Consumer complaint received 2021-03-30
Company: PENNYMAC LOAN SERVICES, LLC.
State: CO
Product: Mortgage
Sub-product: VA mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage

Complaint:
I wanted to take a moment of your time to share the experience I had with PennyMac because, to put it frank, the company needs to do better in the future. 
I am an XXXX XXXX XXXX and I returned from a XXXX XXXX in the summer of XXXX. This meant that I now qualified for the VA loan and I was thrilled. Yes, it meant that I could buy a house but it was so much more than that for my husband and I. Weve been aspiring real estate investors for years now so having the VA loan gave us the jump start we were looking for. Wed put in the time to research the ins and outs of the business. We learned everything from the term house hacking, to what it means to include an appraisal gap in an offer letter ( something vital if youre going to be competitive in the XXXX  XXXX market ). We thought we had predicted every curveball that could have been thrown our way. We thought of worst-case scenarios and how we would bounce back. We were ready. Or so we thought. What we didnt take into account was how terrible of a process it would be, working with PennyMac as a potential lender. 

Let me back up just a bit to give you the full picture of what were dealing with. We currently own a property on the west side of XXXX  XXXX. Its about a mile from downtown and we absolutely fell in love when we purchased it in XXXX of XXXX. The house wasnt in the best condition. It has orange hardwood floors, a navy blue kitchen, yellow walls.. .the list goes on. But we saw the potential in this property and went for it because we knew that we could breath life back into this XXXX gem. So, for 24 months we renovated this house. We didnt hire a contractor. We spent hours on XXXX and XXXX and we figured it out. Two years later and every room in the house has been completely renovated. When we werent renovating our house, we had our noses in real estate investment books with the XXXX  XXXX  podcast playing simultaneously in the background. We knew what we wanted and we were going to do whatever it took to make that goal a reality. Thats why in the spring of XXXX we reached out to our real estate agent and broker to let them know we were back in the market. We had laid out a plan to them. Now that we had renovated our current property, we could rent it out for about {$600.00} in cash-flow a month. Wed have the tenants pay down our mortgage and let the Colorado market get to work on building the propertys appreciation. This would give us the ability to purchase and rehab a new property, repeating our process. Wed only really change our strategy a bit. Wed find a duplex. Theres a little known secret thats becoming more and more well known now and thats house hacking. Wed live in the main unit of our new property while renting out the second unit. The tenants would pay for part of, if not all, of our mortgage payments. This frees up more of our funds for renovations and saving up for our next property. 

In XXXX, we found the perfect property. It was about two miles from our current residence and, like before, it needed some major TLC. With about two years of renovation experience under out belt this time, it didnt intimidate us. We didnt worry about the floors, paint, our outdated kitchen. We cared that it was on a beautiful downtown street, surrounded by the most gorgeous Victorian homes. We set out to find the ugliest house on the prettiest street and we found it. We were sold almost immediately and put an offer on it that day. Everything was going according to plan until four days prior to closing. Our broker sent us an email with the subject line reading Problem with the Underwrite. He asked us to call him immediately. I thought that was a little concerning, considering our lender, PennyMac had already approved our loan nearly 10 days prior. Our concern for the situation only grew when our broker informed us that PennyMac was accusing us of homeowners fraud. You can probably imagine that sinking gut feeling that instantly overcame both of us. My first thought was, Why is this coming up four days before closing? and I thought we had already been approved? It was completely unprofessional and unacceptable. 

So, for three days, we worked with our broker to try to convince PennyMac that we were in fact moving into this downtown duplex, a concept they simply couldnt get behind. We sent multiple letters of motivation. We sent them invoices for a storage unit we had purchase weeks before. It was full of our belongs because we were already mostly moved out of our current property. We sent them photos of the renovations we had done in the past. We even sent them the link to the XXXX, where our house had already been listed for rent. None of it mattered and 24 hours before our original closing date, PennyMac informed us that our loan would not be approved. They simply did not believe that we would choose to move into a house of lesser value than our current property. They were confident that we would be renting out the new house without ever living in it. This of course would be an issue, based off the loan we were taking out. 

And just like that, the house that we had spent weeks dreaming and planning for was no longer going to be ours. 

So PennyMac waited until four days before closing to accuse us of homeowners fraud. It didnt matter what we told them or what proof we sent them. It didnt matter that I was a veteran, trying to create a future for my family. Nothing mattered except their gut feeling about us. We have been upfront with PennyMac since we started the loan process 2 months ago about what our intentions were. I believe this is a UDAAP violation since PennyMac failed to inform us of any issues on our loan until four days prior to closing. This caused us to lose our {$4000.00} in earnest money and lose the deal on the house. 

To the senior leaders of PennyMac, do better. I can assure you that I will be sharing this experience with my network of colleagues, so I truly hope your gut gets realigned soon. You will never again be considered when we are purchasing our investment properties across the Colorado region. Thank you for showing your true colors before we blindly went into business with you.

Company response to consumer: Closed with explanation