Loan on a house for comm activity, does this make sense to you?

[Henning]

I'll tell you what. I've just decided that it will be my primary residence. Since y'all are interested in the comings and goings of where I live, I just moved there. So - put that in your pipe and smoke it. Now we'll see what other shenanigans they can come up with.

Oh, I do have banking established in the area, receipts for goods and services, pictures of me moving household goods in, utilities, and as of 11:00 today, my drivers license will be at the new house I'm buying.

Go ahead, make my day.

Well then, that changes thing, if you rent out the house you are currently in that is owned free and clear, and change the coverage there to a landlord policy, then you can close this deal as a primary. If you don't, you are committing fraud which can cost you dearly if they find out.

Here's the deal, you want something from them that you are not entitled to. Just pay cash for the house and you have no worries.

 

[MtPJimB]

I'll tell you what. I've just decided that it will be my primary residence. Since y'all are interested in the comings and goings of where I live, I just moved there. So - put that in your pipe and smoke it. Now we'll see what other shenanigans they can come up with.

Oh, I do have banking established in the area, receipts for goods and services, pictures of me moving household goods in, utilities, and as of 11:00 today, my drivers license will be at the new house I'm buying.

Go ahead, make my day.

Wow, was just trying to help. Are you related to Captain Happy?

 

[MtPJimB]

When going through these reps purchaing our current home. I had at least half a dozen "because we said so" moments where the Mortgage holder, the mortgage broker and the insurance company had no argument. When I pointed out that they were breaking federal guidelines they just shrugged. My mortgage broker consequently lost his license and agreed to pay some stiff fines to stay out of the pokey. They all ***** and moan and complain about the stricts regs after the bailout but it's really nothing but a few more excuses for them to attempt to screw you over with nonsense and blame it on regulations.

How about I provide you with links to the 10,000 pages of new mortgage regulations that went into effect this past January and to the 2,000 pages of new regulations that go into effect next year that are going to further fundamentally change every aspect of mortgage lending?
It's not bitching and moaning - for me it's great job security. But it is reality. The small community lenders who were never really doing anything wrong to begin with are getting saddled with all the baggage from disreputable mortgage bankers and Wall Street investment bankers and the consumer is the one ultimately paying the price.

 

[docmirror]

Wow, was just trying to help. Are you related to Captain Happy?

I appreciate the help. But sadly, this is what the bank keeps telling me. Here's a quote, as best I can recall from Friday: "Mr Smith, I know it's been a long process, and you have answered a lot of questions but I'm only trying to help you get the loan you need." Well, in the larger scheme of things, they are giving me a loan, and that is helping me. But in the minutia of details, they are actually helping themselves to better qualify my loan so that it can be resold on the secondary market at best capitalization.

So - there's help and then there's "help".

I know the banking regs have gotten more onerous, and I know that it's due to some bad actors in the banking industry. As with all things, the pressure is being pushed down to the lowest level(borrowers). But - my original thesis stands. To require homeowners insurance, on a property that they are deeming as commercial, is an oxymoron, and what I would call duplicitous.

 

[JoseCuervo]

Well then, that changes thing, if you rent out the house you are currently in that is owned free and clear, and change the coverage there to a landlord policy, then you can close this deal as a primary. If you don't, you are committing fraud which can cost you dearly if they find out.

Here's the deal, you want something from them that you are not entitled to. Just pay cash for the house and you have no worries.

Exactly, he seems to flip flop back and forth on what the purpose of the house is.

The banks have definitions on what each house is for, and the related loan products. An Underwriter is following those rules, as they should.

Fraud as a borrower is not a good thing any more. Long gone are the Liar Loans that caused much of the melt down.

 

[docmirror]

Exactly, he seems to flip flop back and forth on what the purpose of the house is.

The banks have definitions on what each house is for, and the related loan products. An Underwriter is following those rules, as they should.

Fraud as a borrower is not a good thing any more. Long gone are the Liar Loans that caused much of the melt down.

Who's lying? Who's committing a fraud? I just moved there, and if I need to, I can prove it with well documented paper trail. The bank is the one that changed after giving me a "locked in rate and terms". I guess that makes sense to you. Meh - ok.

 

[paflyer]

No such thing as a simple, straightforward mortgage application anymore, and the more complex your financial situation (read well-off) the worse it is.

Two years ago we purchased a "second" home in Cedar Key, FL and as part of the application process with PNC they became aware of rental income that I have - leading to demands for the Lease Contracts, the credit worthiness of my lessees, etc; income that I had from timber sales on my farm - leading to demands for documentation all the way down to weight receipts from the wood yard; etc, etc.
Painful to the point of considering ending the application and taking my business elsewhere - but advised by those in the know that the process would be equally painful everywhere else.

Certainly the pre-2008 status quo of getting credit if one could fog a mirror was not in anyone's long term interest, but the pendulum seems now to have swung way too far the other direction

Good luck!

Typical government overreaction idiocy. And who gets the harder time as a result? Hint: it's not the people who caused the problems in the first place.

 

[paflyer]

.... I can't imagine what people in marginal situations have to do to qualify!

I'm willing to bet it's a LOT easier.

 

[asechrest]

In my opinion, it is not the bank's place to make assertions about the use of the property. Neither is it the insurance agent's. Either accept the client's stated use of the property, or don't do business.

When I write insurance, I obtain information from the client about the use of the property. If I feel that information is suspect, or that the client is not telling the truth, I do one of two things: 1) I require signed documentation from the insured attesting to the use of the property so that I am protected if it causes issues at time of claim or 2) I opt not to write the insurance and allow the client to obtain insurance elsewhere.

And the bottom line is that the bank is requiring the wrong type of insurance. This is not uncommon. Dealing with loan departments who pretend to have a doctorate in risk management is not uncommon.

 

[Gerhardt]

In my opinion, it is not the bank's place to make assertions about the use of the property. Neither is it the insurance agent's.

Just a guess, but I suspect that the bank was given as much conflicting information as we were. And it does fall on their shoulders to do due diligence to ensure that the property is being used as described. That's why that question is included in their paperwork.

 

[asechrest]

Just a guess, but I suspect that the bank was given as much conflicting information as we were. And it does fall on their shoulders to do due diligence to ensure that the property is being used as described. That's why that question is included in their paperwork.

Well, I'm just working off the info given in the OP.

The truth of the matter is that the bank has no ability to ensure the property will be used as described. The loan must be underwritten before he takes ownership. Likewise, I have no ability to ensure, prior to closing, that a property I write the insurance for will be used as described. There is by necessity an element of trust involved. So when it comes right down to it, you have to trust what they say, advise them of the repercussions if they breach that trust, and document the file, or choose not to write the business at all.

But that seems a bit tangential. The bank appears to have decided how the home will be used while paradoxically requiring the wrong insurance product.

 

[Henning]

Who's lying? Who's committing a fraud? I just moved there, and if I need to, I can prove it with well documented paper trail. The bank is the one that changed after giving me a "locked in rate and terms". I guess that makes sense to you. Meh - ok.

You were the first to lie though, your application IIrC you told them it was NOT investment property, that was what we people call, "a lie". So, when they caught you in the lie, they gave you the rate for your reality, not your lie. I don't know why you are mad, your deceit was what caused all this. You told us this is an investment rental property and told them it was a second home to try and get a lower rate, that is fraud.

I know you want to get away with something and minimize the expenses of your rental business, but you got caught and are being penalized for lying. They could wait until the deal closes, catch you at your game and really make a bunch of money off you.

If you don't want to pay the bank the money, then pay cash.if you can't afford the cash and need money to build your business, you need to pay the bank their business rate. I don't get where you feel you are being abused. If the deal at the new numbers don't work for you, then this business venture doesn't make sense.

 

[N2124v]

Henning, Wells Fargo Mortgage sucks. If I get an offer for a clients property and Wells Fargo is going to be the lender we will encourage them to look else where for a loan, or reject the offer. To many I instances of WF not performing, or dragging closing a out.

 

[Lindberg]

How can you be living there if you haven't bought it yet? I've got a residence and a rent house. The rent house has a commercial property structure and liability policy on it with the same company as the homeowner's policy on my residence. The premium difference is not significant. Certainly not enough that it miss out on a deal over it. That said, I understand how frustrating it is dealing with big banks. IMO it's not worth it.

 

[skidoo]

Where do you find that happening? I couldn't get a loan on $90k condo with $60k down because I have no credit rating, I don't show up when Wells Fargo looked me up, and I had $80k in their bank, yet they couldn't write the loan.

Well, that was your first mistake, i.e. banking with Wells Fargo, and expecting any sort of service where they don't look at you as prey...

 

[Henning]

Well, that was your first mistake, i.e. banking with Wells Fargo, and expecting any sort of service where they don't look at you as prey...

Well, I signed up with Wachovia and ended up with WF.

 

[docmirror]

Just to put some closure on this, we closed on Friday at 3:45PM. My bank paid up on time, but the trustee for the sale didn't want to wait until Mon to get his wire(after 3, is next business day). So, since the sellers trustee is the one that held up the closing for 6 hours to get an accurate payoff, the escrow lady went full nuclear on the guy. It was fun! She sat there with the four previous requests for the payoff from a week ago, and the banker on the phone is saying 'we never got your fax, we didn't get your email, we can't find your phone calls', like the dog ate his homework. The seller is droning on and on about his 'million dollar loan he just wrote at 7%, and they were LUCKY I gave it to them', meanwhile he's about 4 days from foreclosure, and the trustee is all bent about 3 days of interest on the wire xfer.

What a bunch of incompetent douches. Well, anyway after the escrow lady took a breath, the trustee on the phone finally said he would 'grudgingly' accept payoff on Monday. So she made a note for all of us to sign that heard the conversation and put it in the escrow docs! Hahaaa! I was happy to sign that one.

The bank rescinded the requirement for the homeowners policy, I got a landlord policy, they charged me an extra $325 for "special underwriting exception", and it's done.

Occupancy <> title transfer. We had an agreement with the seller that we could move on the 25th no matter the closing date. We needed to get in before the 1st of the month. After close, I went down the street a few doors and got a nice bottle of Cali cab and gave it to the escrow lady. She was great. Deal done, airport is 10 min drive, and the planet is once again spinning in greased grooves. Sadly, I have to change banks now.

 

[weilke]

The bank rescinded the requirement for the homeowners policy, I got a landlord policy, they charged me an extra $325 for "special underwriting exception", and it's done.

Occupancy <> title transfer. We had an agreement with the seller that we could move on the 25th no matter the closing date.

Huh ? I though this is now your residence, why did you get a landlord policy on it ?

 

[docmirror]

Huh ? I though this is now your residence, why did you get a landlord policy on it ?

They wrote the note as investment. Go figure. I didn't argue, just signed and signed, and signed....

I sent an email to the my lenders bank officer, and the guy I do business with and used the magic words 'bad faith' and 'switched after filling out application'. In fact, they made me sign a brand new pre-printed "loan application" AT closing. Dotting all the i's and crossing all the t's, cuz my first app was a "residential loan application".

 

[Henning]

They wrote the note as investment. Go figure. I didn't argue, just signed and signed, and signed....

I sent an email to the my lenders bank officer, and the guy I do business with and used the magic words 'bad faith' and 'switched after filling out application'. In fact, they made me sign a brand new pre-printed "loan application" AT closing. Dotting all the i's and crossing all the t's, cuz my first app was a "residential loan application".

Which is what caused all the problems. Glad you got it worked out.

 

[C182P]

Slightly off topic... a year ago I was looking to refi my mortgage (on the property I live in). Income-wise, liquid asset-wise, and credit score-wise, I had to have been near the top of their "ideal customer" list. The process was taking considerably longer than the 30 days they had initially promised me, and underwriting was sending more questions every few days.

Among my total assets included a rental property I own (market value of very little); the underwriters for my refi (again, of the property I live in... not this rental property) demanded I provide proof of insurance on the rental (they had already received proof of insurance on my home that they were to refi). I responded truthfully that the property is self-insured; I did not feel the need to insure it and I reminded them that they were not going to hold a leon against this rental (which I own clear).

Without even coming close to stating it, I figured out their concern with insurance on my rental was because I have a little income from that property and they must have wanted to make sure I would still be able to pay my mortgage if the rental went literally up in smoke. I got so ****ed off at their inability to actually tell me what they were looking for that I told them to strike the rental as an asset from my application -- my income so grossly exceeded what I receive from the rental (and my debt-to-income ratio was around .17, well below their concern point). They agreed to do that and we continued forward.

Or so I thought. 2 weeks later I finally gave them a productive use for whatever physical paperwork remained for my refi application and I went elsewhere. The elsewhere I went only took 45 days to close what they also stated would be a 30 day process, but at least they made up for their lack of efficiency by giving me visa gift cards to cover the extra interest I had to pay as a result.

 

[Doggtyred]

I just upped the ante. I told the bank we will not be talking directly anymore. I'm represented and I need their legal team to call mine. I'm fed up. If this deal crashes, we'll let a judge decide. Eff this. The loan co has sent 38 emails, and about 30 calls over the last month, with one question after another. I should have given them the heave ho after two weeks, but they started with a very good rate, and it was bait and switch. I'm not taking it anymore.

Good decision. It sure sounded hinkey the way its going down.