Consumer complaint received 2022-07-25
Company: ZINC Financial, Inc.,
State: AZ
Product: Mortgage
Sub-product: Other type of mortgage
Issue: Trouble during payment process

Complaint:
XX/XX/XXXX - I spoke with XXXX XXXX, a business development representative for Zinc Financial, over the phone about obtaining a loan through their company to acquire a home located at XXXX XXXX XXXX XXXX in XXXX, Arizona. Via an email sent on XX/XX/XXXX @ XXXX p.m. entitled : Zinc Financial-Fix and Flip XXXX XXXX provided the following terms : AZ-85 % -90 % LTP ( loan to purchase ) 100 % rehab 10.50 % -9.99 % rate 1.75 points 9 month term XX/XX/XXXX - I provided background information about myself and the project via email. 

XX/XX/XXXX XXXX XXXX confirmed that Zinc Financial was willing and able to proceed with the loan and emailed me Zincs list of required forms and documentation to proceed. 

XX/XX/XXXX - Required documents were provided to Zinc Financial via email to XXXX XXXX as requested. XXXX XXXX supplied Zinc Financials final terms sheet at XXXX p.m.. The terms sheet provided outlines the term of loan ( 9 months ), interest rate ( 9.9 % ), purchase price ( $ XXXX ), loan amount ( $ XXXX ) and lists fees. One of the fees listed is the rehab control fund of $ XXXX. No further documentation for the rehab control fund was provided until an email received after closing on XX/XX/XXXX. 
Transaction was scheduled to close XX/XX/XXXX, but delayed by Zinc Financials underwriter until XX/XX/XXXX After contributing the required $ XXXX plus lender fees, I borrowed {$180000.00} to acquire the home and property located at : XXXX XXXX XXXX XXXX in XXXX, Arizona XXXX. At closing I paid 1.75 % in points for an additional {$50000.00} as needed for rehab costs. 
Closing costs were based on a total amount available of {$230000.00} however only {$180000.00} was distributed to the seller. At no time did Zinc Financial disclose their terms for the additional {$50000.00} rehab control fund in writing prior to closing the loan.

Prior to the loan closing I had at least two phone discussions with XXXX XXXX about the additional {$50000.00} rehabilitation funds and was assured that funds would be released in a timely manner with proof of payment, valid receipt, photographic evidence, and an inspection. The verbal statement provided by XXXX XXXX were inline with the following written statement entitled REHAB DRAWS found on page2 of the Zinc Financial Inc. Loan Application under GENERAL GUIDELINES. Additionally STEP 11 found on page 3 UNDERSTANDING OUR PROCESS eludes to all funds being released at close. 

Complete written terms for withdrawal procedure were only disclosed after closing via an email with the subject line : XXXX - Control Fund Submission Process and Tracking Spreadsheet which was sent XX/XX/XXXX by Zinc Financial , Inc. Executive Assistant, XXXX XXXX XXXX 

Email XXXX - Control Fund Submission Process and Tracking Spreadsheet provided an erroneous spreadsheet which XXXX XXXX reported to have entered based on my loan application submission of the form entitled REHAB ESTIMATE OF IMPROVEMENTS. Page 7 of the Loan Application provided by XXXX XXXX on XX/XX/XXXX at XXXX a.m. Per the title of the section in question, I provided an estimate of the costs required to renovate the subject property given limited inspection time and access prior to closing. I submitted my estimated costs to the best of my knowledge at the time and was at no time told by verbally or in writing that these estimates would be considered firm numbers going forward. As a result, I was very concerned about XXXX XXXX email and reached out to her quickly after receiving the correspondence to discuss the control fund document. 

During my phone conversation with XXXX XXXX, she expressed that amending the form was possible but that corrections could only be done once and would likely require a change fee. I proceeded with the renovation of the property with this knowledge and requested the form be amended on XX/XX/XXXX after performing 90 % of the project and floating the rehabilitation costs on my personal credit cards. XXXX XXXX responded on XX/XX/XXXX at XXXX p.m. confirming my email had been received and that We will review your request. Once I have an answer I will be in touch with you. I called a couple days later to inquire about the status and left voice messages for several Zinc Financial representatives. 

When the second billing statement arrived, I discovered that interest was accruing on the entirety of the {$230000.00} despite having never received the $ XXXX. When I was able to get XXXX XXXX on the phone days after my first attempt to touch base, I inquired about why I was being charged interest on funds I was not in possession of. She seemed to understand my concern as did XXXX XXXX representative I talked with while waiting to talk with XXXX XXXX. XXXX XXXX instructed me to contact XXXX XXXX, a service manager with Zinc Financial. 

After a somewhat heated conversation with XXXX XXXX, she insisted that she had assurances from her legal team that Zinc Financial is within their rights to charge interest on undistributed funds. As my request to amend the Control Fun Submission Form was denied, she instructed me to submit all of our proof of receipts, photos to XXXX XXXX for re-review of amendment. Within 10 minutes of sending the email it took hours to put together, XXXX XXXX send the following response on XX/XX/XXXX @ XXXX p.m. : After our conversation earlier today I spoke to the President of the company. He stated that we can move forward with one of the three options below 1. Apply the $ XXXX to the account as a principal paydown. 
2. Keep the loan as is ( all draws can be submitted through the website and requested with no change in the budget ) 3. Pay the loan off in 15 days with no interest.

These are the only options we can offer you at this time. Let me know how you would like to proceed with your account by tomorrow afternoon. 


After much reflection of the situation I currently find myself in, please find the above statement and attached documentation as my formal complaint of Zinc Financial , Inc. due to lack of disclosure and lending ethics violations. As outlined above, representatives of Zinc Financial , Inc. failed to properly disclose their lending terms in writing prior to closing. Representatives made fraudulent, misleading claims and underhanded tactics to obtain the loan and string me along until it was too late and they had racked up {$1700.00} in fees for undistributed funds. They will make over {$3300.00} in interest on the {$50000.00} over the course of 6 months ( the requited amount of time to wait before refinancing ) Given that we can not access some or all of the funds we will have additional interest expenses on the credit cards. Neither the interest being charged on undistributed funds or the control fund being fixed based on a ESTIMATE were disclosed prior to close of escrow.

Company response to consumer: Closed with explanation