Early in 2008 I applied and recieved approval for a "One-Time Close" Construction to Perm type loan from Wells Fargo under their "Builders Best-Construction/Perm Advantage Program".
In order to receive approval into this Construction to Perm Loan program it was explained to me verbally, and in writting that before I would be approved for this Construction/Perm Loan I had to pay one point to lock into the rate, terms, and amount of the permanent loan that I would ultimately be rolling my construction loan over into upon final completion of my newly constructed home.
A check for over $5,000 (One Point) was provided to fullfill this agreement, and a "Builders Best Ageement" was issued "Locking" in my; rate, terms and amount for my permanent loan.in this "Agreement" it states:
MUTUAL PROMISE
When you elect to "price range protect" a rate and price range, you and Wells Fargo are mutually agreeing that your loan (if approved) will be closed within the time period selected at that rate and price range. We agree to honor our commitment to you for the Price Range Protection Period, even if market rates go up and you promise and agree to close your loan with Wells Fargo.
A little later I am "approved" for the "Construction/Perm Advantage Program" as evidenced by the closing of the first part of this loan process and additionally by my "Construction/Perm Advantage Agreement" from this same (and assumed only) closing that further explains the conditions of my "permanent loan".
It is worth noting that I paid a second point at this closing, so it is not to be misconstrued that the point I paid early on before this closing could have been for the purpose of closing this first loan. It was only for the purose of "Locking" the terms of the "Perm. Loan". Thus consideration paid for value given.
Work begins on my new home. After the home is completed, and all of the condidtions are met in order to roll the loan over to the "permanent loan", my loan officer explains to me that the program I was "approved" under no longer exist, and they are looking for another program to move me into.
A short time later it gets stranger yet, because now they want me to provide addtional financial information, and bank statements. I tell my loan officer that this is unneccessary because I've already been "pre-approved" and even paid to lock in my rate etc. I don't need to be "approved" a second time. I further explained that I would just like them to fulfill the terms of our original signed and paid for agreement (remember my 1 point to lock in the terms, rate, and amount for my permanent loan).
It is explained to me then that they are just trying to get me into another program and that I may have to pay extension fees, and that I may create other problems for myself with the underwritting department if I don't provide the information requested.
Finally I turn over the information they request. My thinking is that they are not asking for this information along with a credit application, so what could be the harm.
Well apparently this type of reasoning was wrong. Next thing I know they are denying my permanent loan based on a very vague one page form letter.
They explain they will extend my construction loan for a period if I pay them $500.00 which under the circumstances I do. If I don't you can be sure that I loose the house and all my equity I have in it.
In the 12 months since I was approved for this construction to perm loan, underwritting guidelines have changed considerably. One loan officer I have talked to since this happened, said that he didn't think he could help because LTV ratio's on new homes of this type were at 60% as opposed to an 80% LTV for an existing home.
I'm sure most people think something is being left out here; I didn't meet some condition of the loan, missed payments, or I provided misleading statements on my loan application etc. If this were true I wouldn't bother writting this. I do hope if there are those of you out there that have had similar experiences with Wells Fargo and the "Builders Best: Construction Perm Advantage program" that you will send a comment, or put your story up here like I have. It's in your best interest to do so.
This with other stories I've seen and heard about WF not meeting it's existing obligations leads me to believe there is something wrong behind the scenes at WF. Off balance sheet obligations perhaps?
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