THE $395 LETTER TO CHASE MORTGAGE
RE: Refinance at XXXX W Canal Rd, Brockport NY 14420 Loan# xxxxxxxxx
Steve xxxxxx,
We are writing to request a refund of the $395 deposit that we paid up front to lock in our rates and begin the refinance process. I was told during my second meeting with you that this fee would be used to pay for the appraisal as well as Chase's costs, but would be refunded at closing.
About a month into the process, you called to say that the appraisal showed that the unused mother-in-law apartment attached to our home, was "not legally conforming nor typical for the area" and a permit was required for the ADU (additional dwelling unit) or else the kitchen needed to be torn out. Our prior appraisal, at the time of purchase 6 years ago (when we went through a attorney) stated just the opposite saying that the apartment was "legal and conforming". I contacted the Building Codes Officer for the town of Sweden, Walt Windus not once, but twice, and was told both times, that the apartment is perfectly legal as it is and that NO additional permits are necessary unless we choose to rent it out. We have no intention of doing so. It was obvious that the appraiser hired by Chase had made an error or was given incorrect information. I personally contacted the appraisal company to find out how to rectify the situation and was told that only my loan officer could make such a request. We were stuck on our end. I've invested in real estate for 29 years, so I am not new to real estate transactions, mortgage loans, or jumping through hoops. However, being asked to gut a perfectly legal kitchen (according to the town) to the tune of $2000, which would only devalue the property, is truly the most absurd thing I've run across to date. It's a matter of cutting off your nose to spite your face and completely asinine from any logical standpoint.
The whole point of an appraisal is to make sure the value of the house will cover the loan in case of default. I've carried several mortgage contracts myself. I completely get it. But.. DO THE MATH! The house appraised at $264,000K plus we added a new $13,000 roof after the appraisal was done. We were only asking for a loan of $170,000. Even if the loan went into default and you felt the need to make it "legal" according to your appraiser's standard, and deduct $2K from the appraised value to gut the kitchen, you'd still stand to make more than a tidy little profit. But, please... tell me who would ever force you to do that anyway? The only agency with any jurisdiction is the town's code enforcement office and they're perfectly content with it "as is". The only person that has a problem with the legality is your appraiser and I don't see him having any authority to have you rip out a kitchen from a legal apartment in the event you had to take a house back. Personally, I'd advertise and market the apartment as a glorified party room, complete with kitchen. The town has no problem with that... as long as it's not rented out!
Irritated by Chase's ridiculous red tape, we started looking into what it would take to go elsewhere for a loan. I then discovered in the "fine print" that our $395 deposit was not refundable unless the refinance closed. Despite the hassle and despite not being told verbally about the non-refundable deposit (sneaky?) we knew the apartment was in fact legal and that our credit, income, assets, and home value far exceeded Chase's loan requirements. We decided to stick it out and wait patiently for Chase to get the necessary letters of correction both yourself and Danielle thought were needed. Beginning Aug 1st, I contacted Chase several times to find out the status and wrote letters to the various agencies myself. Despite the Chase reps seemingly agreeing that there was an error made by the appraiser, and assuring us that they were working on it, we got NO response for 29 days. By the time we got an answer, the expiration dates for our locked rate had already expired. Plus the answer was received at 3:10 pm on the day our loan commitment was also due to expire, so there was NO time for us to do anything useful with the information. Apparently it took a month for the underwriters to provide you with the same answer we were originally given... that the appraiser said the kitchen must be gutted or we needed a permit. You've now said you'd be willing to check to see if removing the appliances would meet Chase's definition of "legal", which apparently differs from that of the town. Really?? And wait another 30 days for that answer... and then start the paperwork over again because we've expired beyond the extension? Why would that question not have been asked when we were first told of this issue at the end of July? No thank you. Coming up with an answer like this... so late in the day... on the day our loan commitment expires... with no time to do anything about it (since we'd not been told about an extension until it expired)... and after having had nearly a month to get an answer... when no one is even listening to what the code enforcement officer is saying anyway... appears highly suspect at best. From our point of view, it seems that excuses and delaying tactics are being underhandedly used as a way keep our deposit.
Our credit is perfect. Our income and assets are more than sufficient. The appraisal amount far exceeds the loan amount we're asking for. Each time you requested addition paperwork I typically had it to you within 1-2 days. When I wrote for answers to the building codes office as well as the appraisal company, I had responses back from them within 1-4 days. When time is of the essence and an expiration date is looming, I can find no excuse for Chase not being able to get a correction processed within 30 days, or at minimum giving us an answer in less than a month so we could could explore other options. I see no "good faith effort" on Chase's part.
You now say you did not "need" an answer by the expiration date and that you'd grant a 15 day extension. However, we were not told that the dates on a signed contract could be changed arbitrarily. In fact it seemed quite the contrary when we received the official Chase notices in the mail saying that our commitment and lock would be expiring. We were told to contact you to find out what we needed to do, but by then it had nothing to do with us and all we could do was wait on you. We understand that it is not you making the final decisions, Steve. However, we are at a impasse as to whom each of us has decided holds the authority to deem our apartment "legal". We have no intention of gutting a kitchen, nor of removing the appliances and paying for re-inspection, nor will we be paying for an unnecessary permit (per the town) to be able to rent an apartment that we have no intention of renting. So... unfortunately, your offer of an extension will not remedy anything.
At this point I am more than disappointed with Chase and their ability to get anything done. I'm also extremely irritated with the time we've wasted getting documents together for you and writing letters to various entities trying to get this resolved. We had no choice in the appraiser and it is not our fault that Chase hired someone who obviously talked to the wrong person at the town and now refuses to admit a mistake. Had we been at fault in ANY way... had we not been able to provide documents, or met income/asset criteria, or had the house been deemed illegal or had problems financing 6 years ago at purchase, etc... I would gladly have eaten the $395 and chalked it up to experience. However, our refinance was approved. The home and apartment are legal according to the town, both when we bought it, when we financed it with Citimortgage... and now. The appraisal from six years ago clearly states it is legal and conforming and nothing has changed. Chase's choice of appraiser and inability to get a simple statement of correction from the Codes Office/Appraiser, or to give us a response within a reasonable 30 day period is the only reason the loan did not close and was completely out of our control. In your last email you admitted that you were able to offer the extension at no fee to us because "it was on our (Chase's) end" for not getting back to us sooner. We wanted this completed by now and really don't want to waste any more time dealing with Chase. We had no control over Chase's negligence in providing a simple answer within 30 days and since we are under no obligation to extend our commitment contract we are requesting our deposit money to be returned.
As I said in my last email, if the deposit is not refunded, we will be forwarding this letter to our attorney. We will be closing all of our Chase accounts. We will contact the BBB. We will submit a complaint with the CFPB. We will file reviews with every online service we can find. We will post our experience to social media sites. We will spread the word. You had the perfect mortgage clients. You stood to make approximately $77,000 in interest over the next 20 years. You would have had loyal banking and credit card customers as well. We sure hope it was worth it for something so petty... especially when the the information you're using to deny the loan is incorrect.
The full chain of events is provided below. We request that all future correspondence be in writing. We no longer feel that we can trust what we're being told and prefer to have our conversations documented. We will expect a response regarding the return of our deposit before Sept. 7, 2012.
Sincerely.
Teresa and Jim Reid
CHAIN OF EVENTS
June 19: Met with Steve Middlebrook to discuss Refinance, determine costs, and interest rates.June 27: Jim and I decided on the rate/term we wanted and emailed Steve asking how to proceed. Steve responded. Scheduled appointment for the next day. I was told to bring tax returns, property info, and income verification.
June 28: Met with Steve again. I was caught off guard when I was told I needed to pay $395 to lock rate, a fee which went toward the inspection and Chase's costs for doing paperwork, but would be reimbursed at closing. Confident in our credit/income/home value, I went ahead and paid the fee with my credit card, but wish I'd been told of the fee during one of our earlier correspondences. Steve gave me a list of additional items we would need.
June 29: Jim dropped off all requested documents at Steve's downtown office for copying.
June 30: I Emailed Steve with a questions regarding credit score, initial rejection letter from Chase, and when Jim could pick up the dropped off documents.
July 2: Steve emailed and said he did not have answer regarding credit scores. In regards to the rejection letter he said "based on the information we have today it was showing a positive approval. There really should be no reason this loan gets denied. Income is there, value is there, etc.." We also received a Chase packet in the mail requesting the items we'd already given to Steve. I emailed him questioning if we needed to do anything else.
July 3: Steve responded that we needed nothing more and "Everything is all set at this time." We were just waiting to schedule the appraisal. Jim picked up our original documents from Steve. I got an evening call from Chase's appraiser and set an appointment with him for July 6th.
July 6: Appraisal completed. Appraiser seemed unsure as to how to classify the apartment and said it may take more time as he'd need to contact the town. I emailed Steve to let him know. Steve responded saying he'd let us know when he heard something.
July 6: Received first email from Danielle Williams asking me to call to verify loan info, which I did. We were given an anticipated closing date of Aug 2nd.
July 19: Danielle emailed a copy of the appraisal and a note asking for several more documents and written explanations regarding our two houses. I responded the same day with 10 attachments addressing all items requested.
July 20: Danielle emailed acknowledging receipt of requested documents.
July 24: I received a message from Steve asking us to call him.
July 25: I phoned Steve who told me there was an issue on the appraisal regarding the apartment. It showed we were not in compliance because, while we had a permit for the addition, we did not have a permit for the ADU (additional dwelling unit) and that we would need to get one or tear out the kitchen. He suggested that I contact the town.
July 26: Received hard copy of appraisal in the mail.
July 27: I emailed Walt Windus (Building Codes Inspector for the town of Sweden) explaining the situation with the appraisal, how our apartment was used, and that Chase wanted us to rip out the kitchen. I asked if we were not in compliance or if any permits were required as Chase alluded to.
July 30: I received no response, and wrote Walt again to let him know I'd located our original purchase appraisal and that the two appraisals were polar opposites in their terminology regarding the apartment. The earlier one that went through our attorney at the time of purchase declares that per the town zoning officer, it is "legal and typical for the area", while the recent one claims it is "not legally conforming or typical to the area". Nothing had changed in regards to the apartment which is confirmed by the newer appraisal that says "no work has been completed in the last 15 years".
July 30: Danielle emailed asking us to sign a Property Insurance Disclosure, but no mention was made of the apartment issue.
July 30: I emailed the appraisal company questioning the discrepancy between this appraisal and the one at purchase 6 years ago and how to get it corrected.
July 31: I received a reply from Sperano Appraisals: " You will need to have your loan officer contact the appraisal management company that they use for a request like this."
July 31: Walt (building code officer) responded indicating that our apartment was in compliance without need for any permit. "The "in-law" apartment with kitchen is acceptable in the Town of Sweden, provided only family members related to the principal residents live in the apartment." I emailed a copy of his response to Steve immediately after, but got no response.
Aug 1st (?): Jim and I receive hard copy notices that our loan is approved... but they still list tearing out kitchen as a contingency.
Aug 3: I scanned and returned the Property Disclosure to Danielle. Since I'd heard nothing from Steve since sending him Walt's notice, I also asked what was going on with the apartment issue and included the information from the Building Inspector indicating that no permit was needed for Danielle to review. She sent a reply email saying the underwriter had reviewed it and sent his response. He basically again quoted the appraisal paragraph saying that a permit was needed for an ADU (additional dwelling unit) and threw it back in the appraisers court to issue a "completion report". Frustrated, I replied to Danielle asking what we needed to do, since I'd exhausted my resources. Code Enforcement said we were fine and the appraisal company said it had to start with Chase. I also included the note from the appraisal company indicating that Chase needed to contact them. She apparently sent my note to Steve, because he quickly responded indicating that he would try to get an answer by Mon, Aug 6th. I emailed Steve with my presumption that the Chase appraiser talked to a clerk as opposed to the building codes officer and was given incorrect or misunderstood information. I indicated that someone really needed to make sure and talk to Walt this time. Steve's answer was "Yeah..I agree. I don’t think the appraiser spoke to the correct person and this should be over turned from his report. I have to see if maybe we can get something from the town saying you don’t need a permit."
Aug 3: I emailed Walt again indicating that Chase was still referring to the appraisal verbiage regarding the need for a permit for an ADU and that Chase or the appraiser may be contacting him for clarification.
Aug 6: Walt again responded indicating that there was no need for a permit and that we were in compliance since it was not being rented or used as a mother-in-law apartment. "The apartment can not be rented out and no permits will be issued to rent it out. It can be used as an "in-law" apartment. If and when used as an "in-law" apartment, you will have to apply for a 215 permit from the assessors office." I immediately forwarded the information to Steve. (again, no reply from Steve until the day commitment expired and rate lock already expired)
Aug 14: We received via mail another hard copy of the appraisal. Thinking it was a revised copy, we read the section about the apartment, but nothing had changed. We also received (separately) hard copy notices that our locked loan rate was due to expire Aug 27 and the loan commitment was due to expire on Aug 29. I wrote to Danielle, letting her know I'd not heard from Steve despite him saying he'd hope to have the issue resolved by Aug 6th and included the 2nd note from Walt indicating that we did NOT need a permit.
Aug 15: I received an email from Danielle: "We are currently still working with the Appraisal company to see if we can get this issue resolved. As of today we are still waiting on a response. I will follow up with you once I hear back from them."
AUG 29 - Two weeks since we last heard from Danielle and no response from Steve in nearly a month. Our locked rate is now expired, as is our loan commitment as of today. At 3:10 PM (as I'm preparing this document) I receive a note from Steve stating that the underwriter is still saying the kitchen needs to be removed because "The appraiser states as per the town the unit is not legal" which is simply untrue per each conversation I've had with the town. Someone doesn't want to admit they were wrong. Steve said he'd check to see if removing the appliances would make it legal. In response I said we're not interested in buying a permit or removing appliances then paying an incompetent appraisal company for a re-inspection of an unused apartment that is already legal. After receiving my "not happy" email, Steve immediately called and left a message for us to call him, but at this point we prefer to have all conversations documented.
Aug 30 - Another phone message and email from Steve offering to extend the rate lock and loan commitment at no fee, since Chase was at fault for not getting back to us.
Aug 31 - In response, this letter was sent to Steve, and cc'd to Danielle, and both of their managers listed on their emails.
COMPLETE COPIES OF ALL EMAILS AND DOCUMENTS REFERRED TO ABOVE CAN BE PROVIDED.