Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I would assume that your original letter of pre-approval/pre-qual probably said something like
"Subject to verification of the following conditions:
1.
2.
3.
4.
"
With a bunch of things listed that say things like they have to verify the information you gave them, and your financial situation can't substantially change prior to the closing. If it didn't say that, then it wasn't a good lender. They can't guarantee that just because you qualify now, you will still qualify on closing day. For example, people go out and buy a lot of furniture for the new house right before closing and mess up their debt to income ratios, and no longer qualify on closing day. A clause like that would cover them, as your financial situation did not check out, when verified.
Beyond that though, in my opinion these days, lenders are looking for any reason to deny loans. You have to fit perfectly in their little boxes in order to get a loan. Anything outside of the box is denied. When your boss said you wouldn't be getting the overtime anymore, it put you outside the box. Even though you got a statement saying you would have the overtime, the flag had been raised, and they are denying you over it.
As to getting your money back...good luck. I'd agree that small claims court is your best bet. You would have to show wrongdoing by the lender though, and if your boss really did tell them you wouldn't be getting overtime anymore, that might be enough right there for them to legitimately deny you, with no wrongdoing on their part. If your boss gave them incorrect information and cost you the house, then shame on your boss. If your boss gave them correct information that you just hadn't been informed of yet, then that isn't really anyone's fault.
The only thing I used my credit card for since we applied for the loan was for the appraisal and I asked the lender multiple times before using it for that if it would be okay and not affect anything. He said it would be perfectly fine to use it for that. As for the over-time, our lender asked my employer if I would still be receiving over-time long after the actual approval, inspection, appraisal, and after the mortgage papers were sent to us. Also, the over-time shouldn't have even mattered since they found out I would always be getting my incentives, bonuses, and all of my other extras which amounts to way more than my over-time does. They should have asked my employer about the over-time before they determined the approval and everything else, not after we paid all of the money for the inspection and appraisal. I don't even think they're allowed to use over-time and other extras when determining the loan until after they verify it with the employer, which they did not do ahead of time. So technically they falsified my income by not verifying it first. They didn't inform me of any of this either.
The only thing I used my credit card for since we applied for the loan was for the appraisal and I asked the lender multiple times before using it for that if it would be okay and not affect anything. He said it would be perfectly fine to use it for that. As for the over-time, our lender asked my employer if I would still be receiving over-time long after the actual approval, inspection, appraisal, and after the mortgage papers were sent to us. Also, the over-time shouldn't have even mattered since they found out I would always be getting my incentives, bonuses, and all of my other extras which amounts to way more than my over-time does. They should have asked my employer about the over-time before they determined the approval and everything else, not after we paid all of the money for the inspection and appraisal. I don't even think they're allowed to use over-time and other extras when determining the loan until after they verify it with the employer, which they did not do ahead of time. So technically they falsified my income by not verifying it first. They didn't inform me of any of this either.
No they didn't falsify your income. There is pre-qualification which means that they have not verified your income but are going off what you wrote in your application. There is pre-approval which means they have your financial documents and have verified your employment. Then there is underwriter approval which means that the underwriter, the one with the power to make or break your loan, has reviewed all of your documents and has agreed you meet the criteria for the loan. Pre-qualification and pre-approval are not guarantees of a loan.
While you can try small claims, I think you will have an uphill battle. The loan officer can always say that the underwriter was being unreasonable, yadda, yadda. You can go on any forum and see real estate agents complaining about underwriters. The letter you received will have many qualifiers on it for your approval for the loan, one of which should be "subject to final underwriter approval." The underwriter said no. Flagstar would not be my first choice of places to go. I'd choose Wells or BofA over them any day. That's saying something but we are on the West Coast and not in MI, where they are located. Maybe they have a better reputation out there.
What you did was pick a crappy loan officer. If your agent referred you to that loan officer, then I question the quality of your agent. So just remember that Yelp, Google Places, etc are good places to warn other consumers about things. There are straight shooters in the mortgage industry. You need one of them.
No they didn't falsify your income. There is pre-qualification which means that they have not verified your income but are going off what you wrote in your application. There is pre-approval which means they have your financial documents and have verified your employment. Then there is underwriter approval which means that the underwriter, the one with the power to make or break your loan, has reviewed all of your documents and has agreed you meet the criteria for the loan. Pre-qualification and pre-approval are not guarantees of a loan.
While you can try small claims, I think you will have an uphill battle. The loan officer can always say that the underwriter was being unreasonable, yadda, yadda. You can go on any forum and see real estate agents complaining about underwriters. The letter you received will have many qualifiers on it for your approval for the loan, one of which should be "subject to final underwriter approval." The underwriter said no. Flagstar would not be my first choice of places to go. I'd choose Wells or BofA over them any day. That's saying something but we are on the West Coast and not in MI, where they are located. Maybe they have a better reputation out there.
What you did was pick a crappy loan officer. If your agent referred you to that loan officer, then I question the quality of your agent. So just remember that Yelp, Google Places, etc are good places to warn other consumers about things. There are straight shooters in the mortgage industry. You need one of them.
Your situation stinks.
It really does stink. We didn't put an offer in on a house until after the approval, or pre approval. Would that mean that he would have had to verify my income, overtime and extras during the pre approval? If that's true, then he had to of falsified my income, because he gave us the approval for $80,000 before we put the offer in.
Small claims. You do not have to show wrongdoing on their part. All you need to show is that you relied on and acted upon the information provided by the lender. If that information would show that a reasonable person would also have relied on and acted upon the information you have a good chance at winning.
Guess who else knows this? The lender. Faced with a summons and court date they might just pay up. You have little to lose.
Just a little curious about this part "advice and permission from both my realtor and lender I offered them full price on the house because I did not want to risk someone else offering more and getting the house."
You don't need their permission to make an offer. Also, an offer at the asking price does not eliminate the risk that someone else offers more.
The reason I'm asking about that is because if your lender gave you "advice" or "permission" in making the offer that is a pretty significant thing and was wrong. Your REA could have offered advice but if "permission" came into play, how did that work?
A lender shouldn't be giving you advice on what to offer and a REA shouldn't have you in a position where you need their permission to do squat.
These things might be important in small claims court, especially if either of those two things happened as you say. Get those things real clear in your mind before heading to court. If the REA had to give you permission then they are on the hook as well. You see, if the REA placed you in a position that you thought you needed their position, then they created a liability for themselves to know what you should and should not do and then they also had a duty to make sure the information was good.
In small claims, you sue them all. The broker, the lender, and yes, the Realtor too, if the permission thing comes into play. If not, the realtor becomes your witness. Either way, get them all in one place at one time, in front of the judge. When everyone knows this attitudes will chance and people often write checks.
Can anyone explain how the loan amount went from $80,000 all the way down to $60,000 when nothing on my end has changed? I know the lender said the underwriter wouldn't and couldn't use any of my extras, just my hourly pay, but the new lender said i would only be approved for $60,000 with all my extras included not without. Even without all my extras, the amount shouldnt have dropped a whopping $20,000. It just doesn't make sense, right?
I've found lenders and lending to be frustrating to put it mildly...
Early on a mortgage broker told me it is the golden rule... the one with the gold rules...
The only compensation in my case is no one ended up getting paid because the loan didn't fund and this was at a time when this lender was not charging up front for an appraisal.
I have spent plenty of money on inspections and always felt it was money well spent even if I didn't get the property... no one required me to get an inspection.
On several occasions I have helped friends with difficulties getting restitution.
Sometimes it was as simple as getting the brokers involved, other times it was resolved when the court date was set and one time it was strange... the mortgage broker called the court when we were there and asked to reschedule due to an emergency... then the guy fails to show up for the new date...
The Judge awarded my friend everything, including court costs...
She had a hard time collecting on her judgement... took a few years and was finally paid with interest when the guy was trying to get a loan... kind of poetic justice.
As a footnote... my experience is limited to California.
I feel bad for the OP but is not the purpose of an underwriter to finally/actually verify everything? In this case it seems that his income did not verify at the level claimed as they could/would not count the overtime.
I had some friends who made very good money but the majority of it was sales commissions, not salary. They were refused a mortgage they were seeking. They scrimped and saved for a year and were able to put enough money down to qualify for a mortgage based on their salary alone.
I feel bad for the OP but is not the purpose of an underwriter to finally/actually verify everything? In this case it seems that his income did not verify at the level claimed as they could/would not count the overtime.
I had some friends who made very good money but the majority of it was sales commissions, not salary. They were refused a mortgage they were seeking. They scrimped and saved for a year and were able to put enough money down to qualify for a mortgage based on their salary alone.
Commission Sales and Self Employed have a very difficult prospect in qualifying.
A friend that has done well despite the downturn was having lots of trouble getting a purchase money loan because he worked 100% on commission.
He was just about to give up and the mortgage broker said we could do this if your wife had a job... he said his wife took a leave of absence 3 years ago when their twins were born... she is a registered nurse.
Evidently just being married to a RN was just enough to tip the scales...
I feel bad for the OP but is not the purpose of an underwriter to finally/actually verify everything? In this case it seems that his income did not verify at the level claimed as they could/would not count the overtime.
I had some friends who made very good money but the majority of it was sales commissions, not salary. They were refused a mortgage they were seeking. They scrimped and saved for a year and were able to put enough money down to qualify for a mortgage based on their salary alone.
I'm curious as to why the underwriter can't get everything verified before the loan is even pre-approved? Then if the buyer decides to go out and spend tons and tons of money using his/her credit card, ruin their credit score, or get themselves into any other trouble before the final verification and closing, THEN it would be justifiable for the underwriter to deny the loan. It seems as though things are done backwards. If the loan approval is up to the underwriter then why can't the very first step be done by the underwriter. It just doesn't make sense. Even if they had to charge a little bit, I would much rather pay them a fee to do this first than have to pay close to $1,000 for the appraisal and inspection beforehand. Or, why can't the underwriter look everything over and say either yes income extras, commissions, etc can be used, or no just the hourly pay can be used? Regardless, the way things were handled in our situation was just very unprofessional, unorganized and down right wrong.
About the first lender preferring to write and not talk directly to you even by phone...actually that's a good thing, as has already been said. You seem like the kind of person who already has a file with every letter to and from this lender. And then all the same from the current good lender.
Just to round out your info you might go to their dotcom site and see they have a page for their code of ethics, etc.
I've been looking at news reports but they are pretty concise in Wiki. So take a look there to get a sense of this lender. Dept of Justice (DOJ) filed a complaint about them re predatory lending techniques and people who are not qualified to help you with a loan did so and this concerned govt backed loans, which FHA is. This was in early 2012 that is was found out. It was being done for many years before. Basically it involves approving everyone; the old home equity loan strategy of over approving anyone they saw as responsible and hard working; loan payments can't be met; they go in default; govt who guaranteed loans says how in the world was this loan approved.
A few months later their president resigned. A guy already working a couple of years at Flagstaff was elevated to the position of president.
It may be he's turning things around a bit and getting them honest. You may have been caught in that spinning out of control and got the whiplash at the end.
There is even a site that has several consumer complaints about their mortgages...similar to you. It's at p-word (meaning angry) consumerdotcom.
I, too, was surprised to see they had actual three dimensional facilities, and were not only online lenders. I thought of them as one of what I call the mybuddydotcom lenders. I know people who gave up their perfectly good home and traveled across the country on the promise of this kind of company only to find out they never had a chance and the so called lender was only buying time trying to find them a loan so he could make an incentive on it. I got to calling them this because of one supposed mortgage officer who always called someone else involved "buddy". Always by phone. Always some mysterious unknown location. I wonder if the three dimensional Flagstaffs are just the fronts for these kind of onlines.
Another thing, usually those extras beyond your salary, including regular overtime, are not considered valid for lending unless they have been in place a certain length of time...with some, even two years.
Do some more research. There may be class action suits. At any rate do as someone recommended and explore small claims. Bring all the info you find online about how disreputable they have been reported to be. You may find that googling and binging lead you to others with these issues right in your area.
Your realtor should really have known the better lenders and should have put some info in front of your face so you could make the decision a little better.
You had good intentions starting out. Very unfortunate you got hooked up with this group it seems.
Last edited by cully; 01-26-2013 at 11:15 AM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
