Sweating the Small Stuff

March 19th, 2011 — 7:20pm

So why bother worrying about a few hundred dollars here and there? It’s a lot of work to fight with an organization, especially a large one that’s not particularly reputable. And in the end, there is a good chance you’ll get nothing for your work. If you spend 40 hours trying to recoup $200, you’re making less than minimum wage.

The most important reason to fight back is to make the leaders of the organization think twice before creating a culture of ripping off the customer. If the customer is apathetic, there is nothing to stop a company from taking its customers’ money from now until the end of time. And the people who work there understand well that there is not a lot of incentive for the customers to fight (read lawsuit) over relatively small amounts of money. On the other side of the equation there is a lot of incentive to steal a little here and a little there. If you have a lot customers, the volume can quickly add up to millions.

Another reason, though, is that small amounts of money do add up over time. Suppose you pass on an opportunity to recover $1000 per year for 50 years. This isn’t really unreasonable. It’s probably not far off from what I’ve lost in the past few years either due to incompetence, mistakes, or outright fraud. Assuming 8% interest in the stock market after inflation, the present value of that money is about $13,000. The accumulated value 50 years from now is well over $600,000. That’s three Harvard educations! How do you feel about that $1000/year now?

Comment » | Uncategorized

Take Caution with New Technology

March 14th, 2011 — 9:21pm

When I was in high school I needed a method of backing up data. Standard 3.5″ floppy disks were too small. This was around the time that zip drives were becoming popular. I bought a Sony HiFD thinking I was being clever because it was backwards compatible with 3.5″ disks. It never worked correctly. Within a year or so, it vanished; everyone was using zip drives.

Since then I’ve decided I don’t want to be an early adopter. Don’t get me wrong — I love technology. I just don’t want to be the one to suffer through all the bugs and failures. I usually prefer to buy the previous generation of technology. That way I know it’s at least somewhat stable.

A few years ago I was bitten by a similar problem. I replaced my thermostat with a programmable ritetemp. It only cost $50-$60, and it was almost entirely electronic except for a few buttons. I wasn’t really worried about it failing. Due to problems with my heat pump the programmable features were never used after the first month following installation.

For the most part it worked for about two years, although all the features confused some of my roommates. Then it failed. Actually, it appears to me like it’s still working, but the HVAC guy who replaced it said it was the cause of the heat not turning on. I estimate the installation, diagnosis and re-installation, plus the two devices cost about $500. And I got absolutely nothing for that $500 except another (non-programmable) digital thermostat that might fail. The old one had probably been there since the house was built in the 1980s. The cost of the device was no big deal. The problem was the labor.

If you’re going to install new technology (or even old technology) in your house or your car, you have to consider not only what the cost of installation is, but what it will cost to get it replaced if it fails. If it’s not broke, don’t fix it. So often, it’s true!

Comment » | Caveat Emptor

Check Your Receipt

March 13th, 2011 — 2:59pm

My parents meticulously check every penny of every purchase on the receipt. The compare the receipts against the credit card statement. They check utility bills, etc. And they are frequently finding mistakes.

I rarely check receipts and bills closely. I understand that I’m probably being slightly overcharged on a fairly regular basis, but I have decided that the time and energy it takes to carefully audit every single receipt and bill is not worth the money it might save me. On the other hand, I do attempt to at least make a quick estimate of the correct amount of the receipt or bill. It takes only a few seconds to decide whether or not the total is at least in the ball park. I usually spend about 30 seconds scanning down my credit card statement to make sure there is nothing suspicious on there. Twice I’ve discovered that I was double charged. The first time, I disputed the charge with the bank and was eventually credited that amount. The second time, I called the company and they credited the amount back to my card. A few seconds of work can save you money.

Comment » | Caveat Emptor

Banks Behaving Badly (continued)

March 12th, 2011 — 8:16pm

See last post. First they made the claim that they had already offered to reduce my total points from 4.125 to 3.5, which wasn’t true. They then offered to reduce the points to 3.625. Even though this was not as good as what they were offering on their web site, I obviously wasn’t going to get anything better, so I took it.

The next day I was told they had relocked at 3.5 points. They were apparently so disorganized that they cost themselves .125 points. I received the new rate lock agreements for loans at 3.25% and 3.5 origination points, which I promptly signed and returned. As usual, they didn’t bother to correct any of the dates on the paperwork they gave me. In addition, the loan amounts still appeared to be wrong, but they were at least close to what I believed the correct amounts would ultimately be. About two weeks later, my loan originator again sent me the same rate lock agreements but changed the points to 3.625. I complained; they told me they would honor the original agreement of 3.5 points that was already signed.

It’s important to understand at this point, now almost three months into this refinance, that I still did not know how much money I was going to have to bring to settlement. I told them I needed to know the amount a few days ahead of time because it takes time to move money from one account to another. I received the following response:

RESPA laws require that we have the final numbers to you the day before settlement. Unfortunately we will not be able to accommodate your request to have the package for review 3 days in advance. You’ll need to make other arrangements for bringing funds to the table.

As you can imagine, I was pretty upset about this, but at least they were telling me that they were bound by law to send me the salient information at least 24 hours before settlement. I told them that I would hold them to the loan amounts specified in the rate lock agreement.

The loan amounts given were:

[address and loans removed]

3.25% @ 3.5 points (includes origination fee)

This is what I will hold you to. These loans should cover most or all
of the closing costs.

They responded:

We’re more than happy, if not legally obligated, to honor the rate and points on your signed lock-in agreement.

I should have followed up on this response since the amount of the loans was not specifically addressed. However, given that this was an immediate and direct response to the very clear email above, I felt that they had confirmed (and stated that there were legally bound by) the amount of the loans we had agreed to in writing. So I was satisfied.

On a side note, a few days before this exchange was going on, NASA FCU suddenly started hounding me for further paperwork: verification of employment, PUD documents, and questions about previous loan applications. They ignored me for weeks and then, with less than two weeks before settlement, they suddenly started demanding paperwork. And it wasn’t easy to get. The homeowners’ association wanted to charge me for some of the electronic documents. After an uncertain delay, and a nasty email from me to the HOA, this was resolved.

The day before settlement, I asked NASA FCU to send me the closing paperwork. As they noted in the quote above, the law requires disclosure of the HUD-1 at least a day in advance. As usual, they ignored the law. The next day I talked to my loan originator. He refused to send me the closing paperwork and told me I had to contact the title company (actually my settlement attorney) to get a copy. I did, however they had only received what they needed from NASA FCU the night before, and thus could only send me preliminary versions of the HUD-1. I never did see the rest of the paperwork before settlement.

The attorney’s office sent the HUD-1 estimate. The loan amounts had changed. In fact, I was expecting to go to settlement with little or no money. Instead, I had to come up with about $10,000.00. Fearing something like this might happen, I made sure I had extra money in my checking account; it was enough to cover the extra closing costs. If I had not let that money build up in my checking account, I would not have been able to close. It was due only to NASA FCU’s repeated incompetence that I had the foresight to make sure I had far more funds available than they told me I would need. Needless to say, a lot of angry emails between NASA FCU went back and forth. They, of course, denied any wrong doing. I went to settlement without ever seeing the final HUD-1 or any of the rest of the documents, some of which had errors. In fact, I made them fix at least one document at settlement. The preliminary HUD-1 I had been given was not identical to the one I was given at settlement; they increased the amount I owed for the appraisal. To this day, I have never received the final HUD-1 for either property.

In addition to changing the loan amounts on the day of settlement, they also charged me an extra $285 origination fee on each loan. This was not disclosed anywhere. It was not in the GFE. It was not in the rate lock agreement. It simply materialized at settlement. Also, the extra $100 dollars I was charged for each appraisal was not part of the original charge. About two months after the initial appraisal, NASA FCU ordered a rent schedule. The appraisals specifically stated that the income approach was not used, which means the appraiser did not think the properties should be valued based on rent (which is how I would have done it). So why did I have to pay for rent schedules? I’ll never know. My mom’s theory is that NASA FCU was hoping to increase the loan amounts (which would increase the origination fees they collect) by using the income approach. This would help explain why they refused to tell me the correct amount of the loans. But it’s hard to know for sure without seeing written, incriminating evidence.

A few days after settlement, I complained to the BBB. I figured I would simply be ignored, but it was relatively easy to do and not very time consuming. To my surprise, I was eventually contacted by someone at NASA FCU by phone. But he was completely useless; he denied any wrong doing. Then I sent a packet of information to the NCUA, which regulates credit unions. I am still waiting for their response.

In the mean time they are still screwing up important paperwork. They sold my loans to USBank. There were delays in receiving my initial mortgage statements because my address was wrong.

Comment » | Banks Behaving Badly

Sometimes A Warranty Is Important

March 3rd, 2011 — 11:11pm

I’ve purchased warranties on relatively low cost items before.  It wasn’t something I gave much thought to.  I was asked “do you want to warranty on those tires?”  I said yes.  Then ten minutes later I thought to myself: Gee, that was a waste of money.  Even if something had happened to the tire during the the warranty period, it would have been cheaper to go to Walmart and have the hole plugged than to pay for the warranty.

On the other hand, sometimes that warranty is an important insurance policy.  I don’t have enough experience to know when you need a warranty and when you don’t, but I can say that I’ve had bad experiences with HVAC.  HVAC labor is probably the most expensive I’ve had to pay for.  And that’s when things go as planned.  When things go wrong, watch out!

My 23 year-old heat pump failed about a year after I bought my house.  I was given a few estimates, after which I decided not to go cheap.  The estimates seemed to come in at about the same price for the same heat pump, but only one of the companies made any attempt to do everything by the book.  Britts Mechanical (I think was the name) made all the measurements to determine the correct heat pump capacity.  They offered a one year warranty and said they would pull all the necessary permits.  Even though they cost a little more, I didn’t want to take any risks.

Almost immediately after getting the new heat pump and air handler, my electric bill went way up.  Now remember, my ancient heat pump from the 1980s probably had about half the efficiency of the modern one.  I was expecting a bill that was 20%-40% lower.  Unfortunately for me, I have a lot of self-doubt, especially when I don’t understand something very well.  And I don’t have a clue how a heat pump works or what a normal August electric bill in North Carolina is.  Also, I only had one data point; the high bills disappeared as soon as it cooled down.

In any case, I still complained to the owner that I believed something was wrong.  He said he could come by and take a look and told me to contact the electric company to get information about average temperatures.  Well I was doubting myself even more after that, so I declined and said I would keep an eye on it.  So the next summer I lost my job and moved to Maryland.  I got two very large electric bills during the summer but assumed it was because my roommates had simply turned the a/c way up (which was true) while I was gone.  What I didn’t realize until the following summer was that they had turned the a/c up because it wasn’t working (and of course they never said anything about it).

Two years had passed, and I now had tenants living there.  They were having problems with the a/c and eventually received a ridiculous electric bill.  My warranty had, of course, expired by this point, but I contacted the company that did the HVAC work.  Apparently they had gone out of business, but I didn’t know this yet.  More about that soon.  I was given the number for Air Experts, which at the time, I believed was the same company that had done the original work.  The lady on the phone insisted that the problem was due to the high temperatures.  After discussing it for a few minutes, I finally caved and accepted her conclusion.  I gave my tenants the company’s contact information and went on vacation.

My tenants had the company come out more than once.  Apparently the first time they couldn’t find the problem, so they did some maintenance instead.  Eventually they found a few problems.  The air handler wasn’t draining, and the heat sequensor was stuck which was causing the auxiliary heat to run continuously (whatever that means).  It had obviously been this way since they installed it.  I have no idea whether they did the installation wrong or if they just sold me a broken heat pump.

Many weeks went by without a bill ever appearing.  I assumed they were embarrassed over the whole thing and weren’t going to send a bill.  This had already cost maybe $1000 in excess electric bills, and I would think that for the two summers the thing was running with serious problems, its life span was probably shortened.  Since I was partly at fault, I didn’t push the matter.

Then the bill did come.  Apparently they had sent it to my tenants’ address instead of my current address.  I felt like this was adding insult to injury.  How many times am I going to have to pay for another person’s screw up?  So I sent a nasty email.  This was when I was told that the two companies were actually not the same.  One had bought the assets and hired the employees of the other, and so they technically had no obligations to me.  Sounds fishy, right?  Ultimately, they agreed to drop most of the charges.  Why I still had to pay for maintenance that I never even asked for, I don’t understand.  I was irritated again a few months later when I received a letter that went out to all their customers stating that they the two companies had merged.  To this day, I’m still not sure if one of them really ever went out of business.  However, I was lucky to get any concession at all since the warranty had expired.

So I guess the lesson behind all this is to not only get a warranty, but make sure you use it.  Don’t sit on it until it’s too late!  I think you can see how you can quickly have costs mounting into the thousands of dollars.

That was the first bad experience.  I had not learned my lesson yet.  At almost the same time this was going on, the a/c compressor in my car failed.  It cost around $750 to get it replaced.  Here again, the labor was not cheap.  I noticed almost immediately that the new one didn’t seem to be doing as good a job as the old one.  However, I had just changed jobs and was only driving two miles to work, so I assumed it was just taking a while before it started cooling.  I know, I know, I should have figured this out.  I don’t even think a/c takes any start-up time like heat.

After a few months, I drove to North Carolina on a very hot day.  I learned very quickly that the a/c was not working at all.  I ended up making 10 trips in total to the mechanic (5 there and 5 back).  On one of those trips, the company that sold the compressor, SPI Distribution, sent the wrong compressor, according to the mechanic.  Ultimately, I wasted about a day’s worth of time making trips back and forth, and it cost me an extra $222, again for mistakes that were 100% another person’s fault.  This time there was no warranty on the labor, and I wish I had thought about that before they did the work.  I never made an attempt to get any of the money back.  I had no warranty.  I hadn’t directly done business withe the company that sold the part, and I couldn’t even get my mechanic to give me the receipt.

In the future, I won’t pay for any labor or parts that involve heating or cooling systems without a warranty.  If it’s just duct work, maybe that’s OK, but expensive mechanical equipment needs a warranty.  Perhaps I’ve just had some bad luck.  What are your experiences?

Comment » | Caveat Emptor

PMI Agreement from Citi

February 28th, 2011 — 7:15pm

I received the PMI agreement from Citi.  The first thing I noticed is that my signature is nowhere to be seen, which I suspected.  In fact, I don’t think I’ve ever seen this.  The other thing I noticed is that the appraised value does not appear to be correct, although that’s not important.  So basically, the agreement doesn’t say much of anything.  It has the percentages and durations on there.  It says “Non-refundable premium if cancelled.”  I’m not sure that this applies to me in any way.  I didn’t cancel my insurance; I paid off my loan.  And besides that, Citi didn’t make the payment until two weeks after I paid the loan off, which means there would be nothing to refund since  no payment had been made until they decided to go back and charge me for an extra month.

Given the lack of any documentation specifying how the money is to be collected, I’m still fairly sure they charged me for an extra month.  I’m going to call the Office of the Comptroller of the Currency, and ask for their opinion before I pursue this any further.

Comment » | Banks Behaving Badly, Overcharging

Banks Behaving Badly (continued)

February 23rd, 2011 — 9:21pm

See earlier post.  I finally told my loan agent I was going to visit his office to see if we could get some of these errors straightened out.  He didn’t seem to be too enthusiastic about about me dropping by for a visit.  In fact I couldn’t even get in the door.  The main entrance was locked.  I couldn’t get in until a lady at the front desk let me in, and then they gave me a badge.  Odd.  When I finally met my loan originator, he told me there was no need to for me to come by (we had been doing everything by email).  He seemed to be sweating and nervous.

My plan had worked, however.  In response to my visit, he fixed (probably the night before) the swapped mortgage amounts.  I don’t believe any of the other numbers had been changed.  But at least I felt good enough to hand over the appraisal checks.  A few weeks later, I received some more paper work with the loan amounts swapped again.  Oh well, I guess you can only ask for so much.

Then I waited.  And waited.  Nothing happened.  I called and emailed.  Nothing.  When I did manage to get a response, it was only that the paperwork had not yet gone to underwriting.  By this time I had received the appraisals.  A few more weeks passed and it became clear that I was not going to settlement by the lock date.  The rates had fallen slightly.  I was wondering if NASA FCU was intentionally delaying to try and get a better rate for themselves.  In any case I decided to try to negotiate a better rate.  When I first asked about re-locking at the current rate displayed on their website, my mortgage agent called me at the end of the day with a sort of counter offer.  He made me make  decision immediately, so of course I didn’t have any time to run the numbers.  I told him never mind.

A few weeks later, when my rate actually had expired, I demanded a better rate (actually just lower points).  To be continued.

Comment » | Banks Behaving Badly

PMI Overpayment

February 21st, 2011 — 2:24pm

I made PMI payments as discussed in my last post for about two and a half years.  Even though interest rates were low at the time my loan was made, the higher percentage due to it being an investor property, combined with the PMI, made the effective rate over 7% (and climbing).  I was looking for ways to get out of what by today’s standards would be seen as a high interest rate and ultimately refinanced at almost the best time in the history of recorded mortgage rates.  My parents wisely told me to verify that the final escrow statements of the two mortgages were correct.  I contacted both banks and asked how my escrow and any overpayment would be refunded.  The accounting mostly appeared correct to me.

Wellsfargo sent me exactly the amount they said they would (the remainder of the escrow).  Citi did not.  I called to find out why some money had mysteriously come out of my escrow.  They said it was used to make two PMI payments and that the PMI was paid two months in arrears.  I went back and looked over the full history of payments.  Citi was paying my PMI to a company called Genworth.  The payments made to Genworth did not seem to coincide in any way with the payments I made to Citi.  They were on a completely different payment schedule.  This would have been fine, except that when I added up the number of payments I made to Citi, it came out to 31 months and a few days, but Citi made 32 payments to Genworth on my behalf.  It appeared as though they were charging me for December because the PMI payment was made around mid-month, even though I paid Citi off on the third.

Lets consider this for a moment.  PMI is insurance.  Insurance is usually prorated to the day.  It’s not like, for example, an agreement you might have with your tenants.  If the lease says the tenants are to move out by the 31st, and they leave on the 15th, you don’t refund them 15 days of rent.  You can’t just re-rent the house for those 15 days.  It costs you money.  Insurance has no costs.  More specifically, insuring something that has zero risk is free money.  Since my mortgage was paid off, there was no risk of default, and I was forced to pay insurance for something that could never happen.

I reviewed the Deed of Trust, which had a section on mortgage insurance.  It does not specifically mention how the insurance is to be paid, but it does have a sentence that says “Borrower is not a party to the Mortgage Insurance.”  I’m not exactly sure what the implications of this are, but I’ve taken it to mean that there is some agreement between my lender and the mortgage insurance company.  And whatever this agreement is, I am somehow bound by it.  If that’s even close to true, it makes me wonder if such an agreement would even be upheld by a court.  Since I have no say over whatever agreement they might have, they could theoretically put whatever they want in it, and I would be the one to suffer the consequences.  I was unable to find any other settlement documents that might have specified the exact terms of the PMI.  Of course, if you have ever been to settlement, you know that there’s enough documentation to make medium sized book.  It’s possible I simply overlooked something.

I contacted Citi by email half a dozen times.  I could not get them to answer my question about the (possible) overpayment.  They kept referring to the fact that the PMI was paid in arrears.  One time they told me the insurance company would send me a refund if applicable.  I contacted Genworth and they told me they didn’t owe me anything.  So I made various threats to Citi, such as reporting them to the regulatory agency and so on.  They responded by saying that they would conduct some kind of review.  A few days later they mailed me a statement saying that the PMI was paid in arrears and that no refund was owed.

Finally, I called them again.  I insisted the customer service representative and I go over the entire history of payments until we could come up with the discrepancy that was causing our disagreement.  After several minutes of going back and forth it was established, according to him, that because I made a payment on the first of December, Citi had to make a PMI payment to Genworth.  Never mind that all the interest for the month except for two or three days was refunded to my escrow.  If I had known this ahead of time, I would have turned off automatic payments, and apparently I would not have paid any PMI for the month of December.  (Of course, if NASA FCU had sent my loan to underwriting on time, I would have settled long before December anyway.)  I am doubtful of what he was telling me.  It doesn’t make any sense that I could have gotten out of that last PMI payment by simply delaying my monthly payment until the mortgage payoff was received.

I asked him if he could send me a copy of the agreement with these terms.  He said would put in a request to send me the agreement signed by me.  Whoa!?!?  I signed this?  Well, maybe I did.  I’ll find out in a few days.

Comment » | Banks Behaving Badly

Private Mortgage Insurance

February 20th, 2011 — 4:30pm

I only put down 10% on my investment property.  Generally, when you put down less than 20% on a property (LTV of 80%), you either need to purchase Private Mortgage Insurance (PMI) or you need to take out a second loan.  For investment properties, you might need an LTV of 75% or less.  I don’t know the exact rules, and they have probably changed or will change due to the financial crisis.  Also PMI does not cover your payments if you can no longer afford them.  It insures the bank against your failure to pay, so you will probably never deal with your PMI company.

My loan originator mentioned that it would be better if put down at least 20%, but based on the numbers (and my lack of money really), I decided I would be better off paying a little extra for PMI.  I could have gotten a second mortgage, but I didn’t want to have to deal with a second lender and all the associated paperwork.  However, my loan originator failed to mention two important things.  The first was that the percentage paid for the PMI is not locked like your rate is locked.  I, naturally, assumed both numbers would not change, but I found out the hard way, at settlement, that the PMI had increased by at least .2%.  Of course it went up; would you expect it to go any other way?  The other thing I was not told was that you can’t get rid of PMI.  You have to pay it until the loan is paid off.  I believe my loan originator was probably unaware of this.  My settlement attorney said something about it.  He too, apparently, did not know the law in this particular case.

The Homeowner’s Protection Act lets you cancel PMI once your LTV drops below a certain level.  I’ll let you read it yourself; I’m not very familiar with it since it has never applied to me.  As I later learned, it only applies when the house is your primary residence.  If you’re an investor, you pretty much get thrown to the wolves.

My specific plan, which I learned about at settlement, required me to pay .9%  a year on the original value of the loan for the first 10 years.  It then dropped to .2% for the last 20 years.  Let’s think for a moment about just how bad a deal this is.  In a healthy real estate market, you might expect the equity in your house to increase to more than 20% of its value within less than 5 years (assuming an initial LTV of 90%).  With PMI, you would be stuck paying thousands in insurance to protect against a default that has no more chance of occurring than someone who initially made a 20% down payment.  In fact, even as the risk of default drops to zero, you will still be paying insurance.  There’s a simple phrase for that: free money (for them, not you).  Even if you did default, the bank would more than recoup any losses.  Additionally, since the interest rate pertains to the original value of the loan, if the loan is held for the full 30 years, there will likely come a point in time at which the monthly PMI payments are greater than the interest on the loan itself.

The bottom line is this: Don’t get PMI. Had I paid PMI for the full term of my loan, I would have paid more in PMI than the additional 10% down needed to get rid of it.  Take out a second loan instead; you can always pay it off later.  If you absolutely have to get PMI, make sure you find out all the details up front and that your rate can’t change at settlement.

Comment » | Banks Behaving Badly, Overcharging

Banks Behaving Badly

February 19th, 2011 — 8:17am

OK, so it’s really a credit union.  Back in August of 2010, when mortgage rates were at all time lows, I decided to refinance both an investment property and what used to be my primary residence before I lost my job.  NASA Federal Credit Union was ranked A+ by the BBB.  My brother had used them, and even though they gave him grief over some nonsense and, I believe, delayed his loan, for the most part, things didn’t go too poorly.  Also, they had really good rates.  I had also looked at some online lenders with excellent rates, such as Amerisave and Aimloan, but I was convinced to stick with a local lender that was probably more reputable.

Right from the very start, I could not get any meaningful answers to my questions.  I (or my parents) had asked about the down payment requirement and the interest rate for an investment property.  I was told that there was no difference in interest rates between an investment property and a primary residence.  I don’t remember what they said about the down payment, but I believe over the course of a few months the number altered between 20% and 25%, depending on  when and who you asked.  Upon pressing them for more details later, it was revealed that investor loans really were the same interest rate, but you had to pay an extra 3 points.  In addition, they charged another .5 (I think)  points for loans less than $90,000.  The 3 points later turned out to be 1.75 points, and the .5 points mysteriously vanished altogether.  Hey, I’m not complaining about that.

Oddly they didn’t seem too interested in my business, despite the fact that I was one of those rare people out there with a job, money, a high credit score, and properties waiting to be refinanced.  I suspect now the reason is because they were already overburdened with so many larger loans.  When your margin is small, you need more volume.  And because they had low rates, it gave them a lead over the competition.  So it took some time to get any acknowledgment of my application.

When I finally did get a response, it was a complaint that they could not read my handwriting.  OK, fair enough.  I would have done it online, but they gave me PDF files.  The first piece of documentation I was sent was a loan summary for one of the properties, but most of the numbers didn’t make any sense.  It took a few days for me to receive enough documentation  to figure out what was going on.  My loan originator had swapped the amount of the loans on the two houses.  I eventually figured that out from looking at the current loan balance.  Part of the reason it was difficult to identify the problem was because the value of the property was apparently made up, or perhaps it was an estimate I supplied; it’s no longer clear.  That was at least somewhat understandable since there was no appraisal yet.

The summary also showed the origination percentage and the discount points.  The origination percentage was not at all clear.  I would later learn that they lumped a fixed fee in with origination fee, but it was not documented at that time, nor was it ever documented.    This poor habit of neither disclosing, nor documenting, as well as lumping together the various fees would later become a problem.  But at the time I had not figured out what was going on yet.  Many of the rest of the loan summary numbers were apparently made up: recordation fees, attorney’s fees, title insurance, transfer tax, etc.  I don’t have a problem with making some estimates, but if most of the numbers on a loan summary are meaningless, then why even bother providing a loan summary at all?  This would become another theme throughout the refinancing process.  The paperwork is treated as some law or regulation that stands in the way of business. They gave me the paperwork, and even though every single documented number might as well have been wrong, they seemed to be satisfied that their obligations to me were met.  The paperwork isn’t there just to make some regulator happy.  Some of us actually read this stuff.  It needs to be correct.

Next I received the rate lock and loan points agreements (one of them came with the other loan summary).  The mortgages were still swapped at this point.  Also, curiously, the dates did not add up.  The commitment period began 8/31/2010 and ended 10/15/2010, but it also said I had 60 days.  At the time I didn’t care very much about the obvious conflict, but it would later become extremely stressful not knowing when the lock expired because they were unable to process my loan in any reasonable amount of time.

At this point I started requesting that at least some of the documentation be fixed.  I wasn’t about to send two $500 checks for appraisals with the mortgage amounts still swapped.  I wasn’t angry yet; everyone makes mistakes.  But they ignored my requests to fix the problems, and so I asked again.  And again.  To be continued…

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