Mobile Homes

Overbearing Banks: Here’s the Story of My Bad Loan Experience — What’s Yours?

Expertise: Mortgages & Creative Financing, Landlording & Rental Properties, Business Management
26 Articles Written

I've got a quick story for you about a demanding bank that holds a small residential loan of ours and wanted to see if their practices are more common than I had initially thought.

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We were able to refinance a mobile home and land property in November 2013 with a local credit union. This was a $28k mortgage with an 80% LTV, 6% interest rate, and 8 year term, which are fantastic terms for these types of properties in our area.

Everything closed smoothly.

We didn’t hear from them again until October 2014, when we received a letter that asked for annual financial statements.

Financial Statements

It seemed odd that the bank would ask for financial statements on such a small residential property, but the mortgage documents clearly stated that these annual statements were required to be sent out and that failure to do so could result in the bank declaring the note to be in default. They could then require the loan to be paid in full or foreclose on the property if payment wasn't received.

Obviously this seems like an extreme scenario on a loan that’s in good standing. Very few banks will call a mortgage due upon the transfer of the property so long as the note is in good standing. It’s even less believable they would call it due for missing financial statements.

As it turns out, we had already sent financial statements for the year in trying to get another property refinanced. After reminding the bank of this, the matter was resolved for the year.

Related: Confessions of an Ex-Banker: How to Get Your Next Loan Approved, Guaranteed.

However, we received another letter in November 2014 that our insurance deductible was above the required $500 limit.

Insurance Deductible

When it comes to insurance for our rental properties, we prefer to go the high-deductible route with lower premiums and then only plan to file claims when catastrophic damage occurs. Mobile home insurance tends to be much more expensive than its site-built counterpart. The difference in the annual premium between our current deductible ($2,500) and the $500 deductible was $350.

This amount is not gigantic by any means, as the property still cash flows, but as long as we have sufficient coverage on the home, why would the bank care? We had the same insurance policy when we closed on the refinance in November 2013, and nothing was said about our deductible.

After combing through the mortgage documents, it was clear that the only insurance requirement was having enough coverage. The deductible was never mentioned.

Related: The Investor’s Complete Guide to Filling Out a Successful Loan Application

We emailed the banker who had sent the letter and asked her to show us the maximum deductible requirement in the signed mortgage documents.

She never was able to find the documentation, and after getting her manager involved, they decided to drop the issue. The last email from the bank said that they were basically doing us a favor by ignoring the deductible issue and that if we are able to secure any new mortgages through this bank, we’ll be required to have the lower deductible insurance.

Despite my complaining, I’ll probably still work with this bank again due to the cheap money to be lent and the fact that very few banks in my area will lend on mobile homes.

Have you had any similar experiences with overbearing banks?

Leave your stories below!

Aaron Kinney has been investing in mobile home and land properties since 2011. He writes about this occasionally at and helps ...
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    Karen Rittenhouse Flipper/Rehabber from Greensboro, NC
    Replied almost 6 years ago
    We have a lot of stories with overbearing banks which is why we haven’t used a bank since 2008. Here’s the deal with banks, they loan you the money – they get to make the rules. And they get to change the rules. And, if you borrow from them, you have to play by their rules. My next door neighbor is/was a huge commercial investor. He put in strip malls with grocery stores as the anchors. He lives in a 7200 sq.ft. home and was hugely successful. Until…. The bank he had his commercial loans with decided they were getting out of commercial. He got a notice that they would not be renewing his loans. His house was tied to one of them and they would not separate it out. And, they did not give him time to find and process with alternative lenders. He lost his shirt (and his home) and had never been late with a payment (his story, at least). So, no, your story is not unusual. And be sure to read and understand the fine print before you sign because they can come back at anytime with their requirements (which are many). Good luck to you!
    Aaron Kinney Real Estate Investor from Lexington, South Carolina
    Replied almost 6 years ago
    Wow, that’s a crazy story Karen. Reading the fine print is key!
    Replied almost 6 years ago
    I had a similar situation a while back. The loan had the same requirement to show financials each year. Year 1 I forgot but year 2 I got a phone call from an obvious new hire telling me I had to produce the statements required. Being busy with other things I told him to just take the money from my account and pay out the balance due. He had to check with his supervisor before he could do this. I told him to go ahead and to let me know when they would take final payment. A couple days later he called back to say the loan had been paid out but… they would still need the required financials as per contract. I reminded him we didn’t have a contract anymore and then told him next time I needed money I would be more than happy to bring them in. He then got very demanding to which I told him to have a nice day and hung up. I never heard back from him and have had several more loans from the same bank.
    Aaron Kinney Real Estate Investor from Lexington, South Carolina
    Replied almost 6 years ago
    Thanks for the story, Gerry.
    James Syed Real Estate Broker from Mount Olive, IL
    Replied almost 6 years ago
    Before I got to my current lender, I came across some really bad lenders. I would mention a couple here, I had Wells Fargo loan officer gave me a preaproval letter for NOO (non owner occupied) loan and right before the closing, told me that I would have to live in one of the 4 units that I was buying. I spent over 5 months with this loan officer for all this. The second one, I had a mortgage broker (after he gave a preapproval letter), said I had to pay him 4 points in cash and he wouldn’t mention that anywhere on HUD either, I knew it was criminal. I could have reported him to my state’s appropriated department for mortgage brokers, but I didn’t. Take away home message is, there are good, very good and of course bad lenders out there. Make sure to pick a very good one, take your time and investigate.
    Jeff Arndt Investor from Pittsburgh, Pennsylvania
    Replied over 5 years ago
    I know the FHA process can be very arduous upfront, however I have not heard anything from that bank or any others besides that the note was sold to another institution – standard stuff. At the end of the day I can’t really blame the banks for the actions that they take these days. In 2008 their practices were way too lenient, now the pendulum has swung in the other direction and the processes may seem too strict at times. Hopefully they settle out in the middle somewhere. As for you first statement of the post, I have not had to deal with these extra requirements after closing. I hope they go smoothly for you.
    Jerry W. Investor from Thermopolis, Wyoming
    Replied almost 5 years ago
    I have had to do financial statements every year for every bank I have borrowed with. My worst story for me was my partner made an offer with non-refundable earnest money. It was a special deal. I arranged the financing and got the rates and the points up front. I negotiated a little and went with the local credit union. The day of closing as we were signing papers I said wit, this loan is 2 points higher than what we agreed on. The banker (the President) said yes, I forgot that we charge 2 points higher on mobile homes. He also charged an origination fee that was never mentioned and was 50% higher than I had ever paid before. It was too late to go to another lender so we signed. Thirty days later the loan was refinanced and went to a different bank as well as all of accounts. There was no way the banker did not realize he was 2 points higher and not have time to tell me before closing. I had one prior occasion where I had been taken advantage of by the banker that I had chocked up to an honest mistake. He was eventually fired from the bank for ethical reasons. I let the bank know why I moved my accounts, but assumed they didn’t care or the board never knew because he was the President. I hate dealing with folks like that.
    Aaron Howell Investor from Crozet, VA
    Replied almost 5 years ago
    I went under contract for a house in another state. After 10 weeks under contract (and out of contract) we close tomorrow. The secondary loan officer at Citizens Bank (Ohio) has never returned one of my phone calls and insisted that I wire an extra $13K to the title company because the bank required certain “liquid reserves” and that the title company would promptly wire it back. I resisted and argued that what was the difference of my $$ in my account versus a 3rd party’s account. She couldn’t answer. The Title Company had no clue what she was talking about either.