A little over a year ago, I realized it was time to start looking at options to refinance the mortgage on my place. I followed the rates and loan packages with some regularity for a few months. In June 2010, I locked into a rate that was a full percentage point lower than my current rate and the other conditions were also decent. Then the nightmare of bank absurdity began. While my loan officer was nothing but helpful and conscientious, the same cannot be said of the bank as an institution.
The rate was locked in for three months. I was told it could take that long because the bank was backed up. So far, not so bad— I’d learned from previous loan experiences not to take these things too seriously. I was sent a package of disclosures, pages and pages of bank-CYA. I let those sit, and that was my one mistake. More than two months after submitting the initial paperwork, things got hot and heavy, with information sought by the bank, some of it redundant with what I’d already submitted some new, and I delivered all that. But that first batch I’d set aside— came back and bit me. The bank sent a notice that I was missing that material. I didn’t even see the letter (being busy, a big stack of unopened mail had accumulated), and I never got a call or e-mail. Next thing I know, they’ve cancelled the application. So it’s OK for the bank to do nothing for two months, but my delay of about ten days is unacceptable! And that, for something that isn’t even substantively relevant to my qualifying for a loan (it’s not my credit score, payment history, income, savings, etc.).
I was furious, and had to wait one month (more bank rules) to start anew.
This worked out in my favor. Mortgage rates were going down, and I got an even better rate in early November. Great for me, but someone, somewhere, is getting less money. So the bank’s absurdity cost someone (not the bank, because it turns out they sell most of their loans and make their money by playing the role of middle-man and just collecting monthly payments). The day after I locked in my rate, the trend reversed and has been inexorably upward since. Of course this meant submitting the same account and other application information all over again, and once again, silence from the bank for a good two months.
Then all of a sudden, the bank wants this, that and the other thing. I live in a condo, so they wanted me to waste money on “walls-in” insurance. I had been told this, so I’d gotten my quotes and wanted to get coverage as late as possible so as not to waste any more money than I had to. I was told they needed evidence of coverage, which I provided. Then, as we’re getting sown to the wire, they wanted proof of payment, IN ADVANCE. I wanted to have it start the day the loan closed, but had to scramble to get it done a whopping four days sooner.
All along, most of those in the bank’s underwriting department seemed to have a very unhelpful mindset. I’d call, asking a question and they’d respond by e-mail, or vice-versa. I would find things out by dumb-luck, instead of being told “you must provide…”. But what topped the list of obnoxious absurdity was the bank’s requirement that I pay THE BANK my property tax, rather than directly the County.
Why you ask? Well I don’t know the setup in other jurisdictions, but in LA County, property taxes are paid in two installments. The second is technically “due” February 1, but not late until April 10. So, guess when everyone pays their second installment… But, in its infinite wisdom, the bank does not want to loan money to anyone who has debts that are due. So this created an artificial deadline of February 1 to fund my loan because there was NO WAY I was going to expend that kind of money earlier than I’d budgeted for it, and I told them so. Now the scramble was REALLY on. But the incommunicativity of the underwriting people kept right on going. If I didn’t call, and occasionally have to escalate my followups to supervisors, I wouldn’t have learned of the things I had to do in a timely manner.
And then, the utterly absurdEST requirement hit. A letter of explanation was demanded of me for some of the deposits made into my checking account. This might even have been reasonable if most of those deposits weren’t my regular, bi-weekly paycheck, of which the bank had copies (at that point, I think it was at least six different one, if not eight, between the two rounds of applications). How’s that for utter lack of common sense?
Ultimately, things worked out, but with a lot of needless grief along the way. As my loan officer reminded me, it’s not my “tight” to get a loan. Fair and true enough. But why is so much nuisance necessary? Well, it’s because the banks practiced utterly reckless loaning for a decade or so leading up to the real estate crash that is still choking the U.S. economy. The banks and those on their staff who had NO familiarity with or utter disregard for ethics made a killing. But now that they’re being watched, we, the average people who did not benefit from their recklessness are being required to pay the price in annoyance, dollars, and inability to make mortgage payments because refinancing is now out of reach.
Ultimately, those least aware of the U.S. housing cycle suffered and are suffering the most, and that includes many Armenian immigrants who arrived in the country during a time of what seemed like endlessly and rapidly rising housing prices.
Through all this, the topmost management of financial institutions, unchastened, are collecting obscene bonuses once again and, in Washington, DC spending money from the bailouts to fight, lobby against, necessary regulations of their (very human and expectable) greed-based practices.
Give your congressional representatives a piece of your mind. Let them know that “regulation” is no longer a dirty word, but rather an ABSOLUTE necessity.