Consumer complaint received 2016-03-15
Company: Prospect Mortgage, LLC
State: GA
Product: Mortgage
Sub-product: FHA mortgage
Issue: Credit decision / Underwriting

Complaint:
Told I was eligible for a FHA loan only to be denied on the last day. 
I contact prospect mortgage to obtain a FHA rehab loan on a property I wanted to purchase at XXXX XXXX XXXX XXXX XXXX GA. I was assigned XXXX XXXX as my lender and he obtained a credit report sometime in or around late XXXX XXXX early XXXX XXXX. 

I was pre-approved and told I qualified for an FHA loan and was told the process involved, which included hiring an FHA consultant for this type of loan. The consultants fee is based on the size of the renovation project. In this case the FHA consultant XXXX XXXX XXXX XXXX was hired at a {$1000.00} fee for a project over XXXX in size. 
I was told that I needed to find ( and pay for the consultant ) find a general contractor, do a work write up from the contractor and then the consultant does the formal write-up. I also purchased an inspection during this process that cost {$250.00}. 
On XXXX XXXX I went under contract on the property and Prospect Mortgage was my lender. I was given a 30 day financing contingency by the seller, to get appraisals done and get approved for the loan. The lender XXXX XXXX XXXX XXXX held the work writeup for several weeks before submitting the appraisal causing us to have to file for last minute amendment to get get the loan approved. 
On the 30th day at approximately XXXX XXXX ( only a few hours left in our contigency ) XXXX calls me urgently and says " he was looking at my file finally '', I explain my concern of " finally '' considering he has had my file for several months at this point. He explains that my credit report ( that he has had since XXXX ) shows my current home is an FHA loan, which I did not know about due to purchasing it from XXXX XXXX in a neighborhood stabilization program. He explained that I was actually not eligible for an FHA loan, that I would only qualify for a conventional loan and would need to pay more down payment and closing costs. I proceeded to tell him this was unacceptable, to not only drop a " bomb '' on me of needing more money for closing and down payment but to make me go through the FHA process of hiring a consultant for {$1000.00} when I was n't eligible to begin with was ludicrous. 

In addition to all of this XXXX would not issue a formal denial loan denial letter so that we could immediately terminate the contract. He stopped responding to phone calls and emails and only responded sporadically ( and even now 2.5 weeks later I still have no denial letter ). 

I am seeking to recover my {$1000.00} FHA consultant fee that I paid, as well as the {$250.00} inspection, I also currently have not received my {$500.00} earnest money back from the seller due to XXXX lack of cooperation to give us a denial letter. 

I am very frustrated about the entire process, the time and energy I have invested in a project that I was never eligible for to begin with but was constantly told I was. I have paid almost XXXX out of pocket towards this loan that I was not eligible for and I would like Prospect Mortgage to re-pay me for their errors. 

I am seeking to recover the : {$1000.00} - FHA Consultant Fee {$250.00} - Inspection {$500.00} - Earnest Money due to cooperation for a denial letter All due to Prospect Mortgage 's ( XXXX XXXX 's ) mishandling of my loan application and mis-advertising the type of loan I am eligible for. 

Prospect Mortgage is responsible for me pursuing this loan over the course of the last 4 months and should be responsible for repayment.

Company response to consumer: Closed with explanation