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Kings Mountain, North Carolina, United States
"A mind lively and at ease" is a blog by a first-generation Russian-Ukrainian immigrant Maria K. (Maria Igorevna Kuroshchepova). An engineer by education, an analyst by trade, as well as a writer, photographer, artist and amateur model, Maria brings her talent for weaving an engaging narrative to stories of life, fashion and style advice, book and movie reviews, and common-sense and to-the-point essays on politics and economy.

Friday, February 11, 2011

Investment guidelines? How about customer abuse! - Letter to Bank of America's home loan and underwriting executive

Dear Mr. Brucker:

It is a sad day for a financial institution, when the needs of the secondary market are placed above the needs of the customer; and when good credit, reliable income, and long-term customer relationship are invalidated in favor of the investment guidelines. That is what is happening at Bank of America, and as the executive overseeing home loans and underwriting I felt you needed to be aware of it.
Having been a Bank of America associate and customer for over ten years, with a checking and savings account, a credit card, a car loan and an existing mortgage, I had no question in my mind where to go, when we decided to sell our existing home and buy another one. And with the credit score over 700 and a down payment in the bank, this should have been a smooth sailing.

I applied for a new mortgage on December 20, 2010, promptly provided all the necessary information, including purchase contract for the property we were buying, and that for our existing home from our buyers. From the very beginning, our loan officer had contact information for both our realtors, our attorney and our homeowners’ insurance broker – three sources, from which to obtain every possible bit of information about the property. I was told that we should be able to close in 35 days from the day of application.

The appraisal was done on January 6, 2011. The appraiser indicated three times that the property was single-family and that the additional building (a small cottage) on the property was not a suitable rental. Just to put it into perspective – the house itself is barely over 1,100 square feet. So, the assessment was fare in stating, that even with the little 200 square foot cottage, the property could not possible house two families.

We hit a snag a month later on January 18, 2011. If you do the math: this was day 29 since application and only 6 days before the closing day, according to Bank of America’s own customer service representative. I was told that the loan was “restructured” and that underwriting would like to increase the down payment from 5% to 10%. The loan officer stated that we no longer had sufficient funds to close and casually suggested that we borrow money from friends and family to make up the difference. Apart from being shocked at such flippancy, I was also confused, because with the money we had in the bank and the proceeds from the sale of our existing home, there should have been plenty. It turned out that the loan officer “forgot” to include the proceeds from the sale in the calculations, despite being provided with that information at the time of application. I never received a good explanation about the reason for the counter-offer from the underwriting, but I went with it in hopes that we would finally be able to set a closing date.

On January 27, 2011 – day 38 after the application and 3 days beyond the 35-day timeline that we were initially promised – we were told that the underwriting deemed the property a two-family property and wanted to increase the down payment to 20%.

I reviewed the appraisal practically with a magnifying glass in hand to make sure that I was not hallucinating – it clearly stated “single-family property”. When I brought this up with my loan officer and her manager I was told that the investment guidelines stated otherwise. The underwriting had further wasted our time, by requesting the original deed for the house from the township, which our realtor provided within hours. The deed did not classify the property as a two-family dwelling either. However, the underwriting opted to dismiss that as well. By January 31, 2011, we were yet to receive a decision. We were now on day 42 since application and 7 days beyond the 35-day timeline.

On February 1, 2011 I felt I had to take a stand. I stated in no uncertain term that we were either going to bring the terms back to the reasonable 10% down payment and set the closing date, or I was withdrawing my application and going elsewhere. I set the deadline for that decision for end of business on Tuesday, February 1, 2011. The deadline was not met – I did not receive an answer. So, on Wednesday, February 2, 2011 I informed my loan officer and her manager that I was withdrawing my loan application and taking my business to another bank. By “my business” I do not just mean this particular mortgage. Once the dust settles and we are moved, I intend to close all my accounts with Bank of America and take them elsewhere. I do not feel like trusting my money to the institution that does not trust me.

So, to summarize, according to underwriting it was fair to quadruple the initial down payment amount, dismiss the appraisal, for which I paid $450, and violate the closing date commitment made by the very company that employs them. Thanks to the so-called “investment guidelines” (which, let us face it, is nothing more than buying something for a buck and selling it for two), a ten-year long customer relationship, involving multiple accounts and tens of thousands of dollars, has been destroyed. In addition, this placed tremendous strain on our sellers, our buyers, our realtors, attorney, and on us. We all had to cancel moving plans, work with three separate financial institutions and redraw paperwork to accommodate new timelines. In one fell swoop, Bank of America – the “bank of opportunity” – had negatively impacted opportunities and dreams of three families and five mortgage industry professionals.
After all that, the only apology I received was from my loan officer’s manager, who stated she was sorry “that we are unable to approve your loan to make this deal work for you”. I was not offered any financial compensation for the money that was (in my opinion) wasted on the appraisal that made no difference, the time that was taken up by this process that yielded no results and the hardship this had placed on us and the people we are working with.

In addition to you, this letter is going up on my web site, where it will be read by dozens of my subscribers. I fully intend to inform other potential customers, that Bank of America is good when it comes to simple stuff. So, as long as their financial needs do not go beyond basics, this would be a good choice of financial institution. However, if their accounts are in the least bit non-traditional and require a lot of customer interaction, or if the property they are purchasing is in the slightest bit unusual, they would be better off working with a credit union or a small local bank with a better understanding of the local real estate scene and less rush to bundle up their loan and sell it off.

I strongly suggest, sir, that you reconsider Bank of America’s real estate investment strategy and assess what it is costing you in customer satisfaction and reputational damage. Perhaps, if you take my comments into account, you will be able to devise a plan to keep and reward existing long-term customers and attract new ones by placing their needs above those of the secondary market.


Maria I. Kuroshchepova

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