Complaint Review: First Guarantee

In early May, 2003, I received a phone call from a man named Pat representing First Guarantee Mortgage offering me a low-interest (5 to 5.7%) refinancing loan. He took some information over the phone and asked me to fax him documentation immediately--because, he said, the loan could close on May 21. I provided all the documentation requested, and he called several times to discuss the loan. I spent some time on my work history, and he stated that he would write it up in such a way as to make it attractive to the loan officer, in view of the fact that I had essentially been working for the same institution since 1991.

I told him up front that at present I was in an awkward employment position, having been placed by an agency in a job replacing a departing permanent employee. The company had told me that they could not officially hire me right away, but I had already been there two months when Pat called, and everyone was pleased with my work. Pat said that this would not be a problem.

About a week later, Pat called to inform me that my credit rating had dropped. I had no idea why this had happened, as my credit had always been impeccable. Moreover, claiming that I would be closing in three weeks (a 3-week closing is promised on their website), he instructed me not to pay my creditors during the month of May.

Because of the alleged credit rating drop, however, he added that this would make it more difficult to get the loan approved; nevertheless, he told me he was putting me in contact with a loan officer, Victoria Bruton, to complete the process.

Some time later, I spoke with Victoria on the phone and she assured me that, depending on the appraised value of the house, I would still get an excellent interest rate and that all of my debts would be consolidated. She reviewed all the documents I had provided to Pat and said I needed the appraisal next.

The appraiser valued the house at an attractive price of $192,000; however, it took four weeks for this appraisal to be arranged, because Victoria insisted on an appraiser of her own choosing. (An appraisal normally takes little more than a week.) Because of the excellent appraisal, Victoria said she could get 90% of the appraised value approved for our loan. This would indeed cover all my outstanding debts, with payout money included.

A few days later she called me and said that she had been told that First Guarantee was now only going to be able to manage 80% of the appraised value. Throughout this period, Victoria frequently telephoned me to go over payout amounts, and continuously reminded me how wonderful it would be when I was debt-free. Her manner was friendly and caring, and she repeatedly asked for my trust.

Some time thereafter, she called me again; now her story was that in light of the 80% figure, not all of my debts were going to be consolidated. I was also going to be switched to a non-documented, non-conforming loan. (A classic bait-and-switch.) My interest rate would therefore increase from the initially promised 5% to 7.99%--which was higher than the interest rate on my current mortgage! She, like Pat the previous month, also instructed me not to pay me creditors this month (it was now June), because, she claimed, the closing and payouts would be made very soon and by paying creditors I might throw off the loan officers figures.

I mentioned to her that I had been shopping around for other loan officers, and that I was very perturbed that after all this time and build-up, my debt was not, after all, going to be totally consolidated. She seemed shocked at this news, and said that if I was going to shop around she would no longer do business with me. This, of course, was classic coercion.

Victoria promised me that she was continuing to work on getting me a better deal, and this further delay (while she was supposedly exercising all her diligence for my benefit) continued for another two weeks. Eventually she did say that she could not get me the special deal that she had sought, but that at least I could rest assured that I would go to closing on Thursday, June 19.

On the day of closing, she told me that I might be running late because the powers-that-be had not yet approved a special exemption for me. It was my experience that a closing was only set when a loan was approved, and of course I was quite disturbed when she told me that this closing would not take place after all.

Moreover, as she was reciting the debts that would be cleared by the loan, my second mortgage, which had always been, and had to be included, in this kind of loan, had dropped out of the picture. I called this to her attention and she had no explanation despite my repeated requests. (The law requires that both the first and second mortgages must be paid as part of a refinancing loan package.) This created additional delay, such that another closing date (Friday, June 20) was also missed. She told me also that the addition of the second mortgage meant that they could pay even fewer debts on the consolidation.

By this time I had grown suspicious as well as exasperated. Victoria told me that I had come this far and that it was still a good deal. Did I really, she insinuated, want to start the process all over again with another outfit? (Clearly she was counting on my being in a state of exhaustion after all the delay and double-talk I had endured to this point.) Besides, she added, I would without a doubt be closing the following Thursday, June 26.

The local closing agent called me on that date to arrange a time, but telephoned me later that day to say that he had received no documents of any kind from First Guarantee and could therefore not close. I called Victoria and she said that this agent should have known that the documents were not documented until around 4 pm. The closing agent said he had other appointments and that there was a limit to how long he could wait for these documents. He asked me if I would prefer to close on Friday. I said I would not, because there was a three-day period to get these funds turned around and I did not want to miss my debt payments on the first of the month (of July). He called later and said he still had no documents and could not do it that night.

I called Victoria again, and she said he had no right to cancel this closing, and I said he had no documents and therefore could not close. She apparently called him and the result was that I had to set another closing date: the next day, Friday, June 27. (So far, not one thing promised to me had ever been done on time or as promised. I should also mention that when Victoria broke the news that not all the debts could be consolidated, she told me that she would get to work at once to do a second mortgage to carry that small unpaid-out amount. When I followed up to her on this, she seemed to have forgotten all about this latest promise and said that it could not be done.)

At the closing I was shocked to see, for the first time, that I was expected to pay a high broker fee as well as a percentage of the loan! It seems I was not dealing with a bank, but a brokerage firm, and a rather slippery one at that. Of course I had to find this out for myself, at the last moment; no one at First Guarantee had had the honesty to inform me of this fact.

But at least the closing was done, and the contract was signed. I had my loan. Or so I thought.

The following Monday, June 29, I received a call from the Vice President of First Guarantee, Leah DiVirgilio; in a hostile and accusatory tone, she informed me that they would not be funding the loan because, she claimed, I had misled them by not fully indicating to them that I was a temp not yet hired on a permanent basis. I told her that it was my understanding that a closing is not set unless a loan is approved, and closing is the final act. She maintained that I had attempted to defraud her, and when I tried to explain to her the complex facts of my employment situation, as I had explained them in great detail to Pat many weeks previously, she claimed that I was being evasive. I told her that they had had ample time to tell me that that document was not valid. I ended the conversation by telling her that I believed she was in breach of contract.

At the very beginning of this ordeal I had provided Pat with W-2 forms and current pay stubs. I had explained to him my history at, and with, the University of Virginia in various capacities, as well as the unusual situation I was confronted with in being placed in a temp-to-hire position by an employment agency. I had told him this because I thought my job status might pose an obstacle to the loan and wished to be as forthcoming and candid as possible at the outset. This made Leahs later accusations especially galling.

I should add that on Thursday, June 22, Victoria had telephoned me to tell me that the closing would indeed occur that night, but that she needed a proof-of-employment statement. I told her that I had already provided such documentation to Pat back in early May, as well as to Victoria herself, because I was required to fill in the time between my leaving the Cancer Center at UVA and being assigned to the Credit Union. I could not understand why I was being asked, yet again, to do this at the last minute. I asked my supervisor, Janine Williams if she would sign a verification of employment for my loan application. She signed the form and verified my employment, and then I showed her on the form that there was another area that showed expectation of continued employment. She asked me how she could appropriately fill this part of the form in, and I said I did not know, but that Victoria had said that it was needed only to verify some probability of my continued employment. I stated at the time that nobody can predict the future.

My supervisor decided to check with HR on that point, and Joan McGraw of HR told her that she was not to sign anything at all in this respect, and that I would have to take the form back to the staffing agency. I told my supervisor that the staffing agency had no idea how I was doing there or what my prospects most likely were. My supervisor was the person who worked most closely with me and signed my time sheets. Those on the brokerage side of my job, which is separate from the Credit Union, also could not state anything, because the hiring decision was ultimately with the Credit Union. Jeanine said that I should try the staffing agency.

Meanwhile Janine had crossed out her signature on the form. I told Victoria that this was the best I could offer on such short notice, and expressed my perplexity about her request, given that I had already covered this matter; I then faxed her the document. I waited to hear back from her to learn if the form was acceptable or not, but heard nothing. I heard nothing the following day, when I actually closed.

Then came Monday, and the aforementioned call from Leah.

Later that week I spoke with Leah again, attempting to work out a solution to our impasse to avoid the tedium of filing criminal complaints and a civil suit. The subject of my alleged withholding of employment information came up again. Give that this company will put nothing in writing or disclose email addresses, Leah was able to claim falsely, without fear of any written evidence to belie her, that Pat had never been told of my employment status. I told her that Pat and I had spent at least 30 minutes going over it, and that it was he who had filled out the application itself and chosen what to include, and that I never saw the application form itself until closing. In fact I saw no documents whatsoever until closing. I also expressed my belief that this whole process bordered on fraud.

Here, then, is a summary of why I consider First Guarantee Mortgage to be a scam outfit: The initial glib promises; the mysteriously increasing interest rates; the constantly worsening credit rating; the continuous lowering of my loan payout amounts; the month it took to get an appraiser; the 2.5 months it took to reach closing, despite their advertised promise (and Pats personal promise) to close the loan in 3 weeks; Pats and Victorias instructions that I not pay my creditors in the months of both May and June (a violation of Virginias predatory lending practices statute); the fact that they used the resulting degradation in my credit rating which they themselves had caused with their irresponsible instructions and promises as a further reason to increase my interest rate; the mysterious dropping-out of my second mortgage; and, finally, the simple fact that I closed on Friday, with a promise that all the payout checks would be in my hands on the following Wednesday (July 2), only to be told the following Monday that the loan was not going to be funded, in a blatant breach of contract.

By the way, as an indicator of this outfit's sterling integrity, let me add that a recent article in The Business Review (Albany), under the headline "Criminal Charges Against Head of First Guarantee Mortgage," reports that a Mr. David Silipigno has pleaded guilty to wire fraud and making a false statement in a bankruptcy court. First Guarantee claims he works for them only as a consultant (!). Now that's showing rigorous moral standards!

Arthur (writing for wife Jamie, the victim)
Charlottesville, Virginia
U.S.A.