Holy cow. This is just one of those scenarios that I think only fellow BP members could truly appreciate the nonsense. And it was something that I'm absolutely on fire about. It was either vent here or lose my mind. So here goes.
I have been in the process of completing a blanket loan refi on 7 properties with one of the national blanket lenders (firstkey). This process has been one of the most difficult and time consuming loan processes of anything I've ever done. It has literally consumed a good deal of my free time over the past 2 months.
Imagine doing a 5-10 conventional loan with all the fannie mae guidelines and all the crazy underwriter requests. Now multiple that effort by 10. Thats how much time you're going to spend doing these crazy blanket loans with these companies. They want so much information its silly. And they want the properties repaired as well - no matter how trivial. I actually had to have the gutters cleaned at one house in order to get this loan.
So, finally, after 3 months of nonsense, I signed all the loan docs on friday. Interestingly enough, this crazy company has its own rules on closings too. You actually schedule a signing date to sign the docs. But the loan isn't considered closed (not even dry closed) just by signing the docs. The loan isn't considered closed until they receive the originals.
Ok. So now I sign on friday. Docs are overnighted to them. They receive on tuesday. I had to wait the additional days because of the weekend and the holiday. Ok. Fine. I'll get my check today.
Nope. At 10:30, I call and ask the title company if the file was closed and the deal was funded so they could cut the check. The mail I get back? "Call me". Lovely. How bad can it be?
Well apparently, the title company forgot to seal the envelope. Of the 100+ pages that were sent, the lender only received about 30 some. So now some of my business info is floating around who knows where. It is what it is.
But now I have to sign the docs all over again and wait til tomorrow. Jeepers. But only if it were that easy.....
No. Apparently, firstkey needs some crazy indemnification letter from the title company saying they will indemnify firstkey from any issues that may arise from this transaction. Lovely. Well, my title company's legal counsel says they won't do that and so now the entire deal is in limbo.
I get thru to the title company legal counsel and see if I understand what firstkey is trying to get from this letter. Then I send an email to everybody including firstkey saying that if firstkey just wants to ensure they won't get sued by me, I will sign the letter.
No response. The legal counsel from firstkey hasn't responded to a single email from me all blankety blank day. I'm calling my rep there and he keeps telling me they're working on it. And all I see the firstkey counsel doing is sending out emails with the photos of the fedex envelope. And the people on both sides debating whether the fedex tab has been set or not.
I've never seen anything like it. I can't get anyone from firstkey legal to explain to me why my suggestion won't fly. I'll sign the letter saying I won't hold them liable for any of my info getting out as part of this transaction and then we can move forward.
They won't even reply......
I am so close to wanting to walk from this deal just so i can take them to court for failing to respond and work thru the issue.
I also pointed out to them that what if fedex had simply lost the envelope. Are they suggesting they wouldnt' close unless fed were to give them an indemnification letter??? I told them we all know that wouldn't happen. So what the blank is their issue here?
And if they actually have one, then why aren't they telling me, the customer, what that issue is so I can address it. Is it for me suing them? I'll sign something waiving that. Is there some really strong reason why it needs to come from the title company? Tell me that reason and I can push back harder on the title company since they're the one I always use.
But this is just ridiculous. And firstkey's legal group's absolute unwillingness to speak to me about the situation is the most obnoxious example of a lack of business ethics I have ever seen in my life.
Some of the original docs got lose because the title company made a mistake. How in the world can we not get this loan closed now? 3 months and easily over 100 hours of my time and close to 7 or 8k in fees and other hard costs (repairs, etc). And a title company rep accidentally forgetting to close the envelope is going to blow the entire thing up.
And I'm sure some of you are doubting whether this deal won't close now. But the legal counsels on both sides have really dug in. The title company won't budge right now. And firstkey has yet to be willing to speak to me throughout the entire process - which makes absolutely zero sense to me.
I'm not the one that sends the docs in the envelope so it wasn't my fault they got lost. And even if I had the right to sue them for the docs getting out, why in the world would they not want to talk to me to explain the situation, explain their position and come up with some reasonable solutions?
But thats not happening. And the fact that it isn't suggests to me that they may just be moving on to legal defense instead of closing this loan.
And that is the kind of nonsense and ridiculousness that we investors have to deal with as we work with all these lenders. Most of em have no clue what they're doing and they're literally as dumb as a box of rocks when it comes to using common sense to solve any problem.
So there is my vent. An unsealed fedex envelope by the title company has literally derailed a 765k refi loan. Go put that in some investor seminar........
Wow! At least tomorrow is Hump Day!!!!! :) Hope it all works out @Mike H. !
Dude, Mike that is one horrible situation. That is seriously a crazy situation. Hoping you are able to get it all worked out. Just remember it is even in these situations that our character is built. :)
Apparently, the character that I'm building is one of dumbfounded, frustrated, and disgusted individual - at least from what is being thrown at me today.
I've seen some crazy stuff in my 8 or 9 years doing this. And I've had some crazy closing issues (before or after the closing). But its bad enough the mistake was made. And then its worse that we have this impasse on this stupid letter.
But the thing that is really galling me right now to where I'm about ready to really chew someone out is that the firstkey legal people simply refuse to discuss anything with me and aren't even telling me or the other contacts I have what is actually going on and why they can't figure out a way to resolve this issue.
I am literally seeing emails go back and forth between the title company and firstkey with pictures of opened and unopened fedex envelopes trying to make the case as to whether it was sealed and came open or whether it was simply never sealed.
Does it matter. No matter how you cut it, the title company is to blame here. They did not properly seal the envelope. Fedex told them that they are only supposed to put 30 pages in those envelopes to begin with. :-)
Maybe they should buy some tape..... But jeepers. Lets move on and just get the loan closed.
Sorry to hear about the issues you are having. I think it's very unprofessional of them to simply ignore you. I sure do hope everything works out.
Please tell me you are getting rate and terms worth it.
Sorry to hear @Mike H.
The good news is that in another month or two you won't even remember most of this as it will all be done.
Keep your head up @Mike H. Just another hurdle. I hope all gets worked out.
It came down to me needing a cash infusion. Just been buying a lot of houses over the last two years and even though my net rental income has gone up, I had a couple that I really came out of pocket on.....
So it was more about a way to get a cash infusion was the reason I did this deal. The terms are so. I'm at 5.7%, amortized over 30 years.
Ultimately, I pulled out about 110k and my mortgage payments only went up about $350/mo. Most of the ones I did were commercial loans. Better rates but amortization was 20 so the 30 year helped.
But for me, I was just in a place where I had to have that infusion or I would have been stuck for 6 mos to a year where I would have really needed to sit back and replenish. My fear was that this may be the last year of these deals though. And I've been averaging about 1 house per month for the past 2 years.
So a year off might be the difference in picking up 12 houses or none. And I'm getting oh so close to being able to make that call on whether the business can really support me and my family or not. The numbers are there (44 houses - roughly 10k to 11k net once these last two houses are put in service). But I'm not sure they're there if you look at being able to pay the bills AND to continue to feed more deals.
And, for me, I don't think I can ever consider quitting my job if it means not being able to do deals. Its just too big a passion for me to ever want to stop.....
So, long answer, longer. The terms are ok. I pull out a nice chunk of money and my net cash flow isn't affected much at all (350/mo - of which I can replenish with one deal). But the principal paydown is also taking a hit of 500/mo as well so the real cost is a bit greater.
And I wouldn't recommend this to anybody unless they were in the same boat. The process is ridiculously lengthy. Its 10 times worse than even a 5-10 conventional loan. And the residual effects include having to create a brand new entity to put these homes into - that can only be used for this loan.
Its going to be more headaches for me long term trying to manage my stuff.
But we do what we must sometimes.
Here's the update. Just got word from the lender that they agreed on my suggestion of having me sign a waiver indemnifying them from this fedex envelope mess.
So now I'm even madder. I suggested that over 4 hours ago. What the blank have they been doing all this time?
From what I've learned recently, they called the title company and were going back and forth on this stupid fedex envelope and getting the waiver from the title company. And apparently they hung up on the title company when they wouldn't budge and they actually told them they weren't going to do this loan.
What I would suggest is that, much like any sales company, the sales guys for firstkey are going to be fantastic. The rest of that company is an absolute nightmare to deal with.
If that legal rep had simply spent 10 mins explaining to me the problem and then letting me explain to her my solution, we would have had this put to bed over 4 hours ago.
Instead she spent several hours sending back pics of the fedex envelope and of other fed envelopes trying to show whether it had been sealed or not.
At the end of the day, they finally just listened to reason, took the advice, and we're getting the loan closed........
Just another day in the life of an investor.
And, oh, btw, I got another house under contract. First deal ever from a wholesaler. House is fantastic. Numbers are so so on this one. I'll be coming out of pocket again on this one. But its another great house that I am able to add to the portfolio.
And the first deal I can truly say was 100% due to BP. He found me on BP, asked me about another house he had in an area I won't do. And then I told him my areas and he came up with this one. We'll see if he closes. But he seems like he's on the ball so I actually do have faith in this one..... :-)
I've had hurdles before. This loan has been the worst experience of my entire investing career. And this crazy end to the finish line is exactly what I should have expected given how this process has gone with them.
And to point out to. This is the only purchase or refi that I've ever done where the loan could not close or be funded until AFTER the originals were received by the lender.
Does any other lender on the planet do that? I have never seen that occur on any deal or for any refi in all the years I've done this.
can't you sue them anyway, for damages?
Perhaps this happened for a good reason and you are being protected, although I know you aren't feeling it at the moment.
That was a lot of work you put in.
@Mike H. The fact that the lender requires the original documents to close the file is absurd. Scan and email. It has been over 15 years since Clinton signed into law legislation allowing for the legality of electronic signatures. It is completely absurd that this company is requiring the original documents, which is the root cause of this situation.
Wow! I wanted to scream with you just reading your story. I'm picturing someone at firstkey blowing up a pic of a FedEx envelope and printing it at 1,000% bigger...than getting out their magnifying glass to check for proper sealing. So ridiculous.
But at least it sounds like things are working out in the end.
Yea. It was unbelievable. My rep, who is the only one at the whole place that I can get on the phone, keeps telling me to hold on, that their legal dept is working on it and that they don't have time to talk with me because they're "working on it". And then I see emails coming across showing the pics of the fed envelope.
So then I'm even more upset. They have time to take pictures of the fedex envelope and other fedex envelopes (showing the seals, etc) but they don't have 10 mins to explain to me the holdup.
The funniest part is that 4 hours later they still ended up going with the thing I suggested to them from the beginning - just let me indemnify them. They don't get sued. I get to close. They get a loan.
Oddly enough, I actually didn't have any personal info in those loan docs anyway. It was all for this crazy new corporation that firstkey and all these lenders require you to create for their loans and that has no credit anyway.
But the title company sent their closer out to my house. I re-signed all the docs. And they went back over via fedex tonight. I actually told the closer to put some duct tape on the thing so firstkey couldn't get it open.... :-)
So we'll see if they have any crazy issues tomorrow. Stay tuned.
Wow, you had to wait 4 hours for an answer? You own 44 rentals and you're pulling over $100k out? I'm sorry for your situation man. That sucks. BTW, do you own any firearms? I'm just curious.
I didn't get an answer from them actually. They just sent me the waiver letter and told me to sign it and then re-sign the loan docs and have the title company send those tonight.
They never actually just came out and said, your idea will work so we'll do that.
Its that kind of nonsense that really irks me. They sat on that solution for 4 hours and then finally caved and just did what I asked from the beginning. It made no sense why they wouldn't talk about that as an option right from the get go. Its clearly acceptable.
They just thought they could bully the title company and the title company wouldn't cave. But they wasted a ton of time and then we had to scramble to get the docs signed before 5pm so they could go out overnight.
And the blankety blanks still never called me direct. They clearly will not get good reviews from me going forward.
wow that is pretty horrible. I'm sorry you went through all that and hopefully you will get this done soon. Thanks for sharing and I hope the venting made you feel better! Do you think there were any indications that these folks would have given you the run around or any problems at all or did you receive literally no red flags?
Geez, I need a tall glass of hard liquor after reading this (still smh @ title co forgot to seal the envelop and 70 pages were MIA - murder!). Please make copies before you have them sent off next time - just a thought. Hopefully it will be worth it when its all said an finally done. You have most certainly absolutely without a doubt earned success from this deal, imo. You will look back at this moment going forward, scratch your head and have a double shot every time, lol. Keep us posted.
Ive had to submit 11 sets of 1120s, 2 sets of 1040s, P&Ls for 26 Businesses, Projections for 26 Businesses, Actuals for 26 Businesses, Character references for myself, and each business, 3 months of bank statements for myself, and for each business, and prove over 1MM in gross sales for 2 years, just for a CREDIT CARD.
ONE..CREDIT...CARD. For 1 THOUSAND DOLLARS.
Trust me, I feel your pain.
The branch manager at my bank literally cringes when she sees me walk in, because she thinks Ill ask about my credit card LOL
The part that get's my shackles up is having to clean gutters and do other silly repairs to close the loan. You'd think a company specializing in blanket loans would be more investor friendly in that regard.
I would be careful with the waiver. I would only sign one that relates to the potential damage caused by the original documents being lost, not a general waiver about the entire transaction.
Yes on the indemnification of the lost docs. It doesn't cover the entire transaction. Just covering themselves in case my info were to get out and be used and then I'd sue.
In terms of copies, there were copies. The title company sent copies to the lender the day we signed (friday). But oddly enough, this lender (firstkey) does not close/fund their deals until they receive the originals.
Why that is I have no idea. Every other lender, seller, etc will consider the deal closed as soon as the docs are signed and they get the copies. Transaction is funded.
This is the only crazy company I've ever heard of that doesn't fund until they get the original docs. And wouldn't you know it, this is the one transaction that the title company makes a mistake and forgets to seal the envelope when they send it.
You would think fedex might check the envelopes for being closed too though or notice that there are papers flying all around......
Oh well. We'll see if it funds today or if there is any more craziness.
I've said it a million times. The deal isn't done until its closed..... And these guys have taken it to an all new low......
Wow - sorry to hear of your pain @Mike H. ! Been there (to a less extent) enough to not play with lenders at all anymore. I'm with @Mary B. and wanted a stiff drink after just hearing your story. @Logan Hicks - appreciate your story about the CC. Every time I play with snakes....
Thank you for bringing to light the pain (not to mention the thousands and thousands of fees) to optimize ones ROI through equity harvesting, equity-stripping, leveraging your assets or whatever the latest 'sophisticated' way is to grow. It's not free. It's not easy. The costs are high in dollars, time, and indigestion ANYTIME the words cash-out are involved. Cheers!