lender changed deal .... HELP - Posted by isabel

Posted by isabel on October 27, 2003 at 13:45:57:

Thanks for your response.
I am in California.
I agree w/ you re. the 12 months period. It is not that long. However, I was planning to use the cash to acquire another property and my plan is now at a stop. I will do some research to see if I can find a HELOC on the terms you are describing. Thank you!

lender changed deal … HELP - Posted by isabel

Posted by isabel on October 24, 2003 at 20:54:41:

I recently purchased a single family home as an investment property and my loan officer advised me to do the following:

  • 20% down-payment / 80% first
  • just after closing, get a heloc (approx 15%) and reimburse my cash investment with it in order to only have 5% of my money in the house.

He told me that since I had the cash and good credit (750) this was a way to get a great rate on the first. He also told me that the heloc would be in place approx 7 to 10 days after COE. No problem; it was “a walk in the park”.

Little did I know.

The lender changed my rate on the first the day I signed the loan documents. The underwriter had inserted a 60 month prepay penalty (instead of a 12 month prepay that I had agreed to) and having this reestablished cost me 1 point.

Then the loan officer tells me after COE that there was a problem on the HELOC because it was an investment property.

So the “no problem” became a problem. I now have a first at 80% w/ a 12 months prepay and 20% in cash in the property.

Is there anything I can do at this point?

Thanks in advance for your input.


Re: lender changed deal … HELP - Posted by Dimpil

Posted by Dimpil on October 25, 2003 at 17:42:38:

Okay, Did you sign? I hope you didn’t. Loan Officers know what the deal is before going to the table and he should have informaed you of prepays, rate, HELOC and all. Frankly he was not a good loan officer, he was a hit and run kind of guy.

To make more money from a lender, a Loan Officer (when allowed to by state law) will add prepays and other things that are not customer friendly.

I frankly do not know of any lenders who will do a HELOC on an investment property, let alone without seasoning.

With a 750 you could have gotten a conforming Fannie Mae/Freddie Mac 95% investor loan with PMI but a good rate or a non conforming 95% investor loan, higher rate without PMI.

If you signed these papers, you have learned a valuable lesson. If you do not like the terms of the loan and they were not spelled out to you before hand, and you are not getting what you are paying for, DO NOT SIGN.

Re: lender changed deal … HELP - Posted by R.C

Posted by R.C on October 24, 2003 at 22:21:18:

I hope its not Bridge Captital. Because thats who I’m considering. Anyway with 750 your in control. Let them know you will Walk away from the table if the terms you want ar not there. That will put them in check or walk. You have 30 days to shop as not to affect your score with additional enquries.

Re: lender changed deal … HELP - Posted by isabel

Posted by isabel on October 26, 2003 at 11:24:17:

Yes, I signed because I had no choice. The deal (rate, pre-pay, heloc) had been discussed in details w/ the lender & everything was ok. Then I went to sign the papers and I discovered the last minute changes. We were already late for the closing (lender’s fault) and the seller was getting nervous and was talking about canceling for non-performance & keeping my deposit. So I had no choice. I really learned my lesson but are now trying to find the best way to handle the situation.
Thanks so much for your feedback.

Re: lender changed deal … HELP - Posted by isabel

Posted by isabel on October 25, 2003 at 24:03:10:

The deal is closed. I had no choice but to sign the loan documents with the new rate because I had lifted my contingencies at that point; so if I was postponing closing, the seller could have canceled and my deposit was gone. As far as the HELOC is concerned, I made a big mistake not to ask for written confirmation that it was approved and would close 7 to 1o days after COE.

I did some improvements to the property and it is now worth 20 to 25% more than what I bought it for.

And no, it is not Bridge Capital.

Re: lender changed deal … HELP - Posted by Dimpil

Posted by Dimpil on October 26, 2003 at 13:14:54:

One question. Were you really dealing with a lender or a broker? Because it really sounds more like a broker as reputalbe lenders do not do that.

Just make sure you really find someone you can work with who is on your side. You will be helping them make money as they help you get rich. Those dedicated to you (or the money they will be making from you) will always have you best interst at heart.

As I slowly get out the loan business It’s hard for me to find somone who is me. Dedicated, commitied, doesn’t waste time, gives details and is up front. I hate the bull some loan officers can play. I won’t use anyone from my shop as people get jealous without knowing they are jealous.

Another tib bit. Find a broker that also invests or has contacts with local banks. If he’s giving them enough business they can always do favors for a rain maker.

Re: lender changed deal … HELP - Posted by Dimpil

Posted by Dimpil on October 25, 2003 at 17:51:23:

Get a new loan officer/broker who deals with GREENPOINT MORTGAGE. I know you will lose some money because of the prepay but you may be able to write it off as a business expense (check with you accoutant) and it maybe worth it in the long run.

You really need to find a broker who is working for you if you are going to be in this business vs. working to make a quick fee.

My advice, interview a few, find out what lenders they are singed up with, what they charge for a deal, how many investors they work with go over your goals. How do you find a few good brokers? Investment clubs, word of mouth.

Re: lender changed deal … HELP - Posted by isabel

Posted by isabel on October 26, 2003 at 16:05:43:

Thanks so much for all your advice.

I was dealing with a well known national bank with which I have my mortage on my primary residence. I think that the loan officer was eager to get his personal numbers up & lied to me. So we went over the deal structure, he told me that I was approved for both the 1st & heloc (on terms that were acceptable to me) and that I could lift contingency. I did and got locked in the deal w/ the seller. Then everything changed. So my choices were either to walk away & lose my deposit or sign w/ the new deal terms.

Right now, I am running numbers to see if it makes sense to pay the prepay penalty & refinance considering the fact that the value of the house increased approx. 20% since I bought it.

I will start meeting w/ mortage brokers since I am ready to move on to my next deal.

Re: lender changed deal … HELP - Posted by Bruce barilar

Posted by Bruce barilar on October 27, 2003 at 11:07:52:

Isabel I don’t know that I would just go and refinance so quickly, 12 months is not that long of a time frame to shoot yourself in the foot on prepayment penalty. I am not sure what part of the country you are in, but if you are in the lending area for Wachovia, they will do a HELOC for investment property with your credit score and full doc. Speak to a “business banker” and not one of their financial specialists. They can go up to 100%LTV, should be 1-1.5 over prime. They will use the purchase price in year one.
Good luck, Bruce