350.00 cost).
I was advised that the entire refinance package looked good and it was being submitted. We should be able to close within a week to 10 days. I told the broker that would be fine and to expedite it if possible since we had been working on this for the last 3 or 4 months. He said that he would see what he could do and that we had everything needed in the package.
The next week, when I expected to have a closing date for this refinance, the broker called and said that although the paperwork looked good, the loaning institution wanted to see more assets in my accounts. I told him about my 401K (about $5600.00). He said that was ok, but that I would need to show about $8000.00 more in my bank account and the loaning institution wanted to see assets to cover about 6 months of the loan. He asked if I could get that amount and put it in my checking account. He suggested that since we had paid off some the credit cards from my previous refinance, I should get cash from those credit cards and put it in my checking account. This would help the loaner to be able to approve the refinance and we should be able to close in a week to 10 days. I finally agreed to this and got cash from 3 credit cards and deposited it in my account. I sent a copy of my account showing this amount along with a copy of my 401K account. I was once again assured that everything was in order and looked good. We should expect to close in about a week to 10 days. We are now in August.
About a week later I received a call from another broker stating that the broker I had been working with had some personal problems and she would be handling my refinance. Once again, it seems that we started all over again. Ok and so I did all that was required. I also explained to her that we had been working on this loan for the last 6 months and that I needed to get it closed. I had done all that they asked for with paperwork, additional funds, etc. Now was to time to get this done. I was assured that this would be done and we could close in a week to ten days. We are now in September.
After updating the paperwork again (again, too much time had expired and some documentation got lost in all the shuffles of brokers) and scanning and sending the documentation, I was again assured that the refinance would be done and we would close the loan in a week to 10 days.
It was not to be. On Friday, October 12, 2007, another person from First Guarantee Mortgage called and said that the broker I had been working with had the day off. This person (Trudy) advised me that the investment company that was going to finance the refinance had lowered the appraisal by $70, 000 and that I could no long get the amount of money I requested. I have since learned that the appraisal was not lowered, that the rule for refinancing an investment property (the second home) is that the loan will only be fifty percent of the appraised value. This should have been told to me in the beginning (when I first asked about refinancing the second home in April). In effect, the refinance was finished.
As you can see in this narrative, I believe that the only intention of First Guarantee Mortgage was to have me refinance my primary home. First Guarantee should have been up front with me in the first place and advised me that they could not do the second property.
I had been told that there would be no problem in refinancing the second property and that over this 6 month period, I had been advised many times that everything was good, all paperwork was great and we should close within a week to 10 days!
Having been assured that everything was going good and the refinance would be completed soon, I have gone ahead and had a lot of work done on the property at 8 Nevada Street (all the work I had planned on doing originally about $35-40K) and paid for it through various credit cards or loans. I had planned on using the funds from the refinancing of the property to have all this work done.