THE MORTGAGE MESS

THE MORTGAGE MESS (First 2 para's are background -- if in a hurry, jump to 3)


I have had 12 previous mortgages, and I have never experienced a mess with the mortgage industry like the one I have survived over the past year. For the past few years I have been receiving almost as many mortgage solicitations in the mail and in my email as credit card solicitations. I finally decided it might be a good idea to take out some home equity, so I responded to a “pre-approved” solicitation from United Services Automobile Association (USAA) about a year ago. I have been a member of USAA for over forty years, and they have always been a good insurance provider – better forty years ago than now but still rated right at the top by consumer organizations. They have moved into many other services over the years and the organization generally has suffered but is still good. Still good except for the mortgage division. The whole experience with them was frustrating. I learned that “pre-approved” means nothing. The process dragged on and on and resulted in a mortgage offer that was about what one might expect if they had no job and no credit history – I told them to shove it. I’ll not provide the details now, but I mention the situation because I thing it is indicative of the present state of the whole mortgage industry.

Last summer, I responded to another solicitations by one of the many companies out there. The rate sounded good but the fees were high. At that time, I wanted to consolidate some debts and buy a few things, however, so I continued to shop for a loan. The company that owned the present mortgage was Citi Mortgage and my regular bank was Bank of America, so that is where I decided to look. Bank of America is where I first applied because they said they could get me more of my equity (90%) by way of a VA loan. I made application and paid them for an appraisal, and things moved along pretty well for about two weeks. The process just drifted off then, however, and no one could seem to figure out what the status was or what needed to be done next. Finally they notified me that they could not offer me a VA loan because my condo building is not qualified. I’ll not provide all the details of this attempt either. Suffice to say that ,over another three weeks or so, they were unable to convert the VA application into a conventional, and they WERE UNABLE TO FIGURE OUT WHY! They have different persons in different cities handling different parts of the process and, in my case they could never get the process straightened out and back on the track. They finally refunded my appraisal money and asked if I wanted to start over. That’s right, start over. One of the biggest financial institutions in the world could not find a way to change to loan from a VA to a conventional. They could only move to a conventional loan by starting again from the beginning. Anyway, Bank of America seemed too screwed up to continue to deal with, so I decided to move on to Citi Mortgage – that was a big mistake! What should have taken a few weeks took six miserable, frustrating, exasperating months with Citi.

The Citi application process went smoothly. I was happy with the rate and the fees. They would only offer 75% of loan to value (LTV) but that was enough for what I had in mind. The appraisal fee was a little higher than Bank of America but OK. The lady that handled the loan application was very competent and helpful. She moved things right along, including my getting a Power of Attorney so that my son, David, could sign all the final papers -- as I was now (late October) in Thailand. Unfortunately, she was the last competent person that had anything to do with my loan for the next six months. I have no idea how she keeps her sanity within that organization.

The loan next moved to a processor who, apparently, kind of keeps track of it and shepards it through the “underwriter” who sorts out the financial technicalities, and the “closer” who bring all the papers together and takes care of signatures and dispersing the loan proceeds. As with Bank of A., they are all in different departments in different cities. The processor’s contribution consisted mostly of waiting for me to inquire and then forwarding the dim-witted paperwork that I’ll talk about below – never bothering, of course, to check to see if any of the mistakes previously made in the papers had been repeated (they almost always were). I think there were a total of six applications sent to me – they all had mistakes. They finally just said to sign it anyway so that they could move the process along – just make sure that the figures were right at closing. Yup – they could not find a way to enter the correct figures in the application, so they wanted to leave it incorrect try to get it right in the closing documents. I finally threw my hands up and had David sign the still uncorrected application.

Right at the center of all this was the underwriter. She deserves special mention as being particularly brainless. Her concerns and inquiries began with her repeated inability to understand how a retired traveler could have a primary residence in which he did not spend a great deal of time. This came up two or three times. In the midst of being unable to come to grips with this primary residence concept, she was hit with the realization that my mailing address was not the same as the address of said primary residence. The idea of a traveler using a mail forwarder then confounded her for a few iterations. Meanwhile, apparently in an attempt to come to grips with these first two perplexing issues she had question about what my daily travel expenses are and whether I live with a girlfriend when in Thailand – I’m not sure what that last question has to do with getting a loan, but all this shows you what kind of pinheads are making loan decisions these days. about four months into the process, she noticed that the two Mortgages Instatutions metioned above had checked my credit. She then demanded proof that I did not already have mortgages with either of them. No one could make this up -- remember her own company, Citi, already held the existing mortgage on my property. Here is a person, with a responsible job at a financial institution, thinking that maybe another mortgage company might have provided me a new mortgage without paying off the old one -- and demanding that I prove that they have not. God help us if there are very many of this kind out there in the gene pool.

I had submitted two months of bank statements early in the process. They clearly exhibited my government pension. After a few months of processing, Citi decided they needed more current bank statements – wondering, I guess, if the Federal pension had been revoked. Shortly after receiving the second set of bank statements (now four or five months into the process) they decide they need my most recent (2008) income tax returns. I happened to have the first two pages of the return with me and sent them in my email scan. These are the pages that have all the totals. Not good enough. They needed all the work sheets. I authorized my CPA to provide them. There is no way to know if they have a set of standard procedures and just read one page one month and another page the next month or if they are just too feebleminded to know what information they need after examining the application. I guess the past two years have proven that the people in the mortgage industry are unable to figure out that persons without a job or a credit history are high risk borrowers. From that you can extrapolate, I guess, that they also just simply don’t know what constitutes a low risk borrower.

So a process that should have taken a few weeks finally results in a group of papers coming to my son for his signature in about six months. Low and behold the figures were, pretty much, correct. The were signed on Wednesday the 24th. There is a three day waiting period in which the borrower can change his mind and call it off. Three days would be Saturday, so all is well and the money will be dispersed Monday the 22nd (five days), right. Wrong! I started complaining Wednesday the 31st. On Friday, April 2nd, the part of the money that was to be wired to my bank arrived in my account. Is of Tuesday, April 6th, the money that was to go to my auto and travel trailer loans has not yet arrived. If I have the closing statement, I might be able to figure out how the money was distributed, right? Well they sent that statement to my condo (remember that they coulden't comprehend the concept of a mail forwarder -- apparently they still can't). Anybody want to bet that they are not charging me interest on the loan amount already?

As all this was going on, Cite ignored repeated requests to correspond with a supervisor, and my email complaint to on line customer service resulted in a totally irrelevant response about an "inquiry about my account."

All this is a testimonial to the sorry state of affairs in the mortgage industry generally and, in particular, Citi Mortgage, the flagship of the toxic junk lenders. They could likely not stay in business without the profits reaped by the overpaid risk taking clowns that helped bring the economy to the brink of disaster – oh, wait, those clowns are still there (and raking in their bonuses) only because of the big government bail-out. What a mess!!!

LATER:...........Here’s the update about my loan proceeds from the Citi mortgage fiasco that I described last week. You’ll recall that the electronic deposit to my bank occurred four days late and that the money for the vehicle loans had not arrived as of the tenth day from when the money should have been disbursed. You will also recall that they sent the closing papers to my condo address (an unused mailing address where no one lives). OK, you can see what’s coming – they has issued paper checks for the vehicle loans and put them in the envelope with the closing papers. The envelope my neighbor noticed laying by the front door of my condo. Mystery solved, and the reputation of the financial industry for feeblemindedness is preserved! The closing item for this debacle is the fact that the checks they have issued for the vehicle loans are written in the amounts that were correct last October.