Home Finance issues

[rmk49]

What is the name of your state? Tennessee
My wife and I purchased our first home in October, 2006. We obtained a FHA home loan through our bank. At the time of the purchase, we informed our real estate agent that we were going to remodel the home before we moved into it and we discussed this with our loan officer. I am not familiar with banking laws and procedures so I relied solely on the loan officer and her word as an employee/agent of the bank.

After the loan was approved I went to see my loan officer in November about getting the money to remodel the home. She told me at that time that it would be no problem and that she “didn’t care who done the work as long as it was a licensed contractor”. After approximately 6 weeks, I obtained an estimate from a licensed contractor and took it to her and waited until she called me. Two weeks passed and she called and told me that I needed to sign some more papers for the loan process. I went and signed the papers where she said to sign them (I also signed my wife’s’ name where indicated as she watched) and then she said to me “As far as I am concerned it’s a done deal” which I understood to mean the loan was approved. My wife and I had some personal savings that we were holding in reserve for emergencies and since my loan officer had told me that the loan was a “done deal” we proceeded to start the remodeling process.

Approximately two weeks after we had started remodeling the home, an appraiser showed up and told the contractor that he was not supposed to be remodeling the home yet. I called the bank and spoke to my loan officer and she said that since I had started remodeling the home that it would have to be refinanced by the bank with a conventional loan. After registering a complain with the bank about the loan officers actions and conduct, she was terminated. Her practices and promises to us left us in the condition we are in today and the stress is about to get to me. I am a 100% disabled veteran who knows nothing about banking but I don’t think that I am being treated fairly. I am under a doctor’s care for depression and PTSD and this ordeal with the bank is not helping my condition at all. My wife has a medical condition that is aggravated by stress; she has lost time from her job because of this ordeal.

[LindaP777]

I'm sorry for your trouble.
What is your question?

[rmk49]

My question is what do I need to do to file a lawsuit against this institution for the way the original loan was handled; why did they not obtain the correct FHA loan to begin with and avoid all the trouble they caused us? How do I file against the loan officer who mislead us all through the process and repeatedly broke promises to us regarding the status of the loan. The bank has offered to loan us the money to finish it and then refinance it at a higher interest rate. Isn't this considered predatory lending practices? What about all the health problems they have aggrevated and/or caused my wife and I? Are we just to sit back and do nothing?

[rweltz]

Be careful, if you are saying that you signed your wife's name on a document you are addmitting to fraud.

Get a Real estate lawyer now.

[moburkes]

Originally Posted by rweltz

Be careful, if you are saying that you signed your wife's name on a document you are addmitting to fraud.

Get a Real estate lawyer now.

Exactly. There is never going to be a good explanation for this regards of your "reasons" for doing so. There is no legal reason for you to forge another person's name. Also, no loan is ever a done deal until the closing.

[HUD-1]

First, the lender got you a loan and you were able to buy the house with an FHA 203b loan. You selected the lender and they offered you the loan product they had. Do they even offer the 203k rehab loan? (If so, the 203k loan ususally has a higher interest rate, around 1% higher than the 203b) Second, the loan officer verbally saying its a "done deal" is not an approval or a written authorization to start construction. You made assumptions and proceeded with your own funds at your own risk. The loan officer was thenfired over this. It does not sound like predatory lending based on your post. Why not take them up on the loan offer to finish the remodel ?

[rmk49]

I supose it would be the prudent thing to do because we will never finish the house at the present rate of remodeling. Thanks for your advice.

[rmk49]

The bank has contacted us and offered the loan to finish the house but they want to pay off the FHA loan, refinance it themselves and they said the bank would pay all the closing costs for the new loan. A new loan will have a higher interest rate and they want my wife and I to sign a waiver releasing them from any and all claims againt them or any of its' past or present employees....does this sound like they really want to help us or is it a ploy to absolve themselves from any wrongdoing? I have never known any bank to just up and pay the closing costs and all associated costs out of the goodness of their heart. If we don't sign the release, we will not get the loan.....something stinks here and if I could find a competent litigation firm I would find out just exactly what laws have been violated.