Banks are evil too

Over the course of the whole buying/selling process, I had been checking with the banker. I called him about once a week to make sure everything was okay, that he had all the information he needed, etc. I was assured that everything was just fine, there were no problems, etc. We had even managed to lock in a rate of 4.625% on our 30-year fixed-rate mortgage. Two days before we were supposed to close on the new condo John and I went out to the CBS Home office and signed all the paperwork for the sale of his condo. An hour after we finished doing that, I got a phone call from our banker, Charlie, who said: "I have bad news. But don't panic, I think I can fix it." After all the stuff we'd been through so far, how bad could it be? Yeah, bad assumption. Apparently the underwriter screwed up and we should have never been told that we were approved for a 30-year fixed-rate mortgage because Freddie Mac had a requirement that 51% or more of the units in the condo building had to be sold before they would be willing to back a 30-year fixed-rate mortgage. Oh, but the even better news was that we were going to get an Adjustable Rate Mortgage at a lower rate (4.37%) for the first 7 years, convertible to a 30-year fixed-rate (for free) when the building is 50% sold but at current market rates. Yes, you read that right. We wanted a 30-year fixed-rate mortgage, but Freddie Mac said that was too risky so they offered us an ARM. And we were supposed to take all the risk as to what the rates were going to be at closing the second time, even though we had locked in a really good rate. I am so glad that we've learned what got us into this financial disaster! Obviously we told Charlie that we weren't willing to just take the ARM. We told him to figure something else out. After many calls back and forth trying to impress upon him that we really weren't interested in the ARM, he finally called us back at 7pm that night and said that he had put in for an exception with Freddie Mac and he had cleared it all the way through his boss's boss. So we had to wait.

In the meantime, John and I were feeling just a little stressed out. John had to be out of his place by Sunday at midnight, I had given notice on my apartment and had to be out by the end of the month. We hadn't even put John's place on the market until we had confirmation that we were approved for a loan. We had worked with an attorney who looked over the initial offer papers and condo documents for the condo. We really didn't want to resort to a law suit, but we felt like we should at least contact them and find out what sort of legal standing we had. Obviously we hadn't signed the final paperwork, but we had signed the good faith estimate which stated we'd been approved for a 30-year fixed-rate mortgage. We didn't know if that was enough to have a case or not (if we can't get things worked out). First thing in the morning, I called the attorney, Andrew, to see what he thought about the situation. I was expecting that he'd say it was something to the effect of bait and switch. Instead, he said that if we had to go to court, we would definitely win, but it would take at least six months to get there which didn't solve our current situation. He used the term "detrimental reliance". He said that because we made our decisions based on the information the bank gave us, we definitely had a good case. So, we had that as or absolute worst situation back-up plan. Our only option was to wait for Charlie to call back and see what he had to say.

We had the walk-through at noon for the new condo. I have to say it was really depressing walking through the place we had fallen in love with not knowing whether we'd have a loan at closing or not. We were in the car headed to get food and John asked me "So, if Freddie Mac comes back and says no, what's Charlie's backup plan?" I told him I thought Charlie was under the impression he could talk us into taking an ARM. Right as I finished saying that, my phone rang. It was Charlie who said that Freddie Mac said no. So, I asked him what his backup plan was and he said "The only thing I'm authorized to offer you is the ARM, convertible at current market rates when the building hits 50% sold." At this point, John was pretty angry. I gave him the phone and he walked Charlie through the fact that he didn't have a house anymore and the ARM was not acceptable because there was no reason why we should be required to take the risk since he's admitting the bank screwed up. John had previously suggested that the bank promise that we would be converted to a fixed rate mortgage within the seven years and regardless of what interest rates were at that point, they would buy points on the loan to get us back down to the rate we were promised. Charlie tried to explain that they just "don't do that". I still have yet to understand why they can't do that. They're a bank. It's not an illegal process. Anyway, Charlie ended up getting flustered enough that he told John that we could call his boss and talk to him if we weren't satisfied. At this point, after we got off the phone, we started going through all the names I could think of that were high up in the bank. That was when John realized that his parents knew the president of the bank. They apparently went to the same church.

John called Charlie's boss and left a message. We decided to give him a half hour to call back. Well, he didn't call back. So, we started calling every person I could think of who we knew would have the power to fix the problem. We were passed around to every secretary in the building. Unfortunately for us, the bank president was out doing charity work that afternoon. I managed to track down the name and phone number of the head of the lending area. We tried calling him but his secretary was very adamant that we leave him alone. Finally, I got so fed up at being passed around to all the secretaries that , I talked to my boss who gave me permission to leave early (bless his heart). I went down to the bank building and politely asked the secretary if I could see the head of the loan department (Mike). At this point, John had spoken with Charlie's boss who was apparently under the impression that we had a loan and everything was fine. It was already 3pm by the time he'd heard back from Charlie's boss and I wanted some answers. The secretary told me she didn't know how long it would be. I responded by saying that I was willing to wait as long as necessary. She hesitantly responded by telling me I could have a seat in the waiting area. I sat down next to another secretary's desk where I could see Mike's office. She was on the phone. After she got off the phone, she asked if I needed anything. I thanked her and politely told her that I had already been helped and I was waiting to see Mike. She then proceeded to call someone upstairs. Her end of the conversation went like this: "Oh, I know. Charlie's been down here all day. Apparently someone complained." "Ooh, that's bad!" "Well, he's been freaking out." I had to keep from laughing because I was sitting right there.

Shortly after eavesdropping on the secretary's conversation, Mike came out of his office to greet me. He had apparently been on the phone with Charlie's boss so he knew a little about what had been going on. But, he asked me to walk him through the situation. So, I told him about how we'd found this great condo, locked in a good rate, been approved for a 30-year fixed-rate mortgage, put John's place on the market, received and accepted an offer in a little over a week for John's place and then we got the news about the loan. He stopped me when I got to that part and said "I'm going to promise you, right now, that we will fix this. You will close tomorrow as scheduled with the loan terms you were promised. I'm really sorry this has happened. This isn't the way we like to run our business." (Hallelujah! Finally, someone who has the power to fix this!) He said he'd call at the end of the day and give me further information about the loan.

We did get the 30-year fixed-rate mortgage we were promised and we closed as scheduled. But I don't want to do that again for a VERY long time! I think John and I crammed enough stress into the buying and selling process as possible (none of which were things caused by us). I do have to commend Charlie. He showed up on time to the closing and, much to our surprise, it really wasn't awkward. We really didn't want to throw him under the bus, but he wasn't willing to make any concessions. I think he was only offering us what Freddie Mac said he could, rather than talking to the people at his bank to see what the local bank could do. But, thank God that's all over!

To everyone who is considering buying and/or selling a residence, I wish you the best of luck and I hope it is a smoother process than ours was!

Hopefully I'll have pictures of the condo up soon. I have ones I took from when we toured the place. I'll need to take some with our stuff in it at some point.