Sorry for the long story below. I need to know if I have any options here other than to risk losing my 3% earnest money deposit and the most amazing house for my family.
My wife and I made an offer on a bigger house and we were very fortunate that the buyer picked us. The market is very competitive and we feel fortunate to be in escrow. It is very much a seller's market right now in the area we are looking for. Plus, we love the house and it is perfect for our growing family. My wife is pregnant with our third child.
I have never had a problem with any of my 5 previous loans for purchase, refinance, and a HELOC. With this company, Sebonic Financial / Cardinal Financial they are asking for way more documentation than I have ever had to provide. This is unusual for us but we've still been able to provide everything within 24-48 hours. We provided everything about 5 weeks ago and have followed up despite not getting much communication. We've periodically checked in to see if we were good and each time we were told, "yes".
There is nothing unusual about us or our loan. We're putting 20% down and the purchase price is $603,000. We have good credit in the 780s, low debt, good income and decent savings. We even managed to rent out our existing house before we move out, and that was hard to accomplish!
We had a 45 day escrow which should be a comfortable pace for everyone involved. Our escrow is scheduled to close on June 2nd. It appears that just now, they are starting to look at our documents.
This morning I receive an email that underwriting looked at our 2014 tax returns and that the IRS shows they are not filed. This is wrong! We absolutely did file and pay on time. They have our tax returns, they have our checking account statement that shows the money coming out to pay the IRS but "their computer" shows it isn't filed. I quickly search my inbox but it looks like I deleted the "e-file" receipt from TurboTax. So instead I take a screen shot to show it was accepted. Their solution is to call an 800 number (not a solution since their number wasn't working), go online (not a solution since their online site is down for maintenance), or go to a local office. It's 9am and I have to catch a plane to Las Vegas at 12 but instead I'm battling surface streets to get to downtown LA this morning to the IRS office. I'm then lucky enough to arrive in a room full of over three hundred people waiting in line and I'm the 2nd to last person before they stopped giving numbers and told people to try again Monday. While I get my number they are able to confirm they received my 2014 returns but that all I can get is a transcript copy and for that I have to wait in line. I'm told I am going to wait in line and they likely won't call me today (I only counted 4 people working behind the counter) but that if I wait all day I could get a priority number for Monday so that I could wait more on Monday and likely be seen then. This is all to get a transcript of a tax return which was filed and paid on time and there is absolutely no logical reason for me to have to go looking for this on a Friday the weekend before I'm supposed to close. Oh, and I missed my plane to Vegas and had to book another one for tonight. Finally after 4 hours at the IRS office and my wife and I exchanging emails and calls with them, they say underwriting will accept my screenshot and that they didn't realize the screenshot of TurboTax said "accepted". I admit I cried on the way out of that miserable, hot IRS room.
We are promised that there will be nothing more that they will need from us.. oh but about 20 minutes after I return home my wife calls me and tells me now they want a settlement statement on a parcel of land I own free and clear. And fortunately since I'm not in Las Vegas and I'm sitting at home stuffing my face since I skipped breakfast to run downtown this morning, well I've got nothing better to do than to dig through my file cabinets. Again another ridiculous, odd request that I quickly am able to fulfill and send back to them. It's past 5pm on the east coast and these guys aren't even going to look at this stuff until Monday.
I looked online and these guys have good reviews on the sites where they advertise, but honestly my experience is a lot more like the reviews on this pissedconsumer website below
If I had to scramble and get a hard money loan instead to close this deal, how do I start and how long does it take? What are my options now if on Monday they surprise me again with something else their "underwriting" needs to see.
- really scared
I know it is hard, but try not to take this personally, I have heard these horror stories from many people. For some reason, lenders have taken the stance that you need them and they take advantage of it. I hate that and am very sorry you are experiencing it now.
Starting over with a new lender will take some time. Considering you are trying to close June 2nd, that is really not enough time to get anything done, especially since this will be your primary residence.
Andre, if you have a good broker, they should help in dealing with your sellers agent to buy you time if you need it. But what you're describing is going everywhere and not really a symptom (totally) of a bad broker. The IRS is backed up on transcripts right now and not all are posted for lenders to automatically retrieve. Their only wrongdoing is that they pushed your file to the back of the queue since you had time on your escrow, that could have been used to track this down weeks ago. From what you're describing, you should be fine once the transcripts are retrieved. Make sure you ask them for a copy of the underwriting approval conditions so you can see for yourself what has to be done, since they're flaky.
If you need a bridge of hard money, expect to put at least 30% down and pay a couple of points to close. it should only take a week or so to close if you have to. I suggest you let the sellers know the IRS is slow on the transcripts and they should give you some breathing room. I can attest, it's a nationwide problem.
Sorry to hear about the runaround. I've seen this happen before, where the lender doesn't look at the file until just before closing. This won't help you this time but I'm thinking a solution might be 30 day closing, with an extension to 45 days if needed, that way lender will start to look at the file 15 days before closing giving time to get things done. Anybody had luck with something like this?
@Andre really there isn't much I can say that will help you in your current situation; however, I have some thoughts going forward with regard to what you could have done to prevent this from being such an urgent and important situation. These statements are meant respectfully.
The two things that I see as red flags are that you have one lender and that you take 24 to 48 hours to provide documentation. Also I didn't see where there was sound follow up, and if there was it wasn't effective.
Looking at each scenario -- take the lender first. Why do you only have one? If you are using traditional financing then a hard inquiry is ran against your credit -- this means that you can shop your loan around under that same inquiry. You got comfortable and stopped working for you. You did this when you piled on the complexities of another child and renting your current house out - which to me is when you should be working 10X as hard to ensure that this situation doesn't cause you more stress.
As for the lead time for documents. Why do you not have confirmation (even that screen shot) of taxes paid, properties settled and other significant documents filed hard copy and saved electronically in order to provide a lender this within 8 to 12 hours? Document everything - and then have said document in hard copy, on a hard drive and in a fireproof safe. This is not the first house you have purchased so you no doubt know what documentation is to be provided - so why aren't all of these docs set up to be expedited upon request?
My questions are to get you thinking about how you can consistently put yourself in a position to have options. Right now you have few options and are not in control of the direction of the situation. What happened here is you had a mortgage that 30 days ago was not urgent but it was important. Now it is both urgent and important.
You did not treat it as urgent AND important until now. The next time hold the lender accountable and if they aren't performing or responsive find another one. In this case, more action earlier may have helped you avoid this situation.
In the mean time -- what is meant to happen will happen. If this falls apart so be it. If it works out - that is awesome. Spend time with your family and wife, support them and stop crying. Let them know that this stress is not more important than they are and that they are your priority - not a house.
I hope that helps.
I have closed on 4 houses in the lat year and a half. I have come to believe that the underwriters - who get things at the last minute - need to feel needed and must find something - usually something nit picky and small - to earn their keep. I have gotten used to it. Have your lender extend your closing date - this is totally possible - it would be silly for the seller to start from ground zero again, i.e. find another buyer and then wait for that buyer's financing. I was beating everyone up on my last house because I had a team of guys ready to tear it apart and put it back together and they wanted me to wait andextra week. We got it closed on time and the house torn apart and put back together before the first payment was due on the mortgage. It is nerve wracking but once you realize it's the norm (as several people above note), maybe that will give you some breathing room psychically. Good luck! And let us hear back how it goes!
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I'm sorry to hear that @Andre Rosemberg . I've dealt with bad lenders before too. Many lenders are still tight with guidelines so the underwriters nitpicking isn't unusual. It's absolutely frustrating, but common. Try to get a short extension on your contract. The sellers don't want to drag the process out another 45 days any more than you do.
Yeah, they've gotten crazy lately. I've got good friends that are appraisers and they've got some (not so) funny stories about what the lenders come back with them for.
Hard Money wont make sense for you I wouldn't think. Most HML's wont do owner occupied because of the different rules and licensing, plus paying 3-4 points on $600k would hurt. My suggestion would be to go to the seller early and explain the situation, offer additional earnest money for an extension (with a financing contingency), then shop the loan some. You're talking a jumbo loan, so your options are somewhat limited, but I'd let the mortgage broker/lender know he's about to lose that fat commission if they dont get their act together. Money is a pretty good motivator. 45 days should be plenty these days, most are done in less than 30.
I'd definitely be in communication with the seller's agent about what's happening and request an extension with plenty of documentation that you are very qualified for the loan. Believe me, they are eager to get this thing closed sooner than later and they know how long starting over will take and will work with a qualified buyer if they see you are trying. They have a lot of influence with their sellers.
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