Nations Lending Corporation
Middleburg Hts,#2REBUTTAL Owner of company
Fri, June 10, 2011
Borrower understood completely that he did not qualify to buy the home he was interested in buying. He understood well before he refinanced his home and I will explain why.
Borrower was referred to me from a friend of his. Borrower called me and asked me if I he could get him approved to buy a new home. On October 22, 2009, I pulled his credit. After checking I told him he did not qualify to buy a new home because he currently had an FHA loan. FHA requires 30% equity in a home before they will consider a second FHA loan (website Zillow and county records showed there was little equity in his home). His debt to income ratio was too high to afford the new home himself. I also explained to borrower that even if he rented his house out like he suggested he would have to have a two year history as a landlord to use rental income per FHA, Fannie Mae, and Freddie Mac guidelines. He said he had a cousin that could buy the house as an investment property and rent it to him. He would then turn his current home into an investment property and do a home equity line of credit to pull out some money. We met with Borrowers cousin to get him qualified to buy an investment home. On October 27th I was given borrowers cousins information to pull his credit. Based on his credit I had him pre-approved to buy the investment property. I just had to verify borrowers cousin income documents and assets. I picked up borrowers cousin income documents on October 29th. Once this was done we submitted a loan for borrowers cousin to buy a home.
On October 22 Borrower decided to do an FHA streamline refinance on his current home. These documents are dated before his cousin signed documents to buy an investment home. Borrowers cousin signed documents on October 27, 2009. Borrower decided to refinance his home for several reasons. He originally wanted to pull about $10,000 cash out of his home but I told him he did not have enough equity and the only way to get any monetary benefit out of his house would be to do an FHA Streamline loan. The following are the benefits that Borrower received from his refinance that closed on December 1, 2009:
Benefits of Refinance:
He lowered his mortgage by over $70 per month (this was done by lowering his interest rate) His payment went from $769.00 to $699 per month. He paid off a judgment lien that was attached to his home and it was increasing in cost every day because there was interest attached to it. He had two months before he had to make a mortgage payment. He had a new escrow account set up for him for taxes and insurance. His real estate taxes that were coming due in January of $883 were paid. $500 was paid for his new home owners insurance policy that he wanted to switch to. He also had a refund from his current home owners insurance policy. The total additional cost added on to his mortgage was $6,965.39 of which a great deal was used to cover his bills which he had to pay whether or not he did have the loan.
Breakdown of Money to Borrower:
County Taxes Due in January was paid $883.96
New Home Insurance Policy he chose was paid $500.00
Hazard Insurance Escrow account set up $166.68
County Taxes Escrow account set up $401.79
Judgment Lien payoff paid off $800.00
Interim Interest until 1st payment due $317.54
TOTAL $3069.97
Money to Nations Lending Corp:
Origination Fee to Nations Lending Corp $717.00
Processing Fee to Nations Lending Corp $835.00
Funding Fee to Nations Lending Corp (underwriting) $684.00
TOTAL $2436.00
MIP to HUD (insurance charges to HUD) $1305.00
Title Fees Total $1134.60
Recording Fee to County $99.95
Credit Report Fee $20.45
Borrower told me with the two months between mortgage payments he would use this money to do some upgrades to the home he was hoping to move in to such as putting in new carpet and painting.
Borrowers loan closed while we were working on borrowers cousin purchase. He had his 3 day right of rescission to cancel his loan which he did not do.
On December 2, 2009 we ordered the appraisal for the purchase of 14932 Sherwood drive, Strongsville Ohio for borrowers cousin.
On December 18th I told borrowers cousin that we needed to verify where his down payment was coming from. He told me he did not have a personal checking account. After asking him 3 times over a 2 week period he finally gave me his personal bank statements. Unfortunately he did not have enough money in his account for the down payment. Borrowers cousin did get profit sharing but his past history of getting it was not enough to cover his down payment. Borrowers cousin did show us a $25,000 deposit from his business. We showed this to the underwriter but they had a problem with this because there are four partners and the bank statement showing where the money came from did not support $25,000 profit sharing for all four partners but only enough for borrowers cousin. I suggested that borrowers cousin take out a home equity loan for his down payment. This would be easy because he owned his home free and clear and was worth well over $200,000.
I called a couple of local lenders and went over the scenario with them. They said they could get an approval for a home equity loan very quickly. I even told borrowers cousin that any costs associated with the Home equity loan would be subtracted from Nations Lendings fees.
On January 5th I was told borrowers cousin had decided he would have to back out of the purchase of the investment property for personal reasons. I was told that his banker from 5th Third Bank who was working on a large 3 tiered business loan for borrowers cousin and advised him that it was not a good time to take on a new mortgage and additional debt. The business loan he was working on was too important and taking on any new credit obligations could jeopardize his business loan.
Some loans are harder to do than other loans. They require the cooperation from the borrower.
Borrower told us that he was unhappy about this. We had no way of knowing his cousin would back out of the purchase. We offered to do the purchase for borrowers cousin with no charges from us if he did go forward with the purchase. Borrower told us that if we could find a way to get him the loan to buy the home he would be satisfied with everything we did for him including the refinance of his home. This was told to me and again to another loan officer in our office, on January 20th.
I understand that Borrower is unhappy that he did not get to move into his cousins investment property, since he backed out of the purchase, but there is nothing we could do about this. His unhappiness should be with his cousin and not with us.
Nations Lending Corp has funded over a billion dollars in loans. We try to satisfy every single customer. Unfortunately sometimes there are things beyond are control in the loan process that hold up a loan.