Irate bank customer hits back. Withdraws $190,000 when turned down for loan.

[InfidelSerf]

I had a bad experience with BoA too.
I had an account for approx. 8 years
Nothing big just typical sub 2K account bouncing around for a twenty something paying his bills.
At the end of that 8 year run with them I made a mistake one month when things were real tight.
So I left the account in the red for several weeks.  I contacted them to let them know I was working on resolving the
negative balance and they said I have 60 days to clear it up or it would be closed.
Fine, I eventually got the $250 needed to bring the account out of the hole and positive $50
The deposit was made as a transfer over the phone from one account to another 30days prior to the deadline.
I then went in a week later to make a deposit and they said that account was closed.  You do have $250 in your savings account.
Would you like to make this deposit into it?
I quietly withdrew all my funds and told them to stuff their bank.
Technically I owed them $200.  But since they violated their policy and jumped the gun and closed the account and put that deposit into my savings instead of correcting the checking account that was in the rear.  And never bothered to contact me.
I decided it was time to leave them.

I have never heard back from them.

[Uncle Bubba]

I had a bad experience with BoA too.
I had an account for approx. 8 years
Nothing big just typical sub 2K account bouncing around for a twenty something paying his bills.
At the end of that 8 year run with them I made a mistake one month when things were real tight.
So I left the account in the red for several weeks.  I contacted them to let them know I was working on resolving the
negative balance and they said I have 60 days to clear it up or it would be closed.
Fine, I eventually got the $250 needed to bring the account out of the hole and positive $50
The deposit was made as a transfer over the phone from one account to another 30days prior to the deadline.
I then went in a week later to make a deposit and they said that account was closed.  You do have $250 in your savings account.
Would you like to make this deposit into it?
I quietly withdrew all my funds and told them to stuff their bank.
Technically I owed them $200.  But since they violated their policy and jumped the gun and closed the account and put that deposit into my savings instead of correcting the checking account that was in the rear.  And never bothered to contact me.
I decided it was time to leave them.

I have never heard back from them.

*grammar police*

in arrears

*grammar police off duty* 

[Bob F.]

The problem is the bank isn't making the loan. They are originating paper they will immediately sell to a third party. Mortages are traditionally to small a margin for banks to bother with. They originate it, sell the paper, and take the money so they can lend it in more profitable ways.

The underwriters have very specific criteria regarding income (even moreso lately, what with the new fed regs). If your income is not regular and proveable income, it doesn't exist in terms of qualifying for a loan.

If the bank IS making the loan, they will want to insure it some way. In that case the insurance company will have certain guidelines for how the income is documented. That gets you right back to "regular and proveable".

Has nothing to do with what they "felt". Has everything to do with his credit history (credit score) and PROVEABLE income (i.e. income documented by paycheck stubs, tax returns, or both). If his debt-to-income ratios or his credit history do not meet the minimum criteria for the loan, the lender isn't going to make the loan. Period.

Brad

Therein lies the problem.

[K Frame]

"From the end-user standpoint the functionality is essentially the same."

Oh, well if THAT's the case, then a 1973 240Z and a 2008 Ferrari Testarossa are "functionally essentially the same" and no one is ever going to really notice a difference between the two. I mean, after all, they're both sports cars...

 

Just because things LOOK the same doesn't mean that they're the same.


One "functionally essentially the same" observation about getting my mortgage through a bank, and when I got my original mortgage through and Navy Federal Credit Union...

I forget the name of the bank I used for the mortgage when I bought this house in 1993. Doesn't matter because it's been suctioned up several levels over the years.

But, I didn't even make the first payment on the loan when it was sold. OK, normal. Three months later, it was sold to another bank. Less than a year later it was sold again. And less than a year after that it was sold to its final resting place, Wells Fargo.

Every time the mortgage changed hands, the servicing changed hands. If it was Tuesday, my loan had gone someplace else, each time with newer, more annoying call center procedures.

In 2001 I refinanced with Navy Federal. To date, 0 transfers of my mortgage. Of course they've sold the note, that's a given, but they retain servicing for the life of the loan. No more musical servicers.

That's a difference people tend to notice.

[Headless Thompson Gunner]

I'm with SADShooter on this one. Instead of relying on a book that says "Artist = irregular income = bad risk", how about using some brain power and evaluating the individual? Especially an individual who has $190,000 on deposit in that very bank?

Is sounds like the bank did show some brain power by turning down the loan. 

Income from self-employed people and small business owners can be highly irregular and inconsistent.  It sounds like the bank took a look at his past earnings and decided they weren't reliable enough. 

The man was going to withdraw his $190k to pay for the house, so he wouldn't have had anything on deposit at the bank to cover the loan.  He'd have to rely upon his (irregular) future earnings to repay.

The bank did the smart thing here.  In the past they would have loaned the money without regard for the borrower's ability to repay.  It seems those days are over, and now banks are starting to think before signing any loans.

[cassandra and sara's daddy]

they'd own his house if he defaulted and they would lose nothin

[Monkeyleg]

Banks aren't in the real estate business.

[FTA84]

they'd own his house if he defaulted and they would lose nothin

I think banks own enough homes right now as it is.

[mtnbkr]

The man was going to withdraw his $190k to pay for the house, so he wouldn't have had anything on deposit at the bank to cover the loan.  He'd have to rely upon his (irregular) future earnings to repay.

Was he going to use the $190k?  The article said he was paying $200k.  I read that as meaning he had $200k for the house in addition to the $190k he had in the bank.

The article also said the property included a commercial component that would earn $500/week.  Sounds like there might have been sufficient income to make the payments on a $80k mortgage

Chris

[brimic]

I'm on board with CUs also. You don't see CUs building extravagant monuments to themseves like banks do. If you go into any city, the largest and most expensive building is going to have either the name of an inurance company or bank on it.

[K Frame]

Well, Navy Federal has a pretty damned nice headquarters campus in Vienna, Virginia.

Certainly nothing like some I've seen, though.

But they do have "Executive Men" and "Executive Women" restroom right out side the President and Vice President's office. But, the President and Vice President have their own pissers...

Last thing I did before I left Navy Federal for the last time was take a dump in the Executive Men's restroom.

And didn't flush.

Christ I hated that place.

[Brad Johnson]

But, I didn't even make the first payment on the loan when it was sold. OK, normal. Three months later, it was sold to another bank. Less than a year later it was sold again. And less than a year after that it was sold to its final resting place, Wells Fargo.

Every time the mortgage changed hands, the servicing changed hands. If it was Tuesday, my loan had gone someplace else, each time with newer, more annoying call center procedures.

In 2001 I refinanced with Navy Federal. To date, 0 transfers of my mortgage. Of course they've sold the note, that's a given, but they retain servicing for the life of the loan. No more musical servicers.

That's a difference people tend to notice.

Problem is it's not a function unique to credit unions. Some credit unions do, some credit unions don't. Some banks do, some banks don't. It's the lender's call on how they service mortgage loans originated in their offices.

The article also said the property included a commercial component that would earn $500/week.  Sounds like there might have been sufficient income to make the payments on a $80k mortgage

Chris

That's barely enough to cover the debt service on the P&I for the loan. It isn't, however, enough to cover the debt service on the PITI (payment, interest, taxes, and insurance). Due to the recent mortgage hullabaloo, opt-out mortgages are extremely difficult to get (an "opt-out" is where you pay your property taxes and insurance outside the mortgage).

Brad

[mtnbkr]

That's barely enough to cover the debt service on the P&I for the loan. It isn't, however, enough to cover the debt service on the PITI (payment, interest, taxes, and insurance). Due to the recent mortgage hullabaloo, opt-out mortgages are extremely difficult to get (an "opt-out" is where you pay your property taxes and insurance outside the mortgage).

Huh?  $500/week, or $2000/month isn't enough to pay the monthly payment on an 80k mortgage?  PITI on my 30yr/160k mortgage is significantly less than $2000/month

the property which included a home and commercial premises would have returned $500 a week, he said.

What isn't clear is whether or not that $500/week is his income from using that commercial premises or income to him from another entity using that premises.

Chris

[Brad Johnson]

My bad. Didn't read it close enough. I was calculating it as $500/month.

$500/week is $26,000 yr ($2167/month). The max debt/income ratio is 41% (give or take, depending on credit score). That would leave $888/month for total debt service allowance. That would be just enough to cover an $80k mortgage on an $80-$100k house if he had no other debt obligations (which, knowing the artistic mindset, isn't very likely).

Even if he had no other debt load they are also figuring the taxes and insurance on a $300k house as part of the payment for that $80k mortgage. Those two things alone could easily be double the P&I for the mortgage (FYI - P&I on $80k @5.785% for 30 yrs is $468.64/mo). That $470 P&I payment suddenly becomes a $1200-$1500 PITI payment when you tack on the tax and insurance obligations. To qualify on that payment he would need to show a gross income of roughly $2500/month with no other debt obligations.

[K Frame]

"Problem is it's not a function unique to credit unions. Some credit unions do, some credit unions don't. Some banks do, some banks don't. It's the lender's call on how they service mortgage loans originated in their offices."

I recognize that. But you're far more likely to find that with either a large credit union or, oddly enough, a small bank, but not a small credit union and almost never a large bank.

And since when isn't $2,000 a month enough to service debt on an $80k mortgage?

[Brad Johnson]

I recognize that. But you're far more likely to find that with either a large credit union or, oddly enough, a small bank, but not a small credit union and almost never a large bank.

Agreed.

And since when isn't $2,000 a month enough to service debt on an $80k mortgage?

I fubar'd the calcs (was thinking per month and not per week). But he's still SOL when you figure the taxes and insurance on a 300k house and add them to the P&I on the 80k mortgage. See my first previous post - I edited to add the numbers.

Brad

[mtnbkr]

I forgot about the taxes/insurance being on 300k rather than 80k.  That said, it isn't clear if the $2000/month is HIS income or income solely from the property (rent from a  tenant, etc). 

Chris

[K Frame]

I'm still not seeing the numbers add up...

My house is valued, for insurance and replacement purposes, at $401,000. That includes contents, and more than minimum visitor injury, etc.

My yearly insurance premium is (last year) $570.

Taxes are a boondoggle, though. I live in a nasty tax area, but certainly nothing like New Jersey.

My taxes are just shy of $4,000 a year but can vary significantly from year to year as we're assessed (by law) every year.

My total monthly payment on a $158K loan (no mortgage insurance required) is $1,153 at 4.75% APR on a 30 year note.

[Brad Johnson]

My yearly insurance premium is (last year) $570.

Taxes are a boondoggle, though. I live in a nasty tax area, but certainly nothing like New Jersey.

My taxes are just shy of $4,000 a year but can vary significantly from year to year as we're assessed (by law) every year.

You're lucky on both counts. Around here the insurance on a 400k house would be roughly $3400-$3500 yr on an generic average of 0.85% /yr for a 1% deductible, replacement-value policy. (Here in west Texas, hail and high wind capitol of the universe, weather-related expenses make for pricey premiums). Property taxes would be roughly $10,000 when figured at 2.5% of assessed value. No state income tax, though.

I'd have to know what the tax/insurance rates are for the area in question before I could really nail down a figure. It's still going mess the guy up, though.

Brad

[K Frame]

Move your ass east where everything doesn't burn the frick down/get beaten the frick down with hail/blow the frick away in the cone of a tornado every 6 months...

[Brad Johnson]

The storms do make for pretty sunsets, though.

Brad

[K Frame]

If you can breath for all the fricking red dust clogging your lungs and collapsing the aveoli...

[S. Williamson]

Just makes us all the more resistant to unconventional warfare.

Toss in smoking, and you've got asphalt-lined lungs.  Sacrifice stamina for immunity and all that.