Complaint Review: SunTrust Mortgage

We lived the American dream. We decided to become entrepreneurs and with a lot of hard work and sacrifice, became extremely successful. Our business was acquired after five years in operation by a public company. As a reward to ourselves, we decided to build our dream home.

We signed a construction to permanent loan with SunTrust in May of 2005. SunTrust had our lot and plans appraised, subject to completion, for $2.5 million. We only borrowed $1.6 million. We owned the lot free and clear. We had zero debt, perfect credit scores, and $900,000 in equity. The construction loan was supposed to be for 12 months. The bank had us sign a builder direct disbursement agreement which allowed them to pay the builder directly, thus taking us out of the loan disbursement loop.

It is now almost 5 years later, the house is sitting vacant only 60 65% complete, there are over $60,000 in mechanics liens, and all but a few thousand dollars of the construction loan has been given to the builder, Premier Construction, by SunTrusts loan administrator. When the builder realized there was no more money left in the construction loan, he walked off the project. We have since found out that the bank gave our money freely to this crooked builder and never made him accountable for it.

Our contract with SunTrust stated it would only disperse funds to the builder for completed work. The bank would charge us a fee to send an inspector to verify the completed work. Our original contract allowed for 10 draws to be paid to the builder. The bank funded 26 draws to this builder, often funding draws without an inspection. In addition, we have since found out that the inspector was never given our plans and specs, thus he had no idea of what to inspect, nor was it possible for him to determine if anything was complete. There are many items that the inspector reported a 100% completion percentage on, but unfortunately do not match the approved plans and specs. In spite of the inflated completion percentages in the inspection reports, the loan administrator chose to fund even a higher percentage of our construction loan than was warranted. At times the construction loan funds disbursed were nearly 20% higher than the percentage the inspection reports claimed was complete. This gap between percentage of work complete and construction loan funds dispersed was present during the entire construction period and the percentage of funds dispersed was always higher than percentage of work complete.

Florida lien laws state that when a lender receives a Notice to Owner from a subcontractor or vendor and the lender pays the contractor directly, the lender is responsible for getting lien releases. We asked our loan administrator many times about this and asked if we could see the lien releases. She told us that she could not fund draws without lien releases, that she was keeping track of them, and for us not to worry about them. We now know she never did this. Most of the time she got partial lien waivers stating the subs got partial payment, but she would pay the builder the full completion amount. This enabled our builder to use our money for other projects, including his own home. If the inspector verified that the work was complete, then the loan administrator should have demanded full lien releases before funding a draw. Instead, she would accept partial lien releases and continue to fund draws for other items and the damage just s****.>

By not following standard lender procedures concerning the handling of liens, SunTrust set our construction project up for failure from the very beginning. For example: Our contracted allowance for foundation work with the builder was for $120,000. SunTrust funded the builder $140,000 and did not get a full lien release for another 14 months after they paid him. We verified the subcontractor was not paid for over a year after he finished the foundation. SunTrusts negligence allowed the builder to walk around with our money in his pocket, comingle our funds with his other projects, and ultimately rob us and his other clients blind. During the 14 month period the builder had our $140k and had not been forced to provide a full lien release, SunTrust funded another 7 draws totaling almost $400,000 on our project. With this kind of negligence from the very beginning, the builder was almost encouraged to steal from us. Sadly, even after SunTrust overfunded the foundation by $20k, the foundation is still incomplete to this day! We are missing walls that are clearly evident on our plans that SunTrust has in its possession.  Although we were charged for these inspections, SunTrust had complete control of them. They ordered them without our knowledge and they chose the inspector. See how important it is for the inspector to have plans and specs?

We have shown the bank clear evidence of negligent disbursements including:

Multiple instances of funding for depositsour contract with SunTrust clearly states there will be no funding for deposits, only completed work.

Funding a draw based on a letter from the builder that stated our contract price had increased. The letter, on our builders letterhead addressed only to the loan administrator, did not have our signature on it and was completely false. This can only be described as blatant fraud, and was described as such by our attorneys in a mediation complaint to SunTrust.

Funding based on invoices for someone elses home.

Funding draws where the builder had let the builders risk insurance policy lapse for over a year.

Funding draws when the builder had let the building permits expire.

Funding draws WAY over the completion percentages.

Funding draws for WAY over our contracted amount with the builder Funding 16 more draws than our contract allowed for.

Funding draws without getting proper lien releases.

Funding draws without getting an inspection, ETC., ETC., ETC.

We kept asking SunTrusts loan administrator for help when she would send us a letter informing us, after the fact, that she had given our builder large sums of money. We would tell her that we had signed zero change orders and our builder kept asking for more and more money. In fact our bank contract specifically states that we had to get bank permission if we wanted to make any changes to our original contract. We made NO changes! We went in personally to the branch and discussed our problems with the administration of our loan proceeds with a supervisor and were assured that we would get a new loan administrator. This did not happen. This loan administrator was eventually let go and the branch was closed. We started dealing with the main office of SunTrust and a new loan administrator. She sent us our entire loan file, giving us access to the paperwork that we had never seen before. In this paperwork we found out how badly our loan was mishandled and how we ended up in such a terrible predicament. Our money is gone and our home is sitting fallow. Our new loan administrator said that she would have been fired had she handled our loan in a similar fashion. We have had sympathetic SunTrust employees tell us that they would get a lawyer to go after SunTrust.

We contacted SunTrust corporate with our evidence almost a year ago. They have done nothing to help us and even requested we get an estimate of how much it would take to finish the home. We had to pay $1,000 to a SunTrust approved builder to furnish the estimate and it was $853,000. Almost a year later that figure will have to be adjusted higher because of the damage that is occurring to the home while it sits vacant. We continued to make our construction loan payments on time, as we always did, up until SunTrust told us to get a lawyer. That was the last payment of our construction loan and they have now sent us a bill for the entire amount of the loan due in full. We cannot get a permanent loan because the house is barely over 60% complete.

This whole ordeal has caused us grievous harm. We have gone into serious debt during this whole sordid mess. We have had to incur the extra expense of renting a home for an extra four years while continuing to make our construction loan payments. We have paid about $200,000 in interest on the construction loan without having the benefit of having a home to live in, and we paid interest on items and work we do not have. The builder extorted money from us by threatening us with liens if we did not pay him for cost overruns. We demanded invoices from the builder to prove his claims but they were not forthcoming. We could not fire the builder knowing he was already paid large sums of money for incomplete work. We have incurred over $30,000 dollars in attorneys fees. Our attorneys appeared to be confident that after sending SunTrust a mediation demand outlining our complaint, SunTrust would have to make things right. At one point, SunTrust offered to mediate, but then withdrew their offer. We are no longer using these attorney's and are currently representing ourselves. Numerous other attorneys have advised us that we have an excellent case against SunTrust, but to litigate would require in excess of $100,000 and would likely take two years at minimum. Since SunTrust has deeper pockets than my family does, especially since our tax dollars bailed them out, we can only conclude that SunTrust wants to test our resolve, resources and patience and hope we come up short.

SunTrust knows that the longer they drag this out, the more financially devastated we become. We have tried to be reasonable and work with them privately without making this a public matter. We know of at least two other families conned by SunTrust and Premier Construction with almost identical circumstances, all with the same SunTrust loan administrator. In fact, one of the other families provided us with a copy of a letter their attorney sent to SunTrust stating their displeasure with the same loan administrator as us and that Premier Construction had misappropriated their construction funds. They went on to say they no longer wanted SunTrust to fund draws to Premier. This letter was received by SunTrust a year before we found out our funds had been misappropriated as well. So even after being warned that this loan administrator and this builder were not conducting themselves properly, SunTrust continued to fund our project to our detriment. The builder had his operating account with SunTrust so I assume this would have been an easy matter to investigate if they were so inclined.

Another interesting fact to our case is that SunTrust loaned the owner of Premier Construction over $600,000 for a construction loan to build his own personal house and it still shows in the public records as being unsatisfied. The interesting part is that the loan was made in May of 2007 and not one bit of construction has occurred on that lot. The builder owned two lots and proceeded to build himself an 8,000 square foot home on the other lot and got mortgages from other mortgage lenders using cosigners to qualify. It appears in the public record that the builder would probably not qualify on his own given his poor credit history.

If the above mentioned paragraph is not suspicious enough, it gets even better. Our project manager and Premiers operating manager was a man named Greg Campion. We had no idea as we dealt with Campion that he was a disgraced DEA agent caught stealing confiscated drug money up in Atlanta and was indicted on 17 counts of embezzlement. As he was awaiting sentencing, he worked closely with our SunTrust loan administrator. They both stated they were dear personal friends on many occasions. We learned that Campion often met with our loan administrator. Campion was the notary on almost all of our Builders Lien Releases documents required each time SunTrust funded a draw. Campion continued functioning as a notary even after pleading guilty to felonies and awaiting incarceration. As best we can determine, Florida does not allow convicted felons to be notaries. Heres where it gets really interesting: When Campion moved into his home that he purchased with the stolen drug money, the Department of Justice filed a lien for forfeiture on that same property. It was in the public records showing his indictment and the lien for almost a month before SunTrust gave Campion a mortgage on that same home. We will let you decide, but many public officials, attorneys, and even SunTrust employees have stated to us that there appears to be collusion between SunTrusts loan administrator and the builder.

I wrote a letter to SunTrust construction loan vps and senior construction loan administrators across the country. These SunTrust employees were soliciting construction loan business on the web. In the letter I outlined just some of the facts of our case. I did not identify the lender that had perpetrated these offenses in order to get truthful answers. The responses I got were unanimous in their overwhelming belief that our lender had harmed us. I even had one loan officer ask me Who was your lender, scams r us?

SunTrust has made many changes to their construction-permanent loan program in the last couple of years. These changes are commendable if they were made to prevent the kind of problems that we have endured. I know that when we started this in 2005 SunTrust and their competitors were working very hard to increase their footprint in the Florida market. Perhaps they grew too quickly and did not have the proper resources in place. If that is the case, then SunTrust should continue to make changes, but SunTrust should fix the problems that were already created! They are ruining peoples lives, and in my case, putting my young childrens future financial stability at risk. This I cannot tolerate! SunTrusts highly paid attorney suggested that we give the house back without receiving any reimbursement for all the money we have already invested in it. When SunTrust stands to gain all of our equity I might call that EQUITY STRIPPING and is the most egregious form of predatory lending I have ever heard of.

Now, in retrospect, I can only draw conclusions as to why this happened to us.

1. The bank was not aware of this errant employee that blatantly disregarded bank protocol. Now that they have become aware of it, they do not want to own up to it because of vicarious liability.

2. This practice was more widespread than just my family and the couple of others that I already know about and the implications of a public scandal would not bode well for investor confidence in this volatile market.

3. The bank knew that in lending to a golden customer with impeccable credit, that when the borrower found out that the money was all gone they would just modify their loan for a much higher amount (talk about a low credit risk, the borrower has already been qualified and has a perfect payment history. This borrower would have a huge financial and emotional investment in the property and would willingly increase their loan amount to finish the home incurring additional closing costs as well as hundreds of thousands of dollars in additional interest to the bank). We know of a couple of people that did just that. In fact we had to modify the loan once already for an additional $150,000. If the customer is not willing or able to modify the loan, the bank could take the house back with a tremendous amount of equity. I believe this is called asset based lending or equity stripping, just on a VERY large scale.