Consumer complaint received 2024-05-17
Product: Mortgage — Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — Changes in loan terms during the application process
Company: PulteGroup, Inc. (MA)

I am writing to you to ask that the Consumer Financial Protection Bureau look into this matter with the hopes of having some, if not all, of my wife 's and my earnest money deposit be returned. 

My wife and I recently XXXX  and decided to downsize our current living arrangement. The development we looked at was XXXX XXXX, an over 55 housing development located in XXXX MA, a Pulte XXXX project. In late XXXX XXXX of XXXX we began looking at the different units offered by Pulte at this location. We spoke with the sales agent and selected a unit to purchase in XXXX of XXXX. 

When we were discussing the purchase of a unit at XXXX XXXX with Pulte XXXX, we were very clear that in order to purchase a unit at XXXX XXXX we would need to sell our existing home. The Pulte Sales Agent acknowledged that and put us in touch with Pulte Mortgage and we spoke with the XXXX regional office. They reviewed our finances/ savings account and said that Pulte Mortgage could approve a conditional loan based on the selling our home at XXXX XXXX XXXX in XXXX. We agreed as we knew that we needed to sell our home in order to afford the purchase of the XXXX XXXX XXXX. We agreed to put a 10 % down payment on the unit from our savings of {$68000.00}. A contract was drawn to that effect that we signed in XX/XX/XXXX. 

We signed the contract believing the conditional loan agreement was part of the agreement to purchase and if we did not sell our home for the amount stated on the conditional letter, we would not be under an obligation to purchase the unit at XXXX XXXX. We made this verbally clear to both the Sales agent and Pulte Mortgage and they said nothing. We put our house on the market at the end of XXXX, at a very reasonable price ( the lower end of the XXXX estimate ) in order to meet the conditions of the loan. However, in XXXX of XXXX the housing market sales began to slow, and the Federal Reserve started to increase interest rates which negatively impacted the selling of mortgages to prospective home buyers. We kept our house on the market until early XXXX with no credible offers. We contacted the Pulte XXXX in late XXXX of XXXX to let them know we were not going to meet at least one of the conditions of the loan approval letter, ( i.e., provide final closing statement for the sale of property located at XXXX XXXX XXXX XXXX MA XXXX with net proceeds of {$620000.00} showing payoff ) and due to the slowing sales market, we needed to terminate the agreement to purchase the unit at XXXX XXXX. 

At that time, we were told by the purchasing agent that had referred us to Pulte Mortgage, that the contract to purchase the unit was a separate agreement, and that the conditional mortgage loan approval letter was not affiliated with the purchase of the unit and we were obligated to buy the unit. The purchasing agent further stated that just receiving the conditional letter of approval bound us to move forward and that the actual conditions stated within the letter were not relevant. The sale agent instructed us that we should contact Pulte Mortgage and work out another loan- which would mean borrowing more money at the rising interest rates. The agent also advised that we should consider reducing the listing amount of our home. We were contacted by Pulte Mortgage with various other offers none of which we could afford. Interesting though Pulte Mortgage continued to process our loan request even after being told that we could not meet the condition of the loan. Pulte Mortgage requested in XXXX a copy of a bank statement showing that the {$68000.00} deposit cleared our bank account. This is well after being told in XXXX that we could not meet the condition of the conditional letter. 

When we explained that to Pulte XXXX, they responded by saying that if we did not continue with the purchase of the unit at XXXX XXXX we would be in default of the contract and would forfeit our {$68000.00} down payment. As we could not move forward, Pulte XXXX found us in default, terminated the agreement and retained our savings of {$68000.00}. And it is worth noting that this was very early in the process of Pulte developing the next four units at XXXX XXXX. The unit we selected was put back on the market, was sold for their asking price approximately a month later, and the sale closed in XXXX when the unit was finished. We tried to negotiate with them to see if we could receive any of our funds back, however those attempts were not successful. They only offered us to use the earnest/down payment of {$68000.00} towards the purchase of any remaining units being sold by Pulte in Massachusetts. Again, as we had stated in the past, given the current housing and mortgage market, etc. this was not a viable option for us as it would entail taking on more debt than we have now through our current mortgage. Their response to my wife and I was, we could always refinance at a later date when the mortgage rates decreased. As a retired couple in our late XXXX and early XXXX we do not believe this is a realistic alternative. We have contacted Pulte XXXX XXXX XXXX twice with no response. 

This whole process seems very unfair to the consumer. XXXX is a multi-million-dollar corporation that operates in the housing market every day, while the individual consumer buys a house maybe XXXX or XXXX time in a lifetime and is at a huge disadvantage when dealing with XXXX. In retrospect I see that I should have shown the contract to a lawyer before signing and was foolish to believe any verbal communication with XXXX XXXX or Mortgage was going to be part of the contract or even be considered. I am writing now hoping your agency XXXX be able to help in resolving this matter. 
I believe the Conditional Loan approval letter provided by XXXX Mortgage was only issued, within XXXX hrs of reserving the unit at XXXX XXXX, to lock us into a purchase no matter the cost to my wife and me. The actual conditions stated in the letter meant nothing, the intent of the letter was only to create an obligation to purchase and if we did not move forward we would forfeit the XXXX deposit. The only recourse to maintain the deposit was to work out a different loan at a higher rate and borrow more funds. 
In general, this whole process with XXXX XXXX seems to make it legal for them to basically steal money from the individual consumer. 

In closing I would also like to include the following that shows XXXX knew that the rising interest were affecting the housing market as stated by XXXX XXXX in an article that was published in the XXXX XXXX XXXX on XX/XX/XXXX ( see below ). 

" Housing is front and center in the Federal Reserve 's battle against inflation, '' XXXX XXXX XXXX XXXX said in a conference call to discuss earnings XXXX said would-be buyers are canceling contracts for XXXX reasons. Some have been priced out by rising rates and high home prices. Others face a psychological hurdle. The aforementioned factors combined with inflation and a looming recession are causing some potential buyers who are in good financial positions to stay on the sidelines. 

In many cases, buyers are making decisions " that economically don't make a ton of sense '' and forfeiting " pretty sizable '' deposits of XXXX money, XXXX said. 
" They're just not confident in making a purchase, '' he said. 

To compensate for falling demand in the long term, XXXX is canceling deals for land where it would have developed new residential communities. The company canceled contracts for XXXX lots in the third quarter, XXXX XXXX XXXX XXXX XXXX XXXX said. It wrote off {$24.00} XXXX in deposits and pre-purchase costs associated with canceled deals. XXXX expects to spent {$1.00} XXXX less on land in XXXX compared to this year. 

It appears that XXXX cancelled contracts and wrote off {$24.00} XXXX in deposits and ended their year profitable. Why were my wife and I forced to forfeit our {$68000.00} XXXX deposit ( which represented 75 % of our life savings at the time ) for a unit that was later sold for the full asking price approximately XXXX month later? This does not seem fair or right. 

Thank you for your attention to this matter. 

XXXX and XXXX XXXX