Hawaii VA Loans

At Hawaii VA Loans, we strive to exceed our customers' expectations and believe that we accomplish that goal frequently.  Unfortunately, a confluence of circumstances made this transaction a difficult one, but one that we do pride ourselves on closing despite many challenges.  Regretfully,...

Mr. [redacted] did not have an experience that we strive for and we sincerely apologize for causing extra tension and stress.  We acknowledge that the Loan Officer made a mistake and verbally conveyed the first payment date incorrectly.  Following is some background regarding the reason for the mis-communication and the net cost to the borrower.Typically, for a loan where the closing documents and funding occur in October, as happened with this loan, the first payment date is set for December 1st.  However, for this particular loan, the initial goal was to sign and close by the end of September which would result in a first payment date of November 1.  Closing did not happen by the end of September for a number of reasons (detailed later in this letter).  The loan was underwritten and cleared to close based on the first payment date of November 1st.  Communication with the borrower and real estate agents indicated that time was of the essence.  The fastest way to close the loan was to maintain the November 1 first payment date.  Moving the first payment date back to December would have required underwriting to review the file again and would have delayed closing by at least another day.  For that reason, the loan was closed with the November 1 first payment date (which is atypical for a loan signing in October).  This was an operational decision and a conversation that did not include the loan officer.The result of this change did not cost the buyers any additional money.  Pushing the first payment date back to December 1st would have resulted in additional interest, taxes and insurance due at closing. Therefore, pushing the first payment date to December 1 means that the buyer would have received $1720.36 less back at closing.  The remaining $611.63 of the buyers first payment (a total of $2304.87) went to reduce the buyers amount of principal owed - which is, in essence, a credit to his account. So, there is no net cost to him resulting from the November 1 first payment date.Here is a comparison of the borrowers actual closing scenario v. the closing figures if he had closed with a December 1 first payment date.Actual Closing FiguresFirst Payment Date: November 1Loan Funding Date: October 1Days / $ of Prepaid Interest due at Closing: 0 Days/ $0.00Property Taxes Due at Closing: $341.04Homeowners Insurance Due at Closing: $578.94Cash back at Closing: $4450.60Closing Figures with December 1 First Payment DateFirst Payment Date: December 1Loan Funding Date: October 1Days / $ of Prepaid Interest due at Closing: 31 Days/ $1442.12Property Taxes Due at Closing: $426.30Homeowners Insurance Due at Closing: $771.92Cash back at Closing: $2730.24Difference = $1720.36 less back at closing had a December 1 first payment date been used.Compensation for Nuisance We do understand that the calls from the collection department were a nuisance and regret the internal communication errors that led to them.  However, we feel that requiring us to refund the full amount of his first payment is excessive.  The first payment date change simply reallocated when money was due.  He received more money back at closing in exchange for an earlier first payment date and a timely close.You can see by the breakdown of the numbers that the difference in the first payment dates did not cost him an extra $2304.87.  He recouped $1720.36 through additional cash back at closing due to the November 1 first payment date.  The remaining amount reduced the outstanding principal balance due on his loan.  No additional interest or fees were earned by our company as a result of the difference in first payment date.After our initial conversation with the buyer, we sent him a gift card of $50 and a check of $92.19 to cover any potential late charges he may incur.  We did communicate with our company’s servicing department to ensure he was not charged any late fees and that nothing was reported to the credit bureaus.  So, he has already received $142.19 in compensation for his trouble.  We are willing to compensate him an extra $250 for the trouble he incurred.Regarding the Delay in Closing TimeframeSome loans are more difficult than others.  In this case, there were a number of issues outside of our (the lender’s) control.  Some loans have 1 or 2 hurdles, this loan had more hurdles to clear than any I have seen.  Here’s a list of challenges that all parties overcame to make the closing of this loan possible.  The loan officer, despite the closing date mistake, contributed a significant amount of time, effort and direction required to clear these hurdles and make this closing possible:Low Appraised Value: The appraised value came in below the original, agreed upon purchase price of the property.No connection to sewer lines: The VA requires that homes are connected to public plumbing lines whenever possible. In this case, the home was not. We needed to prove that the waste disposal was safe and legal.Legal Non-Conforming:  The home was legal when originally built, but does not conform to current zoning laws.  The LO worked with the local VA office to ensure that the home could be rebuilt if destroyed and would therefore be acceptable to the VA.Non-permitted Improvements: The VA requires that all “non-permitted” additions are addressed either by obtaining a permit exception or by obtaining a permit. The home had two areas that had been modified without a permit.  The LO helped coordinate what work had to be done to make the loan acceptable to the VA.Non permitted electrical & plumbing work: Recent work to the electrical and plumbing systems were completed with an unlicensed contractor. The LO found a licensed plumber and a licensed electrician to inspect the work and issue statements that the work was completed in accordance with current building codes.Private Road Maintenance Agreement: Whenever a property relies upon a private road for access, the VA (and every other lending entity) requires evidence that the road will be maintained in the coming years. There was no recorded document for this property and no agreement among the homeowners that use the road.  The LO and agents were able to track down a letter from the City & County indicating that they will maintain the road.The Process to This PointOnce the problem was raised to the LOs attention, he began speaking with two representatives, [redacted] (Spoke to her on 12/12/14) and Joseph (Spoke with him on 1/19/15), from the Collection department, they have both stated that there were no late payments reported for the November 2014 and December 2014 payment.  A payment history has been provided to the customer showing no late payments or late charges were posted to his account (on 2/2/15).  The Collection department did not report any late payments to any credit reporting agencies.Per our Collection Department, the borrower was sent a late payment notice before posting the November 2014 payment on 12/8/14.  After noticing that no November payment was posted, the collection department sends a letter stating that the borrower's payment was not made.  Since the payment finally posted on 12/8/14, he is no longer obligated to acknowledge that the payment was late.  In addition to this, Land Home Financial does not post any late payments for the first 30-60 days while the new loan is being serviced.On December 12, 2014, the Loan Officer emailed the borrower stating that he could call [redacted] from our Collections Department as proof of no late payments being reported or any late charges assessed.  He refused to call.  Proposed ResolutionWe have communicated with our servicing department and confirmed that they will not report the borrower late (or any borrower, for that matter) within the first 60 days of beginning servicing of the loan.  Attached is an image of the policy as outlined in the welcome package sent to the borrower at the commencement of loan servicing. We have also pulled a copy of the borrowers credit report to confirm that there is no late payment reported.  The credit report shows the first payment as a ‘1’ indicating that the payment was made on time.  The report has been sent via email to the borrower on 2/2/15.We are willing to offer the borrower a $250 Visa gift card as compensation for the inconvenience.