Consumer complaint received 2024-07-30
Product: Mortgage — Other type of mortgage
Issue: Closing on a mortgage — Delays with the closing process
Company: WATERSTONE MORTGAGE CORPORATION (AZ)

LAST FILE ATTACHMENT CONTAINS THIS INFO EASIER TO READ My husband XXXX and I applied for a Construction/Permanent loan with Waterstone Mortgage Company ( WMC or Waterstone ) in XXXX, XXXX, and were accepted. We have complaints about our experiences with WMC that cost us over {$20000.00}.

COMPLAINTS We have two complaints about Waterstone Mortgage Company ( WMC ), two situations that WMC was responsible for, which cost us about $ XXXX each. 

1. WMC created a fraudulent a rate lock agreement ( RLA ), and extorted interest rate lock extension fees from us that were not owed, and were based on the fraudulent RLA. 
We were forced to pay their fraudulent rate lock agreement fees against our will, when a lien was placed on our home. If we didnt pay the fees, we would not have been able to get our home completed for an indefinite period.

o We believe these actions by Waterstone Mortgage Company were a conspiracy to commit fraud and criminal extortion.

2. WMC unreasonably withheld closing our construction loan without contractual reasons, and it cost us over $ XXXX. This situation occurred before the fraudulent rate lock agreement issue. The delay resulted in us having to pay a price increase of {$9800.00}.

o We believe what WMC did to delay our loan from closing timely was a breach of contract. 

In XX/XX/XXXX, XXXX XXXX  notified us that they purchased our mortgage loan from WMC. We contacted XXXX XXXX  about our complaints. They were escalated to their fraud department to investigate. They took our information and documentation in XX/XX/XXXX. Unfortunately, after we waited patiently for a long time to learn the results of their investigation, they would not tell us anything. We have no idea if they contacted WMC, or not. It took us a while to put all this documentation together in fewer pages than the hundreds we sent XXXX XXXX 

NOTE : When I - me- my are used, I am referring to myself [ XXXX XXXX ]. When we - us - our are used, I am referring to both my husband [ XXXX XXXX XXXX XXXX XXXX ] and myself. I am the one who took care of this aspect of building our home. 

LOAN DATES & FACTS XX/XX/XXXX : We signed a Disclosure Package that included a Rate Float/Lock Agreement ( RLA ). 
We chose to FLOAT the interest rate on the RLA.

FLOAT was already electronically checked ( not a hand-written checkmark ) when we came in to wet sign the documents, because our loan officer advised against locking it yet. 
Our intent for floating the interest rate on XX/XX/XXXX was to wait to lock it until right before closing. We didnt want the loan terms to expire before the construction was complete. 
The LOCK option had 4.25 % for the interest rate, which at the time was higher than a normal home loan because construction loans tend to be higher. 
o XXXX XXXX fixed mortgage rates in XX/XX/XXXX were about 3.1 %, so we didnt want to lock at 4.25 %. 
o Given both our credit scores were in the mid to low XXXX, we would have received the best interest rates for a XXXX fixed mortgage. 
XX/XX/XXXX : We signed a Closing Disclosure for our construction/permanent loan. 
Both the Construction Closing Disclosure and Refinanced Closing Disclosure documents show a fixed interest rate of 4.25 % for the one-year term of the Construction loan and the XXXX term of the Refinanced loan it would modify to when construction was complete. 
BOTH Loan Terms, in the Can this amount increase during closing? columns said NO, so we thought this is how we locked in the interest rate for both loans.

There was no discussion about interest rate prior to closing, so we assumed WMC dictated the interest rate and we trusted WMC knew what they were doing and were honest about what the XXXX fixed rate was. 
o Our hind sight research shows the average interest rates for XXXX fixed mortgages was about 3.36 % in XX/XX/XXXX, which seems like 4.25 % was a mistake on the Closing Documents. 
o Our hind sight thinks it is odd that the interest rate of 4.25 % was identical to the interest rate [ and relevant information ] listed in the LOCK option we didnt choose on XX/XX/XXXX. 
o Our hind sight guess is that perhaps our loan officer thought we locked the interest rate on XX/XX/XXXX, and proceeded with our Closing Disclosure and Closing Documents accordingly. 
o It seems we might have been cheated out of the current interest rate on XX/XX/XXXX that was much lower than 4.25 %. 
XX/XX/XXXX : We closed on our construction/permanent loan. 
Basically, the same as the Closing Disclosure, with minor differences in final amounts for closing costs. 
XX/XX/XXXX : Closed on Loan Modification, after our house was completed and final draws processed, in a rush after WMC stopped processing draws due to a false default claim, which caused a pause in construction. 
We were forced to pay additional false rate lock extension fees for the extra time it took for final draw to be completed, until we closed. 

COMPLAINT 1 : SUMMARY WMC created a fraudulent a rate lock agreement ( RLA ) seven ( 7 ) months AFTER the date they claimed we locked the rate and they provided written confirmation. WMC extorted interest rate lock extension fees from us, based on the fraudulent RLA.

We are guessing WMC did this to cover for mistake ( s ) made on the interest rate when we closed.

WMC put us in a situation where we were forced to pay their fraudulent rate lock agreement fees against our will, or we would not be able to get our home completed for an indefinite period and a lien could have been placed on our home, until we paid them.

WMC claimed : We locked an interest rate by phone on XX/XX/XXXX ( 2 days after we checked XXXX ) that they claimed expired on XX/XX/XXXX. 
o There are no phone records to support WMCs claim, and our loan officer typically emailed. 
They provided written confirmation of this interest rate lock on XX/XX/XXXX via email. WMC has yet to provide documentation it was sent to us and received by us. 
This information trickled out from XXXX, XXXX to XXXX, XXXX, but WMC would not provide documentation.

WMC demanded : We pay them rate lock extension fees, which we would not pay without the documentation they claimed to have. 
WMC forced us to pay rate lock extension fees, after months ( since XX/XX/XXXX ) of us requesting documentation and after letters from our attorney asking them to provide it. 
We did not receive the only documentation WMC was ever going to provide us, until after we wired the funds. 
AFTER paying the fees, is when we were provided their " written confirmation '' that turned out to be a fraudulent, unsigned, XXXX Rate XXXX/Lock agreement PDF document whose properties show it was created on XX/XX/XXXX by their XXXX  Customer Relations Manager. This RLA was created seven ( 7 ) months after WMC claimed they provided it to us via email.

WMC coerced/squeezed us by doing the following : WMC claimed we were in default because we would not pay their unjustified interest rate extension fees, and instructing their third part draw XXXX XXXX XXXX to stop processing draws as of XX/XX/XXXX, after only processing one draw. 
Eventually our builder had to stop building when the house was almost done. 
XX/XX/XXXX we were given a XXXX XXXX Notice of Lien on our property, because WMC wasnt processing or paying our builders requests for draws.

WMC stopped processing draws from us for our site development costs, so we werent able to access over {$30000.00} of contingency funds we paid WMC out-of-pocket at closing, which meant we had to use up our savings to complete our site development responsibilities to complete our house.

We had so little funds left, our son-in-law had to wire the extortion funds to WMC for us. 

XXXX XXXX XXXX we signed XX/XX/XXXX : On page XXXX, under the XXXX  option we chose : o It states, points which shall apply on your loan in the first paragraph when explaining advising WMC of our election to lock the rate. There were no such fees incorporated into our loan when closing on XX/XX/XXXX, and there is no record of us paying fees to lock the interest rate. 
Fraudulent Rate XXXX/Lock Agreement : o On page XXXX, under the Lock information continued, it lists Discount Points : {$1100.00} but if the fraudulent RLA was real, there would be a record of us paying the fees or it being incorporated into the loan, and there isnt evidence of us paying those fees. 
On page XXXX of the XX/XX/XXXX XXXX, it states we must lock the interest rate prior to closing, which we thought occurred when we signed the Closing Declaration on XX/XX/XXXX. 
On page XXXX it also states that the rate lock period ( inclusive of the Rate Lock Date and the XXXX XXXX XXXX ) must be long enough to cover the time necessary to complete the construction and satisfy all necessary steps to modify into the permanent loan. 
o For the same reason WMC checked XXXX  for us, is why they knew it would not be long enough to lock it on XX/XX/XXXX, as WMC many months later claims we did. [ But we didnt. XXXX XXXX XXXX XXXX XXXX XXXX XXXX AZ XXXX XXXX XXXX XXXX XXXX XXXX XXXX, XXXX XXXX XXXX XXXX Customer Relations Manager, XXXX XXXX XXXX XXXX XXXX XXXX, XXXX XXXX XXXX XXXX XXXX, and WMCs outside counsel XXXX XXXX XXXX XXXXXXXX XXXX XXXXXXXX XXXX XXXX were involved in our second complaint conspiracy to commit fraud and criminal extortion. 

COMPLAINT XXXX : SUMMARY It took almost 6 months to close the construction loan we applied for with Waterstone, for which we signed a XXXX XXXX on XXXX XXXX. It closed in a rush on XX/XX/XXXX. 

We believe what WMC did to delay our loan from closing timely was a breach of contract. Their breach of contract resulted in us having to pay a price increase of {$9800.00} that we otherwise would not have had to pay. 

WMCs XXXX XXXX our Loan XXXX and XXXX XXXX XXXX XXXXXXXX XXXX XXXX AZ office were involved in this breach of contract. 

As early as XXXX we were discussing a closing date. We continually requested to close our construction loan before our price protection deadline of XX/XX/XXXX. 

WMC arbitrarily changed the requirements to close, to ones that were not disclosed in the Disclosure Package contract we signed, and not requested from the underwriters. 
The Discloser Package contract doesnt say requirements could be added by WMC at their discretion. 
Waterstone delayed and refused to close our loan when we asked them to, because the loan officers who were involved made up their own requirements. 
For whatever reasons they did this, it was not for reasons that were in our best interest. 

XX/XX/XXXX I emailed XXXX XXXX and XXXX XXXX to complain about the cost to us for WMC taking almost 6 months to close our construction loan. This was quite contrary to page XXXX of their Disclosure Package that says, Waterstone Mortgage is committed to closing your loan on time. 

XX/XX/XXXX XXXX of Waterstones reasons for delaying moving forward with closing our loan are in XXXX XXXX response. XXXX of his responses relevant to this complaint are below : XXXX. XXXX of the conditions clearly communicated was we would not close the loan until you received permits. We did not receive your proof of permits until XX/XX/XXXX. 
o XXXX XX/XX/XXXX notes below, explaining this was not true. XX/XX/XXXX is when we provided the LAST update ; many before that. 
o The contractual Disclosure Package we signed on XX/XX/XXXX has XXXX bullets that read Permits ( or status of permits ) XXXX bullet about the permit is also on page XXXX, under Construction Underwriting Process, under the statement The Items required for submission to Construction Underwriting are as follows : Another bullet is found under the Project Review Process, which applies to the project reviews done by WMCs third-party draw administrator. This process comes after closing. 
o I emailed XXXX XXXX regular permit status and site development updates, beginning when I told him the plans were submitted on XX/XX/XXXX, and on XX/XX/XXXX a couple of days after the initial review was completed on XX/XX/XXXX. 
o On XX/XX/XXXX I provided a link to the public records. All he had to do was use the link I provided to periodically check, but I still continually emailed updates. XXXX XXXX XXXXXXXX o NOTE : WMC never asked for the permit document prior to closing, nor at any time afterward. It was not a condition from the underwriters. 

XXXX. Your price disputes with XXXX impacted our ability to have a fixed purchase price. 
o WMC already had a fixed purchase price that was not going to change for a potential price increase. It was a made-up condition. A home construction project commonly has change orders throughout the build. It changes the costs, but not the purchase price.

o Page 4 of Disclosure Package, a bullet under Construction Underwriting Process, required a Copy of signed construction contract between borrower and builder/contractor. This document had been provided early in the loan process. 
o Another bullet on page XXXX reads Builder/contractors Cost Breakdown and Draw Schedule. The draw schedule came with the accepted XXXX XXXX order we provided WMC. It also included the cost breakdown of the site development tasks we were responsible for. 
The Cost Breakdown was emailed to XXXX XXXX by XXXX XXXX on XX/XX/XXXX. XXXX XXXX could have requested this much sooner. 
o Page XXXX of Disclosure Package, Additional Information : provides for Cost Overruns and Change Order Policy. Both sections provide for additional expenses from the builder that would be taken care of without changing the fixed purchase price. The fixed price doesnt change. 
o XXXX XXXX XXXX XXXX XXXX that was included in our XXXX XXXX accepted order was provided to WMC very early in the loan process. It explains in their Disclosures & Addendums section, under XXXX. XXXX XXXX XXXX how a potential price increase would be paid. 

XXXX XXXX recommends that you budget for contingency funds to pay for potential price increases as well as costs associated with your owner responsibilities. This can be in the form of cash savings or included in your loan with your lender. 

We included over $ XXXX cash above closing costs and the cost of the home, in our loan. This was to cover for estimated site development costs not incurred nor paid yet, and anything else such as a price increase, if we closed prior to knowing whether we would incur a price increase. 
We continually told XXXX XXXX that if we had to pay a price increase, we would use our savings, but there were also the cash contingency funds that were required to be paid at closing. WMC had our most recent bank records to know we had the money in our accounts to pay for it from our savings. 
XXXX XXXX recently worked for XXXX XXXX and should have known a potential price increase would not affect the fixed purchase price that was already provided to WMC. 
o We had already paid $ XXXX cash for our lot, over half of the $ XXXX we were financing for a project appraised at $ XXXX. The lot equity in itself gave WMC value protection against a price increase.

o The underwriters never gave the condition that WMC needed to know if we would have to pay a price increase before we could close. XXXX XXXX made-up the claim that we needed a fixed purchase price to move forward to closing. 
o We paid our price increase as a change order on XX/XX/XXXX. The change order would be added into OUR costs of our home, but would not be added to XXXX XXXX purchase price. It was already fixed. 
o The facts seem like the real reason XXXX XXXX was waiting to close is because he wanted to incorporate our price increase into our loan ; so much so that he contacted XXXX XXXX without our permission to ask about it. We know this from an XX/XX/XXXX email XXXX XXXX XXXX XXXX sent us telling us that our bank [ lender ] called her wanting to wrap it into our loan, even though we already told XXXX XXXX so many times that we would pay it out of pocket. 
[ quote from XXXX XXXX email ; provided in supporting documents ] You might recall that your bank [ lender ] reached out to me a few weeks ago and were ready to wrap it in, however, they needed the final signed copy. In order to obtain an XXXX XXXX signature and to get a final copy, I would need to collect payment. Once I receive payment and a fully signed change order, I can close it out and send you and the bank the final copy. From there, you could request a reimbursement in the form of a draw from your bank. XXXX can not request this check for you, as this would come out of your soft costs and not a part of our draw schedule. [ We were unaware of XXXX XXXX reaching out to her. We were not copied on his communication. ] WMC unnecessarily waiting to see if we would incur a price increase is what CAUSED the {$9800.00} price increase from our builder. 

Neither the permit condition nor waiting for a price increase were conditions from the underwriters, nor are they supported by the XX/XX/XXXX Disclosure Package contract we signed in good faith and expected Waterstone to honor in good faith. Those XXXX conditions were conditions from XXXX XXXX, possibly driven by XXXX XXXX. 

The XXXX XXXX we signed on XX/XX/XXXX is a legally binding contract. Therefore, we believe the actions Waterstone Mortgage Company took to delay closing our loan, none of which were disclosed nor were they conditions of the underwriters, were a breach of contract.

If the Underwriters needed to have a copy of the permit, we would have had to produce it prior to closing, which we didnt and to this day was never asked for by WMC underwriters nor anyone. 
Page XXXX of their XXXX XXXX we signed on XX/XX/XXXX says, Waterstone Mortgage is committed to closing your loan on time. Yet for all the months we requested to get our loan closed they withheld closing on time ( almost six months ), for reasons not substantiated by their Disclosure Package.

Additional time delays occurred that were a result of our loan officer either not preparing ahead for what was needed to close the loan in a timely manner, or being too inexperienced to know what would be needed.

During the preventable rush to close is when we believe mistakes were made by XXXX XXXX, and we were made to cover and pay for leading into complaint XXXX. 

The XXXX XXXX we signed on XX/XX/XXXX is a legally binding contract. Therefore, we believe the actions Waterstone Mortgage Company took to delay closing our loan, none of which were disclosed nor were they conditions of the underwriters, were a breach of contract. 
If the Underwriters needed to have a copy of the permit, we would have had to produce it prior to closing, which we didnt and to this day was never asked for by WMC underwriters nor anyone. 
Page XXXX of their XXXX XXXX we signed on XX/XX/XXXX says, Waterstone Mortgage is committed to closing your loan on time. Yet for all the months we requested to get our loan closed they withheld closing on time ( almost six months ), for reasons not substantiated by their Disclosure Package. 

Additional time delays occurred that were a result of our loan officer either not preparing ahead for what was needed to close the loan in a timely manner, or being too inexperienced to know what would be needed. 

During the preventable rush to close is when we believe mistakes were made by XXXX XXXX, and we were made to cover and pay for leading into complaint XXXX.