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  1. #1

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    Can I sue loan officer for negligence and incompetence

    Jurisdiction / State: Tennessee

    Hi,
    I am currently in a huge mess due to my loan originator. I was pre approved for a loan from another bank and found a house in Foreclosure that is perfect for me. My contract was accepted and I asked for 45 days to close to make sure everything was in order. The house had a homepath sign and after doing some research on the loan decided it would be a better loan package. I picked my loan originator from the homepath site (the only one that was local here in nashville) I could have gone out of state but thought that I would get better service and over see thing better if the loan originator was local. I contacted him and he said that he handled homepath loans. I sent him the contract and visited his office to sign the initial paperwork. He said it would take about 2 weeks for everything to come back but said that everything was good and I should have no problems qualifying. I kept in touch for 3 weeks making sure everything was moving along and to make sure he had all the information needed. Last thursday he found out that the loan was denied. The reason is the house was only qualified for a homepath renovation mortgage and not the regular homepath mortgage. He applied for the wrong loan I myself was not aware there were two different loan packages and since he was a approved homepath loan originator his first step should have been to check to see what loan the house could get. Also he found out thursday. He did not inform me that there was a problem until monday afternoon. When he did inform me he stated that he talked to fannie Mae and was trying to get the home switch to the regular homepath loan since the home was not in disrepair. He assured me that he had talked to frannie mae and the loan would 99.9% be switch to the regular homepath loan. He asked that I write a letter to fannie Mae stating that the home was not in disrepair and planned on moving in right after closing and doing a remodel on the 2nd bathroom with funds that I had set aside in savings but the bathroom was in working condition. I wrote the letter and had it to him 2 hours later.(Monday night) I contacted him on Wednesday and he informed me that he should have a answer that day. I sent him a email later that day saying that it had to be taken care of today since the closing was in a week and half. Since then I have not heard anything. My realtor and the listing agent talked to him yesterday( thursday) and he said he should know something by today(friday) the latest and that he would contact all of us. What a surprise no call to any of us and it is friday night. I close now in a week and wednesday after talking to I decided to go down to my local bank and see what options I have. I have come up with having to borrow the whole amount from my roth IRa and getting a line of credit on the house to repay the Ira before the 60 day loan rule runs out. I have been pre approved for a line of credit, and conventional loan but due to the time limit I will have to do the line of credit. Then I have to wait to refinance the house(due to seasoning). He does not return emails or phone calls. I called fannie mae and told them the story and they say its the mortgage brokers fault and I should issue a complaint. Can I sue him for damages? He and his bank are the only one in Tennessee to write the homepath loan and he should of had training in this type of loan. Also he withheld the knowledge that the loan was denied for 4 1/2 days. I am issuing all the complaints I can but I will lose any interest in stock that I take my 401k and since I am a fist time home buyer might not be able to take out the 10,000 down payment for roth ira holders. Any ideas or comments on what to do would really help
    Thanks


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    First let me tell you that I have been an attorney and I have been a mortgage broker. I owned two mortgage companies over the course of 15 years, so I'm pretty knowledgeable about this situation. That having been said I will admit that I got out before the "homepath" mortgage came about. The industry is in shambles and it is difficult to do anything in this day and time.

    You really need to settle down. You haven't even missed your closing date yet and you are breathing fire and calling your loan officer incompetent. You haven't lost a dime, you have no damages yet, and you are already up for a fight. If I was your Loan Officer's boss I would get on him for not returning your calls and emails but in his defense I'm pretty sure you aren't the easiest person to talk to on the phone either. Your style seems to be name calling and threats and he probably doesn't want to deal with you because of that.

    Your loan officer has not done that much wrong. Again I'll remind you that I'm not familiar with the homepath program. Before you jump on me let me give you some advice that may solve the problem: Call his office and speak with the Broker or the Branch Manager. Many times, I as the Broker, could make a lender do things the loan officer couldn't. You have browbeat your loan officer so he is probably afraid to go to his Broker for help. I'm not saying that's right, but it's human nature. When you refer to someone as incompetent (and I have not seen any incompetence in your post) and threaten to sue before anything serious has even gone wrong, it tends to make people not want to deal with you. The Broker or branch manager will likely be able to solve the problem.

    By the way, the fear of your reaction is likely the reason your loan officer "withheld" the information that you were denied for 4 1/2 days. He was afraid you were going to attack him. He probably was trying to solve the problem without you even knowing about it. I'm not saying he did right, just that you need to look at your own actions and realize that they affect the level of service you are getting.

    I commend you for trying to see out other ways to fix the problem if this falls through. Having a back up is always a good idea. Your emergency fix from the 401K sounds doable. I know guidelines have changed drastically in the past few months but I do not thing that you would be barred from refinancing because of seasoning. As a general rule seasoning would kick in, but because of the extraordinary circumstances I'm pretty sure you could get around that rule.

    So in summary:

    1. I'm sorry your loan isn't going smooth as glass because buying a house is always stressful especially in this time of uncertainty.

    2. Realize that your combative name calling and threats are affecting the level of service that you get here, and likely in many other places in your life.

    3. Any talk of suing is very premature. Why don't you wait and see how things turn out before you start the execution. The loan officer's actions don't appear to be incompetence. Mistakes are human and they don't mean he is stupid. Stupid isn't a grounds for suit anyway.

    4. Follow your backup plan, that's a good idea. Then hope for the best on the initial loan so you don't have to go through such a complicated process to get your home done.

    5. MOST important, get the Broker involved. Don't rant and rave about how stupid his employee is or how you are going to sue if this goes wrong. I can assure you that you will get less help by threats than you will if you kindly go ask for help.

    Finally, you aren't going to sue anyway. Its just an empty threat most of the time people use it. An attorney would charge you 5-10k to begin a suit like that UP FRONT. I doubt you can show 1k dollars worth of damages (when and if you have them).

    Please don't think I'm being rude, I don't mean to be. I just dealt with plenty of customers who came at me with this sort of attitude when my loan officers screwed up. I wanted to show you exactly how the other guy is thinking when you rant and rave about "incompetence." Good luck with your loan.

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    Hi Jharris 352,
    I didnt mean to come across so strong. The problem is I have not been difficult. I only emailed him weekly to see if everything was going okay because I wanted to avoid any trouble. I have not been harsh in any way My husband owns a Mortgage business in Australia and when problems come up with his clients he lets them know. He also lets them know if he hasnt heard anything or in what stage the mortgage is in. He would never treat one of his clients the way I have been treated I had 2 backup loans but he waited to long to inform me that there was a problem. My point is if he is the only one that can do the homepath loan in Nashville so he should have gotten the proper training in the loan program and he would have known that he was applying for the wrong loan. The way I feel is that I hired him to figure out the loan and do it properly. I only ask for a quick email or phone call to tell me the status. I know that the loan has not fallen through yet but he could have at least called friday as promise to say he had no news. The problem with the Ira is its going to add more stress, I will lose any profits I would have made and now I have to do a refinance. I just wanted a little courtesy. I am angry because he almost lost the house for us and I don"t understand why its taken so long. I contacted another Mortgage broker in Ca and he said that the homepath loans are only taking 2 days but mine took almost 3 weeks

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    Kaktenn,

    Thank you for your explanation. I never disagreed with you that there have been problems and they were not communicated to you as they should have been. Again, I would contact the broker in charge of that loan officer and see if he/she can expedite the process. Just like the LO doesn't want to talk to you for fear of being in trouble, they likely don't want to talk with the boss. You talk to the boss and see if it helps.

    Good luck.

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