How did we get in this economic crisis? Let's see. The banks loaned mortgage money to people who could not afford them. Mortgages were sold off by the banks to each other institutions and leveraged even more. Bad loans were bundled with a few good mortgages, like mine. and the house of cards collapsed. The government bailed out the banks to the tune of $700B. This is the only part of the stimulus packages that has seemed to work.(Bush's BTW) I believe it worked because many of the good banks and financial institutions are looking alive and well. Even though it was screwed up, it prevented the complete collapse of financial America. People like us who have always played by the rules are still being screwed by those who brought us the crisis in the first place.
And now the rest of the story. Let this serve as a heads up if you are going to be dealing Banks.
Doe and I are going to sell our house. Hopefully, the market will let us.
While we were having it inspected, we discovered we had water intrusion, mold and some rot problems. OMG. It is a disaster, but it can be fixed for only $100,000. WOWEE! Fortunately, our equity is about four times the amount needed. Our net worth is seven figures, 70% liquid and I still have a six figure income. Should be no problem, right? Wrong!
We went to Wells Fargo, our bank of twenty years. We met our personal banker (glorified teller with a desk) who job is to guide us through the process.
"How long will it take ?", I asked.
He told us three times on three different occasions, "About a week", he said.
A week went by and I asked what is happening. He would then get on the phone and talk to the loan Czars in Des Moines??? They always wanted more information. I had given them our tax return, which included three earnings history, I had already given the portfolio and the home value appraisal by Hennepin County.
The next week I went back, and they still had more questions that I think I had already given them. At one point they wanted the originals of my W-2s. I pointed out that the information was in my tax returns, as well as the fact that every check I have received in the last 20 years was direct deposited in their bank. It soon became obvious that our personal banker never found out what was happening by making a call to Iowa, unless I was sitting across the desk from him.
Finally, I had had it. I told them I would find someone else to give me a loan. A couple of days later before I went to another bank, I called my personal banker apologized and said maybe we could try again. I didn't want to burn a bridge because we still needed the loan. I had left this on his voice mail, and he emailed that we should try again and promised they would not want additional information. I then emailed him about the loan rate and also left him a voice mail to set up an appointment after I had tested the waters at another bank. I didn't hear from him for six days after the email and three days after the voice mail. Finally, he called. I asked why he had not gotten back to me. Oh, he was off for a couple of days.
I don't blame anyone for having days off, but in a service business to never check email and voice mail is just not acceptable in my world.
I went to M&I bank (regional mid size bank) and I had the loan approved within a week. They finally told me one of the problems was the income to debt ratio. This was the first time I had any indication what the criteria was. We only owed on our mortgage and cars (no credit card debt). My last years income was about $25,000 higher because I had taken the required amount from my IRA. It turns out the ratio would have been fine if I had taken money out of the IRA the previous two years because IRA withdrawals are counted as income.. So what they are telling me is, the money in my IRA is not good unless it has been withdrawn. HUH?
They could get me $80,000 immediately, but to get the $100,000, it would have to be approved higher up. The ladies at M&I got creatively busy. They came up with the idea of getting a$125,000 home equity loan and paying off the the car loans, which would improve the income to debt ratio. Go figure, give him $80,000 or $125,000, but not the $100,000 I asked for. However, paying off the car loans frees up $850/month cash flow, the loan is at the home equity rate of 4.5% instead of 7.1% and is tax deductible. Sounds good to me.
FUWF!
The loan will be paid off when the house is sold. I hope that works out quickly, I think we deserve a break after this horror story.
I think it is important to note that the old adage of you have to prove you don't need a loan to get a loan.
Another little warning.
We have a line of credit with Chase Bank, who doesn't even operate in Minnesota and never applied for.
We have over draft protection with Wells Fargo at $1.00 service charge a month, whether we use it or not. We didn't sign up for it, and then it got reported on a credit report that our service charge was over do.
Bank of America sent an email recommending we be sure to check your account for unauthorized payments regularly. We have never had an account with Bank of America.
Something is going on with the banks. Watch your stuff and take action, if you can. It is interesting you can't even find out where to complain.
I will continue to play by the rules, even if the banks don't
Samuel C. Arnold
Screwee!
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