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Old 01-25-2013, 12:36 PM
 
Location: Michigan
15 posts, read 87,180 times
Reputation: 16

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Hi everyone,
I have a question that involves a lot of detail, so if anyone has any advice as to how I should resolve this issue I would really appreciate it! I live in Michigan and few months ago, I decided that I wanted to purchase my first home. I am new to how the whole process works, so I trusted and depended on a professional to help me. I went to Flagstar Bank and talked with the mortgage lender about getting approved for a home loan. He asked for and received every possible piece of information he required to determine the amount I could qualify for. He told me that I was approved for an FHA 30 year fixed loan in the amount of $80,000. When determining how much I would be approved for, he included my hourly pay, over-time, benefits, incentives, and all other extras that can be used.

At this point I was fully approved through the mortgage company and was told exactly what I could afford. I then began to search for a house that was strictly in my budget for what I could afford. I found a great home for $79,000 and with 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. After the seller accepted my offer, I proceeded with the inspection and appraisal. After the appraisal and inspection came back good, I got suspicious when my mortgage lender starting asking me if I had any more income, if I could get another job, if I was able to get a co-signer if I ended up needing to get one, or if I had extra money to increase my down payment. Go figure, a week and a half later my mortgage lender tells me that I don't qualify for the $80,000. He said my debt to income ratio was too high because my work told them I would no longer be receiving over-time. I asked him if I was able to prove that I can get over-time again, would the loan still be good for $80,000. He said yes, but he would need the letter from my employer stating that I can get the over-time. I also found out that the underwriter just assumed that i was no longer getting my benefits, bonuses, incentives, etc. just because i was no longer getting over-time. So, I informed him that i will still be receiving those extras too. I got the over-time approved from my employer, gave the letter to my lender and he said i would hear back the next day.

The next day came and he said we wouldn't know that day because his manager was out with the flu and that we would know the next day. The next day came and we still didn't know the answer. Two more days went by and he emailed me on a Sunday to tell me that the loan was denied due to my debt to income ratio again. Keep in mind that through this entire process, he never called me to explain the situation or to give me any updates, he would only e-mail me only after I emailed him first. I called him now and then, left him messages to call me back and asked him in our emails to call me because I felt these things really needed to be discussed over the phone rather than in short sentences through email. However, no matter how many times i tried calling our asking him to call me, he never did. I think that's a little odd, especially when dealing with something as serious as a home loan.

Anyway, it didn't make sense that the loan was still denied after providing him with proof that I would still be getting over-time. He wouldn't even explain to me how it was possible that I was still denied until I had to email him multiple times asking for his reason. Finally, he told me that the underwriter is only using my hourly pay and will not and cannot use any of my extras such as incentives, bonuses, over-time, etc. Then I asked him how much I would qualify for now and he said $60,000! I was overly frustrated at this point, so I decided to get a second opinion from a different lender. The new lender told me right up front that I would qualify for a $60,000 FHA 30 year fixed loan WITH my hourly rate, bonuses, over-time, and all extras I receive included in determining that loan amount. I feel that I was incredibly misled by the first lender and I feel that he is still hiding something from me because he said i would only qualify for $60,000 loan without all of my extras, but the new lender said i would qualify for $60,000 with all of my extras included. Something just doesn't add up there.

Then I asked the first lender to reimburse me for the cost of the appraisal and inspection since it was his mistake from the very start. He replied (through email of course) that he could not give me the money, except for the lender credit at closing if I decided to purchase a $60,000 house, which I am not going to. Had I known from the very beginning that I would only be able to afford a $60,000 house, I would have waited much longer until I could afford a more expensive house. What do you all think of this whole situation and what should I do to get my money back? I feel ripped off and now I can't even get this house that I was really excited about purchasing. I'm sorry this is so long, but I just wanted to fit in every piece of information possible. Thank you all for your help!

Last edited by Sunnypalm39; 01-25-2013 at 01:37 PM..
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Old 01-25-2013, 12:54 PM
 
Location: The Triad
34,088 posts, read 82,937,102 times
Reputation: 43661
I'm not reading your wall of text. Break it up into paragraphs and then edit it too.

Getting appraisal and inspection money back won't happen except in extreme cases.
These relatively modest expense professional services are the costs of engaging in the buying process.
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Old 01-25-2013, 01:31 PM
 
Location: Michigan
15 posts, read 87,180 times
Reputation: 16
Quote:
Originally Posted by MrRational View Post
I'm not reading your wall of text. Break it up into paragraphs and then edit it too.

Getting appraisal and inspection money back won't happen except in extreme cases.
These relatively modest expense professional services are the costs of engaging in the buying process.
I broke it up into paragraphs, but I'm not taking anything out of it. In order to give accurate and appropriate advice, you will need to know all the details. I'm basically giving you the whole story. You don't have to read it if you don't want to read that much, I can just wait until someone else is willing to do so. By the way, I'm not exactly sure what would be an extreme case, but this one seems pretty serious.
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Old 01-25-2013, 01:44 PM
 
8,573 posts, read 12,400,755 times
Reputation: 16527
Quote:
Originally Posted by Sunnypalm39 View Post
He told me that I was approved for an FHA 30 year fixed loan in the amount of $80,000.
Did you receive anything in writing? In not, this is your first lesson: get everything in writing!

(And make sure that you fully understand everything that you get.)
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Old 01-25-2013, 01:51 PM
 
Location: Michigan
15 posts, read 87,180 times
Reputation: 16
Quote:
Originally Posted by jackmichigan View Post
Did you receive anything in writing? In not, this is your first lesson: get everything in writing!

(And make sure that you fully understand everything that you get.)

Yes, we have all the copies of the mortgage papers he sent us. These include the amount we were approved for, the type of loan, monthly payments, etc. he basically only communicated with us through email, so we have every single email he sent us through the entire process. I did understand everything he told me in the beginning, it was just confusing later on because there were things he was obviously hiding from us.
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Old 01-25-2013, 01:53 PM
 
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,957 posts, read 22,304,764 times
Reputation: 6471
Red flags for me;

Flagstar, I don't think they have retail stores, all of their business is done through brokers. I might be wrong.
Underwriters
Mortgage Broker(s)

I'd take the mortgage broker to small claims court. you may not win, but you might also get a settlement.
File a claim with the MI licensing authority, again, not a guarantee of recovering money, but might be a decent lever.

Good luck.
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Old 01-25-2013, 01:57 PM
 
181 posts, read 439,406 times
Reputation: 110
"pre-qualified" and "pre-approved" seem to be two entirely different things nowadays.
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Old 01-25-2013, 02:05 PM
 
8,573 posts, read 12,400,755 times
Reputation: 16527
Quote:
Originally Posted by Sunnypalm39 View Post
Yes, we have all the copies of the mortgage papers he sent us. These include the amount we were approved for, the type of loan, monthly payments, etc. he basically only communicated with us through email, so we have every single email he sent us through the entire process. I did understand everything he told me in the beginning, it was just confusing later on because there were things he was obviously hiding from us.
That stinks. Depending on how much you want to do about it (you'll need to determine if it's worth it), you might try having an attorney write a letter to the bank--going over the head of the mortgage officer. You clearly relied on them and it cost you. You could even consider suing in small claims court--but, again, how much do you want to pursue this? It may be an uphill battle.

Are there any media personalities in the area who would be willing to publicize what the bank did? A little publicity sometimes goes a long way.
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Old 01-25-2013, 02:19 PM
 
Location: Michigan
15 posts, read 87,180 times
Reputation: 16
Quote:
Originally Posted by jackmichigan View Post
That stinks. Depending on how much you want to do about it (you'll need to determine if it's worth it), you might try having an attorney write a letter to the bank--going over the head of the mortgage officer. You clearly relied on them and it cost you. You could even consider suing in small claims court--but, again, how much do you want to pursue this? It may be an uphill battle.

Are there any media personalities in the area who would be willing to publicize what the bank did? A little publicity sometimes goes a long way.
I plan on talking to whoever is in charge of him about everything that has happened. The sad thing is, he's the senior loan officer. I figured he wouldn't agree to reimbursing me, so I was waiting for his email today about denying me the reimbursement and made this thread right after I got the email. I may go to small claims court, but you're media idea is a good one. Thanks!
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Old 01-25-2013, 02:22 PM
 
Location: Boise, ID
8,046 posts, read 28,469,020 times
Reputation: 9470
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.
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