Lo doc (high stress) loans

[simonjulie]

Hi all

A property I am purchasing was due to settle yesterday. My solicitor finally, after many requests, received loan documents for us to sign (yes that’s right – on the day settlement was to take place). But just to make it really special he also received a list of requirements from the lenders solicitor which was listed a to q and included things like building file search which could have been done weeks ago had we known.

From the time of pre-approval the lender’s agent assured us that the settlement date could be met. As time marched on we continued to query and kept getting reassurances that “yes – the documents will be in the mail to you any day now and the settlement date is achievable”.

At best now settlement will be delayed at least a week. We have entered into a Licence Agreement to rent the property from the owner until settlement finally takes place. We have also had to pay extra costs to get the searches done in a shorter timeframe. With a little more notice this would not have been necessary.

The mortgage documents took nearly two hours to go through and sign and the extra costs involved in sealing this deal is making me wonder about the viability of lo doc loans.

Has anyone else experienced similar frustrations?

Julie

 

[Rolf Latham]

Hiya Julie

Your broker should have tried with a bigger rocket and he is rather sorry. Next time I will use an Excocet to get past the Agent Screening earlier.

Ta

Rolf

 

[michaelg]

Hi,

I've had dramas, I had one settlement delayed 5 weeks. One reason was my trustee was deregistered, that was the most stressful settlement I had.

Apart from penalties, it cost me a gift to the vendor and a gift to my conveyancer for putting up with me during that time.

Michael G

 

[watto]

Hey Rolf,

Saddam has a few spare rockets.........



cheers
watto

 

[geoffw]

Originally posted by watto
Hey Rolf,

Saddam has a few spare rockets.........

Then where's he hiding them?

(Watto immediately gets sent to join the weapons inspectors in Iraq)

 

[Rolf Latham]

I want ones with a guidance system and an english French or german instruction book

Ta

rolf

 

[Waverlybay]

Hi Simon and Julie

Sorry to hear about your experiences - you must be glad it is all over ! From memory, the property in question was a great buy...so perhaps that will alleviate some of your settlement frustrations.

As you reflect on your experiences, are there things ( that were within your control) that you would on hindsight have done (or not done) to minimise these sorts of settlement dramas? Given your experiences, I think your input would be invaluable for other forum members. I appreciate that your experiences were specific to a low docs situation - but i reckon investors doing "standard" loan docs have been just as aggrieved.

I personally have never received lending docs on the day of settlement - but i have asked a bank THREE times to resend the documents...as there were errors in the docs. I am told by other investors that this is not uncommon. At the other end of the spectrum ... I once got the loan docs 1 week after the purchase contract was signed - but sadly, that kind of service is rare indeed.

As a general rule, if i am using a new lender for a deal, i will try and negotiate at least a 3 months settlement. If the deal requires a quick settlement, then i will use an existing lender. Even for existing lenders, I will - where possible - negotiate min 2 months settlement period. All these a general rules - are of course subject to the deal specifics and whether existing relationships are "maxed out" - but one of my main reasons for going for long settlements is to avoid the simon and julie type debarcles. You can always settle earlier - with no penalties etc.

As a sad indictment on the banking industry - i have a word document complied over the years..that lists over 100 bank contacts in different banks... from the settlements officer, credit departments, banks lawyers, people who activate limits for locs, people who reverse charges, bank broker relationship managers (nasty..they like to hard behind voicemails and tend to perfer to talk only to brokers !), managers of branches....list goes on. I got so sick of calling my broker - who called his bank relationship contact... who then call their contact...who then emailed their colleague who unfortunately was on leave... - so the request got diverted to another colleague who after working on the matter for 2 days..... was terminated (along with the original request !). If things arent "happening" - i will go straight to the one who can deal with the problem NOW. Thankfully, I havent used this list for a while... but it has come in handy on occassions. The lists need to be updated every 6 months - such is the churnout in that industry.



I look forward to hearing from you S & J..and any others on how they have dealt with bank debarcles !

cheers
Waverly

 

[Crystal]

Hi Julie and Simon,
I sympathise with your banking problems. All of my settlements have been painful.
It is incredible to me how incompetent lenders are at lending money! It should be easy - they do it every day.
One of my worst experiences was with HomePath who kept asking me "what is the settlement date?" to which I would reply "Settlement will occur 6 weeks from exchange of contracts - I cannot exchange until you send me the documents!!!"
I hope all works out for your settlement.
Kind Regards,
Crystal

 

[simonjulie]

Hi all

Thanks for all your replies.

Last week was a tough week here in Canberra and by Friday I was so sick of breathing smoky air and sad from hearing so many horror stories from our neighbours who lost their homes - I just had to have a whinge.

After speaking to Rolf again I realise that these problems are really just little hiccups in the big picture and easily overcome. We have been at the house yesterday and today painting and the transformation is fabulous already!

Waverly – in response to your post – I normally don’t let things like this rattle me so much. It was just a crook ending to a bad week. I know it never serves to become complacent. Just when I think I’m getting to understand more about the finance game something new jumps up to surprise me. I think both Simon and I and Rolf learned from this one.

The bottom line though is always to push through with a positive attitude with your desired result in mind (and if you’re having a bad day you can always let off steam on this forum where other people have had similar frustrations).

Happy Australia Day
Julie M

 

[phm]

Hi SimonJulie

Thank you for posting your thread. From your experience, I'm going to ask for a two month finance date the next time I sign a contract. Your experience (and rethinking my past experience also) has provided me with this gem of advice.

Sometimes you get so much info that you forget some of the really helpful stuff until someone posts their experiences.

Thanks.

 

[joejunemac]

Banks!!!!!!!

Hi

I have just settled on our 1st IP, also had the run around from the banks so called lending manager. This was all dealt with via phone and fax and although that was great, I was kept waiting for mortgage docs to arrive in the mail, time was running out, a few days till settlement, so I phoned the lending manager and had a go, he said and I quote "I don't think I like your tone" (well he really didn't like my tone after that!!!!!!) PRATT!!!

Also when loan was being set up he was told we wanted cost of property plus costs (we have ppor, we're using some equity) anyway he arranged the loan for cost of property and BANK costs, We had to fork out for settlement costs. Anyway all settled now, tenant in and a few lessons learned already.

Thought this might be useful to someone, Say what you mean and mean what you say!

Good luck

 

[brains]

S&J,

I had a very similar experience last year with ING Bank, the settlement was delayed for a couple of weeks and i was charged penalty interest (about $500 i think)

I rang the banks relationship manager (id given up on the broker) and advised her in no uncertain terms that i wanted to be reimbursed for these costs.

Also, when the broker steered me towards the particualr ING product, he advised me there were no app. fee.

Well there was a $600 app. fee (he was wrong), the bank reimbursed me for that as well (i think they deducted it from the brokers comm.)

Amazingly, i had a cheque in the post for the full amounts within a week or two.

I would not have been reimbursed these costs if i didnt give the bank a hard time and demand them, so give it a try, first ask your broker and if you have no joy there contact the bank.

Im a bit of a terrier and not easily intimidated when it comes to things like this, but its not everyones style. If youre not up for heated phone calls and the like, put it down to experience.

 

[Alan H]

Hi Julie,

Apologies for my late post, but I'm sure all of us on the Forum would like to send the 'Canberra crowd' our very best for what was obviously a terrible time.

Rebuilding will obviously be a difficult process for many, but your a pretty 'gutsy' mob down.

All the best to yourself, Simon and all those that were directly and indirectly affected.

 

[Jacque]

I'd like to second Alan's post- well said.

Ah late settlements.......... we had a horror one in Qld where settlement was scheduled for and fell through some six times. The lender was highly incompetent and it took some 8 mths of harassment to get back our costs (penalty interest, lost rent and extra solicitor's costs). Brains is right- you need to be persistent if you want compensation and accountability from the lender.

However, I would not use that lender again on principal as their system is so inept and communication breakdowns so common that it makes me tired just thinking about going there again. They have lost me as a customer, that's for sure.

Things I would do differently would include writing down the name and date of every person I was in contact with, from day one of the loan being applied for. Though I now have a broker to do this , it's still important to keep tabs on the process and to annoy your broker as well, if necessary. Keep your eyes out for changes to staff and always request to speak to the same person you have been dealing with from the beginning. Be a polite pest and ring every couple of days to enquire what they are up to, if nothing else your name is reinforced in their memory and the approval may not get left at the bottom of the pile!

Above all, however, remember that it is all part of the investing process and nothing happens without the money!! Be patient, optimistic and ready to say to yourself "What's the worst that can happen?", because there are far worse things- believe me.

 

[siacci]

Gave up on Brokers. Tried 2 and they were hopeless. First one took 4 months to settle a property 4 days late. The second one knew how to set up my loans better than me so I now have to change it all again. I decided a bank manager could not be any worse than the stress of brokers. found 2 bank managers that would listen and lend. So the broker had me believing I was at a dead end for borrowing but I now have bought 2 new IP's and they are wanting to know when I want the next one. Dont give up on the bank manager completely, just keep looking, and if they resist you go to another branch or bank. YOU ARE IN CONTROL ,THEY NEED YOU!!!!!