The Grass Is Not Greener
In my book, Get Real! Building Knowledge & Wealth Through Real Estate, the very first chapter is dedicated to the belief that every successful person in the real estate world has a core Dream Team of partners to assist with all facets of the transaction. For a comprehensive list of those specialists, buy the book! But for the sake of this blog (and the review it will become to warn others against using this particular lender), we will focus on lenders. I do not believe any one partner is more important than another, but in the logical flow of real estate, unless you have a lot of cash on hand, you are going nowhere fast without having a reliable lender to finance deals.
To save you the time of reading my book or biography, I fancy myself someone with a considerable level of real estate experience and knowledge. As a licensed real estate broker in three states, someone who has held the MLO license issued by the federal government (meaning I proved my ability to understand the mortgage process sufficiently enough to pass the federal test), a property owner of more than 60 units, and the regretful holder of 15+ years in the retail banking industry, I have been a party to (in one capacity or another) hundreds of mortgage closings. Never have I come remotely close to needing to write something so scathing and poorly reflecting on the industry.
I have to pause and remind myself that no two lenders are created equal. Read that again. I will wait.
Express Capital Financing has somehow managed a near-perfect 5-star review status on Google, which was one of the main reasons we chose to do business with them. It is always nerve-racking going with a new vendor, especially in an industry you personally know is rife with fraud and bait-and-switch tactics. Finding only one very negative review in the face of what appeared to be very investor-friendly loan programs, my partners and I were willing to give them a shot. After all, it was only a refinance and not a purchase, so at the outset, we had very little to lose if things went sideways versus a purchase transaction where it is never advisable to test drive a new lender.
The red flags might have been there from the start, but we chalked that up to our loan officer being from the West Coast when we were used to dealing with the pace and skill of New York-based partners. But it quickly became apparent that communication (listening, reading comprehension, retention) skills were sorely lacking from the start, and it only got worse as the deal progressed and additional incompetent parties stepped into the process. Let’s start with the appraisal process because this is where the rollercoaster crested the top of the tracks and began the death spiral.
The property in question is a 3-family home we acquired two years ago. One of the tenants is a little odd and does not allow anyone into his unit – ever. He does not answer the door, phone, or email. But his rent is paid on the 1st of the month every month, so we could care less. When the appraiser called to schedule the inspection, she was informed of the likelihood that we would not be able to access the unit in question. She said it was fine. As long as she could inspect all other areas, she would submit her report assuming this unit was in similar condition to the rest of the building. We even tried having her look through the windows of that unit for confirmation of its existence and condition, but she remained resolute in not needing to see it. It all sounded great – until two days later when the bank called to say we cannot proceed with the same terms of the refinance unless the appraiser sees the third unit.
Excuse me? Now, this quickly became a finger-pointing match where the bank claims the AMC (the company that serves as the middleman between the bank and appraiser) will not release the report without seeing the unit. The appraiser swears she submitted her report and that the bank is refusing to move forward unless she goes back and gets access to the unit. With no way of knowing for certain who was lying (although at the end of the day, it is pretty clear this was a bank issue and not an appraiser issue), and having little leverage other than walking away, taking the reduced LTV, or finding a way to get the appraiser into the unit, we agree to pay for a re-inspection and decide to drill the locks to gain access.
No sooner do we pay for the re-inspection is a new appraisal report submitted to the bank. No one ever called us or came out to see the property. They took our money, went on Zillow to find the original pictures from when we bought the house two years ago, and resubmitted the report as if they actually went. The bank was none the wiser until I pointed out the (as I saw it) fraudulent behavior of the appraiser to take money for services never rendered. Given the fuckery, they agreed we could move forward with the report as submitted to keep our original terms, and they would take up the fight with the AMC over the billing issue. This was settled on a Friday afternoon, on a conference call with myself, my partner, the LO, and his boss. Everything was fine.
Then comes Monday morning. Everything the LO and his boss promised us on Friday was now thrown out the window. Since the appraiser admitted to lying and not going back out, the bank was now demanding she go out, or we were back to no longer qualifying for our original terms. At this point, I am livid. They only knew she did not gain access because I pointed it out. Had I kept my mouth shut and let her use the Zillow photographs, we could have saved at least a week and significant heartache. So, the appraiser comes back out, and we keep inching this ball closer to the end zone despite what seems like a willful attempt at destroying the deal by every single bank employee on the processing team.
The level of combined incompetence from the processor, underwriter, senior underwriter, and everyone else with an email ending in experesscapitalfinancing.com was utterly appalling. We fielded dozens of urgent paperwork requests throughout the process, all of which I personally provided in less than 24 hours ,only to find multiple additional requests for the same documents from brand new people who knew less than the person who came before them. Each time, I would escalate the requests to the LO, and each time, he told me to ignore them because they were “out of the loop” and our paperwork was up to date. But this is where it starts to get really good!
As we were trying to schedule a closing, the underwriting team decides they do not like the Articles of Organization we provided because the name listed as the “organizer” was not a member of the LLC. Apparently, they were not familiar with the LLC formation process in the state of Pennsylvania and misinterpreted the organizer with a member. After multiple conversations trying to explain to them how anyone can be the organizer (a lawyer, accountant, or other professional service provider) without having any ownership in the company, their legal team still requested filing an amendment with the state to change the name of the organizer to a member of the LLC. When we pushed the issue in writing to clarify how the state would not approve an amendment claiming the person who legitimately filed our paperwork was no longer the person of record, in effect committing fraud, they finally decided the existing document was sufficient.
We are now about six weeks into the process with a completed appraisal and 100% of all current document requests satisfied, so imagine my surprise when the LO informs me our rate was not locked, and because of the delays with the appraisal process, our rate was now 1% higher. We went back and forth about all the known issues with the appraisal that we had documented proof of not being our fault, yet the LO made the claim it was we who delayed the process and prevented a rate lock. When my calmer partner called to contend that point, the LO told him nothing could be done about the rate, but as a concession, they would change our 5-year prepayment penalty to a 3-year. Woo-hoo! Sarcasm, but even that died quickly.
By the time we finally got the clear to close and the final term sheet, not only was the interest rate another .25% higher than the last quote, but the prepayment penalty remained at 5 years. In confronting the LO, he claimed no knowledge of that conversation, going so far as to say he did not want to call my partner a liar, but he would never agree to that (in effect calling my partner a liar or admitting his own incompetence). With all the stress and aggravation up to this point, we decided to get the deal closed and move on with our lives. They scheduled the closing for two days later, and the final paperwork requests started rolling in.
One of those requests was for a certificate of good standing for one of our LLCs. For the record, I provided the prior certificate of good standing they requested within 1 hour of the request. But for whatever reason, this request was sent directly to our lawyer at 3 PM on a Friday afternoon – sparking a panic Monday morning when it was still outstanding. Why was I not in the loop, you might ask? Not sure. The underwriting team by this point had removed myself and the LO from the process in favor of dealing directly with our attorney. And it gets better! They were also contacting our insurance agent directly to get what should have been standard policy information for closing. However, the underwriters decided they wanted ten times more documentation than any bank has ever requested, under any circumstance. This became another situation where they stopped just short of asking us to fraudulently alter an Accord certificate of insurance.
While our insurance agent was working overtime to satisfy this request, the lawyers inform us we can still close. Woo-hoo! It wasn’t sarcasm at the time, but an hour after closing, it sure moved in that direction. We still did not have the cash-out funding we signed for in the HUD. Apparently, the back office legal team decided they would hold our funds hostage until we came to some resolution on the insurance issue. The entire next day goes by, and we still do not have our money. We signed a legally binding contract in which we would be expected to perform in terms of payments and fees that the bank sure collected at closing, but they refused to honor their side of the commitment. It took two full days to secure our proceeds, and only after the threat of legal action.
Believe it or not, there is so much more I can say about how poorly this company is run and just how disappointing our experience was, but I will save that for my next work of fiction. In all my years, leaving a closing table without the loan proceeds has never happened. The term “clear to close” exists for a reason. If there are still open issues that would prevent a bank from feeling the borrower has lived up to their expectations, why in the world would a closing ever get scheduled? I fear that, like many other questions I have, will never get answered. But whatever you do, please think twice about using ECF for any transaction. Unless you want to have a story that can rival ours, in which case, let’s compare horror notes!
