First let me say that I am a reputable, licensed mortgage broker in Virginia. I manage a branch office of a California-based mortgage company and I have done several commercial and business loans.
In early February I engaged Commercial Lending Capital (CLC) for a rate/term refinance of a commercial office building (multi-tenant) that my clients owned in Austin, TX. Scott Ferguson, Business Development Mgr.initially indicated to me in writing that CLC was a direct lender who drew its own documents and funded in its own name (however we were never able to obtain confirmation on this). We submitted the application, financial statements, CLC submission form, etc. And within 48 hours we were given a Term Sheet / Letter of Intent (LOI). The loan program was very good, and Rick Ford, Pricing Mgr. Told us in writing that the average processing time to close the loan would be 45 days. Based on these representations, my clients wired the required $14,787 advanced deposit on February 15th Scott Ferguson also told us in writing that if the loan did not close the remaining deposit would be refunded to us, less any applicable third-party fees and a due diligence fee of approximately $2500.in fact, none of these claims turned out to be true, and after the drama began, Scott Ferguson completely stopped responding to my emails and calls.
Even though my clients had stellar employment/income/asset/credit credentials, it took CLC almost 60 days to get through the financial phase of the approval process. Responses to phone calls and emails were spotty, and sometimes non-existent. Then during the first week in April we finally received an email from a processor that all prior to appraisal conditions had been cleared, and that we would be contacted when the appraisal was received, normally taking three to four weeks. It should be noted during the preceding two months, I made five requests to CLC to use an MAI Certified appraiser, and none of these requests were answered. After three weeks of not hearing from an appraiser regarding entry into the building we became suspicious and this is when we first discovered numerous complaints about CLC with the Better Business Bureau and on-line at various websites, regarding CLCs business tactics, and apparent track record to keeping clients money. I made an effort to ascertain the validity of these complaints, but was unable to confirm them.
After several inquiries into the status of our loan, CLC called us at the end of April stating that they had ordered (unknowingly to us) a Broker Price Opinion (BPO) report, (which is a $500 drive-by version) instead of a full summary commercial appraisal. This BPO report valued the property under $1 million, compared to our estimated of the property being worth $3.5 million dollars. Upon further examination of the BPO report we discovered over thirteen gross mistakes, including missing entire sections of the building and land. We strongly refuted this report, again expressing our disappointment over the entire proceedings. Mr. Clinton Davis, Director of Operations attempting to defend the BPO report as accurate.
Amazingly to us, and as a result of our demand for a full appraisal, CLC then went back to the same company and ordered another BPO report which took another three weeks.
Although this report had many of the errors in the first report corrected, the value was still far less than what we had estimated, and was around $2.1 million. We counted nine gross errors in this second report. We wrote another letter to Scott Oakley, the President, who again didnt responded to us. At this point, Nicole Ferguson, Chief Operating Officer, responded to our letter and defended CLCs actions and the BPO reports as being accurate. When I attempted to ascertain if CLC was in fact a direct lender, Ms. Ferguson, was evasive and refused to answer my question, claiming it was a trade secret. This gave us a clear indication that something was wrong, because every lender I know would gladly give this information to us.
On May 21 we then demanded in writing again to Scott Oakley, President that CLC order a full summary commercial appraisal, as we had in-fact paid for this in advance; but again Ms. Ferguson answered our request. It should be noted that Ms. Fergusons responses to me were rude and condescending, and she copied my clients on these emails. CLC then ordered a full appraiser from Lewis & Howard, a company whose primary business is tax assessments for attorneys. The appraiser himself stated to us that he had not worked with a commercial lender in twenty years. Lewis & Howard valued the building by net rental sq. Footage (common in office condos), instead of gross sq. Footage, which is more common in multi-tenant office buildings. They also inflated the expenses, including adding a fictitious management expense of 3%, when in-fact one of my clients maintained an office in the building and managed the property himself. This appraisal was $2.25 million, still substantially less than our estimate. (By comparison, the existing lender for the building had done an appraisal in January of $2.25 million. This appraisal was immediately after renovation and with the building still only occupied 47% and approx. Half the Net Operating Income of that on the application sent to CLC and to Lewis & Howard)
What happened next is unbelievable. CLC then cancelled our loan, sent my client a bill for $75,000 which included a 3% CANCELLATION PENALTY ($67,585) and a WHOPPING $16,000 PROCESSING FEE, claiming that we deliberately misrepresented the value of the building, and that the DSCR ratio was far less than we had told them! It should be noted that CLCs own Submission Form states Estimated Value, and that we obtained this value by professional opinion from BulsHodge Consulting, and reputable commercial broker with offices in Dallas, Houston, and Austin, TX.; and that CLC had also been given a copy of the Rent Roll with the initial submission of the loan package in February/ March. We backed up the Rent Roll with Leases and Bank Statements. Additionally CLC made no attempt that we are aware off, to broker the loan to another lender, but instead immediately cancelled the loan, and sent us the cancellation letter.
My conclusion based on these actions is that CLCs intention all along was to find a way to cancel the loan and keep my clients money, by either disqualifying my client or the property itself, and that the complaints on-line are true, and that the Term Sheet/LOI was generated based on a fictitious loan program, and is designed to trap cleints and keep they're money.
I cannot comment on what action IS being taken at this time, except to say that I will NEVER use Commercial Lending Capital (CLC) again. CLC was not honest with us regarding critical details of the process, their lending relationships, or intentions. Ms. Ferguson was rude and insulting to me and my clients. The cancellation letter we received was from CLCs Loan Cancellation Department, which by itself sounds very suspicious to me. (I dont know any lenders that have a Loan Cancellation Department!)
This report is true and correct to the best of my ability and belief, and any response on the part of CLC to this report, will be nothing more than an attempt to twist or discredit these facts.
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