Saturday, May 29, 2010

The Financial Pursuit: a long and weary process

(Out with the Old, In with the New: PART 2)

At the end of November, we started taking the steps to find financing for our new home. We began with the company Quicken, because our home sales company recommended it. Quicken was easy to work with and we were glad! But just two days after being pre-approved by them, Quicken pulled the plug on all manufactured home lending. Due to new regulations set by the government, they chose to not participate in that type of mortgage lending any longer. We were upset, but we went ahead with finding another lender. Our homes sales company started the process for us with Wells Fargo on December 9; and this is where all our lending woes began.

Due to the remoteness and small size of our town, there are no local banks who provide manufactured home lending. The loan officer from Wells Fargo that we were assigned to worked out of Provo, Utah. All of our correspondence with him was over the phone, by email, or fax. After he initially received all of our information, we were pre-approved. We were applying for a conventional loan, and before he could send it to the underwriters, he needed more information. Everyday, he needed different information, such as: a listing of where all the deposits came from on our bank statement in the previous 2 months, an employers confirmation form filled out, a letter proving that our land was put in our name, etc etc. Every other day for several weeks, there was some 'new' thing he needed us to do. Then we sent him $500 for an appraisal to be done, and he didn't receive it for almost 2 weeks. Finally, he sent the papers off to underwriting. After a week, he informed us that we were turned down due to our high debt to income ratio. So he submitted the papers to FHA lending instead. He said we were approved by FHA as long as we paid off a certain credit card. By this time, it was the middle of January. It took us 6 weeks just to get to that point.

In February, our tax refund arrived and we paid off 3 credit cards. For 2 months we were very strict with our budget, and we paid off a 4th credit card. We decided to try getting a conventional loan again because we really didn't want an FHA loan--FHA loans have slightly higher rates and and are required to have mortgage insurance, which meant the monthly payment would be higher. We chose to work with US Bank. The loan officer we corresponded with worked out of a Nampa, Idaho office. He was very friendly and after receiving all our initial information, he told us he didn't foresee any problems with obtaining financing. He needed a few additional documents, he waited for us to send $500 to him for an appraisal. Within just a few weeks, the appraisor came and all the paperwork was done. He sent it off to underwriting. Right before the weekend we thought we'd be moving out, March 13, he informed us there was a problem with the paperwork. The land that we were using as collateral for the loan (equity for a down payment), had a lien attached to it.

Josh's parents own the property that we are putting our home on; it is a part of their ranch. Back in December, they deeded us 6 acres. They paid for a surveyor to come and do a lot split on the ground where we've been living the past 7 years, which is adjacent to their home. They have a home equity loan, and they thought only their house was collateral for it, but apparently it included all the land surrounding the home as well. Their loan was through Wells Fargo,. We still wonder how our own Wells Fargo loan officer didn't catch that problem back in January when it came back from underwriting the first time. We waited for a month for the lien release to come through. Finally, in the miidle of April, it did. After the title company recorded it, they sent it along to US Bank. From there, the situation got ugly.

We'd been hoping and working for financing now for nearly 5 months. In the meantime, our new home had been taken apart and was sitting on the home sales lot ready to be moved. We were careful with our budget and our time planning, because any day we would be moving out of our current house on short notice and we needed to be prepared. We kept thinking that we couldn't commit to activities because we'd be moving that weekend. We told ourselves we couldn't afford to go out to dinner or purchase items because we'd be paying for a mortgage shortly. We were beginning to think that all our efforts would never pay off; we'd never obtain the house that we'd been working so hard to get!

US Bank sent it to conventional lending again, and we were once again denied due to the loan to value ratio. It didn't make any sense to us. The lender said it was the appraisor's fault; the property was low-balled. Our house was worth $110,000 and our land was worth $72,000 but when the appraisor put the two together, he said the entire value was $155,000. So, our loan officer said he would submit our papers to FHA instead. We didn't want to go that route, but by this time, we just wanted financing--no matter what kind or where it came from. He said within a day's time, he would have the decision from FHA. He never called, never emailed. After several days, Josh called, I called, our home sales guy called. Finally, a week later, we were informed that there was some kind of a 'glitch' in the system with our loan submittal to FHA, and that FHA didn't recognize receiving our loan. I didn't understand why he couldn't just RE-SUBMIT it!!!

After another week of hanging in limbo, and not hearing from him, I sent him an email with an ultimatum: I was coming down to Nampa two days later (April 30) and sitting in his office all day until he could get a response from FHA. To which he emailed the reply that we should get financing from someone else. Josh called him, and the loan officer said he would no longer be working on our loan.

We were completely shocked! Josh called our home salesman. Our home sales company is sister companies with US Bank, so they got on the phone with our loan officer's superior, and it was promised that our loan would get the final approval the next day. But, it didn't. The weekend passed. Several days passed. The superior called and informed us that the appraisor that US BANK hired wasn't FHA-approved, and we'd need to have another appraisal done by a different appraisor. Then the loan secretary called and said all our documents that we'd submitted for the loan had now expired, and she needed to call our banks and get a new verification of accounts.

We couldn't take it any longer. By this point, I was so utterly depressed because I'd lost all hope that it would ever happen. We decided to pull the plug on US Bank. They were doing absolutely nothing for us except make our lives hell. Josh went and talked to a private lending firm in town. The head guy there said he would look into finding someone to fund our loan, and just over a week later, he got back with us, saying he found one. Two days later, we walked in, signed the loan paperwork, and picked up a check. The following day, May 13, we drove to Idaho Falls and gave the check to the home sales company. We signed more documents there, and returned home just in time to get a building permit before the office closed.

We'd been working on getting financing for so many months, it was surreal that things could move along so quickly. It's not ideal to work with private financing, because the loan has a higher interest rate and much higher monthly payments. But there's also positives about it: there's a lot less paperwork, no closing cost fees, and no waiting for government inspection on the house before we can move in. We signed the contract with our home sales company before April 30, so as long as we can close before June 30, we will still qualify for the government rebate for new home buyers. We plan to refinance the home this fall. After the house is completely done, we will convert the manufactured house + land into real property, which hopefully will make refinancing much easier than the original financing was!

So, 6 months after we put down our deposit on the house, and dealing with 4 lending firms, mounds of paperwork, and legal documentation, the time had finally come for us to move out!!!

to be continued...

1 comment:

Sunshine said...

how incredibly frustrating.... I'm so sorry! I would be spitting nails if I were you. I don't do so good under pressure.