Consumer complaint received 2022-11-21
Company: RUOFF MORTGAGE
State: IN
Product: Mortgage
Sub-product: Other type of mortgage
Issue: Closing on a mortgage

Complaint:
Our Dispute : Unfair, Deceptive or Abusive Acts or Practice violation One Time Closing Construction -to-Permanent Mortgage is not truly a XXXX-time close loan and caused severe financial harm to XXXX XXXX and myself. 
We were forced to sell our primary residence at XXXX XXXX XXXX, XXXX, XXXX to complete the conversion of our XXXX XXXX XXXX construction to perm loan which is advertised as a One Time Close Loan. We qualified to own both homes simultaneously and purposely did not make the loan contingent upon the sale of our previous primary residence because we knew there may be delays and a shortage of short-term rental homes. 
It was acceptable to keep our previous primary residence and build a new primary residence without selling the XXXX  one, per Ruoff Mortgage at the time of the loan application and initial closing on XX/XX/XXXX. 
We qualified for keeping our prior primary residence ( XXXX XXXX  ) and our new primary residence. We subsequently sold our prior primary residence because of construction delays and the desire of the potential buyer to not wait for the unknown date of completion of our new home. We were unable to find a rental home for XXXX reasons ; we have XXXX dogs and we did not know when our new home would be completed. There were no rental options for a short term lease with XXXX dogs, although we tried repeatedly to find XXXX The construction had been delayed due to supply chain issues, so we were in a position where we were forced into buying a less expensive existing home and using it as our primary residence. We lived in this home as of XXXX and established residency at this home because we were unable to get a confirmation date for the completion of our new home. We were forced to sell this home by Ruoff Mortgage in order to complete the conversion of our One Time Close Construction Loan. We closed on the property on XXXX XXXX XXXX, XXXX on XXXX at a substantial loss in order to get it sold quickly ( in an unfavorable market ) so as to comply with Ruoff Mortgages demands. We purchased the home for {$260000.00} on XX/XX/XXXX and sold it for {$240000.00} on XX/XX/XXXX, sustaining a loss of {$25000.00} including closing costs, Realtor fees, etc. 
Per RuoffXXXX XXXX XXXX I spoke with our Compliance dept. Couple of options : Sell the property on XXXX XXXX would want to see a purchase agreement and preapproval letter for the new buyer. The sale does not have to be final before the construction loan converts. 
Refinance the property on XXXX XXXX XXXX XXXX XXXX XXXX 
A letter from XXXX or the current servicer of this mortgage to state they are okay with you vacating the home as a non-residence of the home as of XXXX XXXX. The letter would need to be on XXXX letterhead and signed by a servicing manager. Maybe since they knew you were building, they would give you this letter. Keep me posted please. 
XXXX The only viable option was to sell the home as XXXX XXXX would not give us a letter or even acknowledge our request, even though we contacted them XXXX times. Refinancing would require an additional {$46000.00} +/- and this was not a reasonable or realistic option. 
There were no stipulations in our agreement for the construction to perm loan that we dont purchase another home and live in it. Ruoff Mortgage requested that we notify them of any material changes in outstanding credit obligations or employment status. My employment status did not change, our credit circumstances improved as we lowered our monthly obligations since the inception of the construction loan. We closed on our previous primary residence on XX/XX/XXXX and notified the lender on XX/XX/XXXX. 
We planned to occupy our new home when it was completed. We had not broken our agreement with Ruoff Mortgage to occupy our new home as a primary residence. 
The request to sell our primary residence in XXXX  caused us severe financial hardship and weakened our financial stability. We had to sell it at a loss of {$25000.00} due to the downturn in home sales and increase in mortgage rates. If we refinanced the home, we would have a higher interest rate, plus have to produce an additional {$46000.00} in cash to make it work. This was not possible at the time because we had already put large sums of cash down on both homesour current residence, and the new construction home. 
We should not have needed to make our XXXX  home a XXXX XXXX as we qualified to have both homes and could have utilized this residence as a second home for our children and for business as it is closer to one of my companys offices in downtown Indianapolis. 
We believe this is a misrepresentation of the original loan conditions as we closed on the loan before we purchased the XXXX  home. It is not truly a XXXX-time close loan even though we only closed XXXX time. The program is called XXXX Time Construction-to Permanent Mortgage Lending. Ruoff was saying that they did not have to convert the loan to a permanent loan unless we complied with their unreasonable demands. The additional fees to not convert the loan were approximately an additional {$65.00} per day. We were already paying this additional fee and did not know how long we could sustain this additional financial burden. 
We believe this was a way for us to be charged additional {$65.00} a day in fees because Ruoff Mortgage would not convert the loan until we sold our XXXX residence at a loss or refinanced it with substantial fees. 
We also believe this was a way to encourage us to refinance with Ruoff Mortgage in order to collect additional fees, and have a higher interest rate than the one we had closed on in XXXX, XXXX. 
In conclusion I believe that Ruoff has violated Unfair, Deceptive or Abusive Acts or Practices ( UDAAP ) regulations based on the following definition : An act or practice is unfair when all of the following are true : It will cause or is likely to cause substantial injury ( usually monetary ) to us, the consumers ; It can not be reasonably avoided by us, meaning it interferes with our ability to effectively make informed decisions ( we were not aware of stipulations that Ruoff would later require of us ) ; AND The resulting injury is not outweighed by benefits to us Unfair practices includes discriminatory conduct with respect to all banking products and services ( we were repeatedly advised by other lenders that they would not require us to take such steps ). 
A representation, omission, act or practice is deceptive when : The representation, omission, or practice misleads or is likely to mislead the consumer ; The consumer 's interpretation of the representation, omission, or practice is reasonable under the circumstances ; AND The misleading representation, omission, or practice is material, meaning it is likely to affect a consumer 's choice or conduct regarding the product or service. 
An act or practice is considered abusive if : It materially interferes with the ability of a consumer to understand a term or condition of a product or service; OR It takes unreasonable advantage of the consumer 's : Lack of understanding of the material risks, costs, or conditions of the products or service ( no condition was provided that we could not purchase another home to replace the one we sold ) ; Inability to protect his or her interests in selecting or using a consumer financial product or service; OR Reasonable reliance on a covered person ( the loan officer ) to act in his or her interest Pressuring or convincing vulnerable individuals into unfavorable terms such as offering to refinance our home for an additional {$46000.00} cash with a higher interest rate than we already had. Both of these conditions would have negatively affected our financial stability. 
Thank you for your help in this matter, and your attention to our concerns, XXXX XXXX and XXXX XXXX

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation