Complaint Review: Rhema Investments/David Manning - Baton Rouge Louisiana

In my thirty years in the mortgage banking industry I have never experienced the complications and disasters that occured while processing the financing of multiple commercial acquisitions for this borrower beginning the summer of 2005. First and foremost, all the monies paid to Rhema Investments LLC, has been offered back to him several times, the last within 30 days or so. The most recent time I personally made the offer to his attorney at which he rejected claiming the borrower believes he would have made four times that much by now on the amount paid to Rhema. During a year and half period the approximately $25,000 paid to Rhema, as agreed to in advance under contract was 25 basis points (100 basis points equal 1%) of the loan amount as our processing fee. The normal origination fee of 1% is paid at closing from the loan proceeds and the twenty five basis points already paid, is deducted from this 1% origination so the total compensation is 1% and only upon a successful closing. Therefore, only a small portion of the origination fee, 25%, is charged in advance to the borrower to cover the real expenses and labor in the due diligence of a commercial transaction. This is discussed verbally and in writing before the borrower is ever asked to put up any money. All of his files were submitted to underwriters and pre-approved before fees paid as well. All of the pre-approvals were real and two of the properties were lost to Hurricane "Rita", three of the properties appraised for 50% of the purchase price (all of the same project) by his appraiser, and one of the first ones was fully approved and waiting to be closed when the borrower decided he would rather put down 10% instead of the agreed upon 20% as per the purchase agreement. It was after this event, which I accepted, that he requested I "roll" my fee into the next one. It was a mistake but I agreed. His agreement in writing on the purchase agreement was for a 20% downpayment of which my fee was based upon and my service successfully provided. The loan should have closed and months later I discovered he had closed the same exact loan with my own institutioal investor, Silverhill Financial, but used another mortgage firm to process the transaction. The borrower wanted to reduce his down payment to allow for a large deposit he had placed in seller's escrow for a three building project acquisition. This deal was pre-approved, processed fully, appraised and the value was half of the purchase price according to his own appraiser. Our last project, a large apartment project with eight buildings was slowed down considerably, due to un-disclosued deferred maintence (necessary repairs) with one of the eight buildings leaning and unstable and had to be repaired. This created approval problems as well but the loan still would have closed had the borrower not have cancelled. This is a very short summary of a year and one half. The offer to refund was not because I believed I had misrepresented my borrower but simply because he did suffer a loss and had very unusal misfortunes. No money was "taken" from his family as the borrower represented himself as a businessman and an investment advisor professionally employed in mangement with one of the largest brokerage firms in the world. It was the only reason I accepted him as a borrower client in the beginning due to his never having financed anything over a residential four-plex. I respectively asked him twice to find another representative to help him in the commercial financing world. It can be expensive, and very riskey and I did not ever accept a loan where the borrower had not done this before. It was another mistake. Lastly, he was referred to me by another customer which is how I obtain all my business. I never advertize and work by referral only. I have been in the business since 1981 and made my first commercial loan in 1982. I am a past president of a multi office mortgage banking firm, created and managed turn-arounds and start-ups and portfollios and have relationships from those associations and years of experience. After much experience with this borrower over the phone I did not want my investors to endure him. He constanly called me all through the day for a year and half and demanded time and attention I had never experienced in thirty years of business. Therfore, I did not release the true identity of the underwriter. It is understandable how the borrowers experience is very painful for him and his family. This is a sad experience and the refund has been offered due to the extraordinary circumstances. However, it is unreasonable and unfair to demand four times as much. During this period I moved my office to another state into a joint venture but it had nothing to do with this borrower. My health which is my personal business, was in a bad state at the time and still is a challenge. I have had many hospital visits and many ups and downs physically. David Manning, Director (C) (909) 953 6827 (O) (909) 476 4020.