Consumer complaint received 2017-07-05
Product: Mortgage — Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — 
Company: MORGAN STANLEY & CO. LLC (NH)

This is to register a complaint on the processing of our mortgage application to Morgan Stanley Private Bank, National Association between XX/XX/XXXX and XX/XX/XXXXof 2017,  and its contractor XXXX XXXX. We have been shocked and suffered a high degree of mental anguish and damage by a process which included incompetence, reckless disregard for security, attempts to compel us to obtain from our accountant statements of fact that he could not legally make, intimidation, brinkmanship and false appraisal practices that are far outside best practices in the industry and a stark contrast to our experiences with two other prospective lenders we consulted during the same time period. We have brought these concerns to the attention of Morgan Stanley. We understand our experience is under review but there has been no redress. We therefore bring our complaint to the attention of the CFPB. Following are the particulars : 1. Incompetence : As is typical with mortgage applications, we provided details initially by telephone to XXXX XXXX of XXXX XXXX, including verifying or correcting information she obtained from an initial credit report. We were therefore shocked when, a few days later by mail, we received for signature the initial credit application in which nearly every fact was wrong, from the facts of which of us is the principal in our business, the XXXX XXXX XXXX XXXX XXXX, to the details of our credit history. We sent a lengthy memo outlining and correcting these facts. <P/>Unfortunately, the pattern of incompetence continued throughout the process, with repeated demands to submit documents we had already submitted and to justify facts that were obvious. For example, we went around and around with XXXX staff in their demands that we explain the source of a subtotal in a monthly Morgan Stanley statement for funds that had come into the account. We had explained and documented the sources of funds repeatedly, but when asked to justify the subtotal again, could only point to basic math. <P/>False Commitment Letter : When we applied with Morgan Stanley, they required we amend our Purchase and Sales Contract financing commitment date to XX/XX/XXXX. If we were unable to secure a commitment by that date, we stood to lose {$25000.00} in earnest money we had given to the sellers to secure the contract. As we got closer and closer to that date with no firm answer from Morgan Stanley,  we telephoned and emailed repeatedly and got vague, non-committal replies or no returned calls. During the last several days prior to XX/XX/XXXX we lost sleep, fielded, frequent calls from the realtor in New Hampshire asking whether the deal was on or off, and learned that another prospective buyer was waiting in the wings should our application be denied characterized Our contact at XXXX, XXXX XXXX XXXX was, astoundingly out of the office on XX/XX/XXXX, and his associate, XXXX XXXX who picked up the case in his absence knew nothing about it. Facing a hard deadline, we were forced to call our Morgan Stanley financial advisor for help in getting an answer from XXXX, even though she has no formal role in this process. Finally, at XXXX XXXX on XX/XX/XXXX, as our realtor was writing a message to the sellers asking them to return our earnest money and cancel the sale, we got word from XXXX that our commitment letter had been approved. However we were stunned when we discovered that the letter, when we received it that evening by e mail and, subsequently by mail, included three conditions, two of which we had already met with previously supplied documents and another that was unclear. When we sought clarification by email from XXXX XXXX, he replied by email with several more, new demands for information, none of which were in the commitment letter. In other words, there was no real commitment letter on XX/XX/XXXX and the conditions in that letter were not the real conditions we had to meet in order to receive approval for our mortgage. It seemed to us the commitment letter was in fact not a commitment at all, but instead a tool to push resolution of our application beyond Morgan Stanleys own XX/XX/XXXX deadline. <P/>2. Recklessness : Throughout this process, XXXX demanded submission of all documents through open email channels. Despite our frequent complaints, we were told to submit bank and credit card statements as well as all explanations for every question in this way. The result was not only a confusing tangle of email exchanges, but also the compromise of our privacy and potentially of our financial security. At one point, XXXX received a phone call from someone describing himself as a Morgan Stanley official offering an update on our application and leaving an extension at the bank. When she tried repeatedly to return the call, she got a message that the individual was not available and to call back. Only upon inquiring by email for the third time was she informed that no such extension existed at the bank. We can only surmise that some or all of the emails we submitted to XXXX in this process ended up in the possession of unauthorized persons, and that they have used them to wreak further damage to our financial well being. <P/>On XX/XX/XXXX, XXXX received calls and phishing e mail attempts by persons impersonating XXXX XXXX XXXX who represented themselves as responsible for our credit card account. She provided their requested confirmation of our card details, only to discover that the card and her email account were hacked. Fortunately, she realized this almost immediately and took measures to secure the account and replace the cards. We can not link this directly to XXXX recklessness with our financial information but it is a disturbing coincidence that it happened during a time when we were being repeatedly asked to provide our financial and credit details to them. 3. Attempted Invitation to Fraud : On two  occasions, XXXX officer XXXX XXXX demanded by email that we obtain from the CPA contractor we employ to supervise our accounting and prepare our tax returns a letter attesting to facts about our business which are not within his purview. On XXXX XXXX, XXXX XXXX demanded by email that we get a letter from our CPA attesting that our legal business can relocate to a new address and explaining a drop in our XX/XX/XXXX self-employment income over the XX/XX/XXXX level. We refused, because our accountant had no role in our decision to relocate and we have never discussed the matter with him other than to advise him that we were moving. Subsequently, XXXX XXXX again demanded on XX/XX/XXXX that we acquire a letter from our CPA verifying our self-employment, including the date on which the firmed opened for business, that it was currently open for business, and that it was in good standing. Again, we refused because none of these were facts that our CPA would know of or would be qualified to judge. In no circumstances would we ask our trusted accountant to make written statements that he could not legally make simply to do us a favor in facilitating our mortgage approval. It is offensive not only that such statements would be requested, twice, but also that Morgan Stanley Private Bank , NA would accept such documents. <P/>4. False Appraisal : An appraisal ordered by Morgan Stanley was completed and submitted XX/XX/XXXX, but not shared with us until XX/XX/XXXX. That appraisal compared the property we were buying ( XXXX XXXX XXXX XXXX, XXXX, NH XXXX ), a 4,000 sq ft home on five+ acres, to five properties. None of the first three were within five miles of our new address. The other  two were in the same neighborhood within one mile of our property, and in the same price range, but, inexplicably, on the appraisal their values were discounted by at least 13 %. In a phone conversation on XX/XX/XXXX with both XXXX and a Morgan Stanley Private Banking official, we were told that because XXXX XXXX XXXX is a property with a main house and an additional dwelling unit, it must be counted as two houses, not one. XXXX County tax records consider the property as one house and prohibit it ever being transferred as two properties ; we have checked. It has one electric meter. Another appraisal done around the same time frame by another lender arrived at a valuation of $ XXXXgreater than the sales price of {$610000.00}. <P/>A 2,000 square foot, three bedroom, two bath home in this area generally sells for $ XXXX {$350000.00} in this part of New Hampshire . Logically, two properties should be more valuable, not less. Nonetheless, XXXX declared to us on XX/XX/XXXX that the fact of two buildings instead of one meant the aggregate value could only be was only {$560000.00}. They offered us a choice of either renegotiating the sale price, four days before the scheduled closing, providing an additional {$40000.00} in cash towards the sale price or accepting a higher rate on the mortgage. We consider this to have been rank manipulation to extort higher than fair market price from a consumer. XXXX, and we must assume, Morgan Stanley, knew of the appraisal on XX/XX/XXXX, but chose not to advise us of thiswhich meant that we had no opportunity to challenge the appraisala process that Morgan Stanley and XXXX both acknowledged to us on XX/XX/XXXX would take 14 days. Had we been advised about the appraisal on XX/XX/XXXX, when it was signed and provided to XXXX, we would have challenged it. This was no longer an option available to us by XX/XX/XXXX if we wanted to obtain a clear to close statement from Morgan Stanley in time to attend our closing on XX/XX/XXXX. Instead, we were faced with a fait accomplieeither accept the wildly divergent appraisal and a higher interest rate, or lose our change to close on this property. <P/>XXXX. Intimidation : On XX/XX/XXXX, at XXXX XXXX XXXX received a call from Morgan Stanley Private Banker XXXX XXXX on a recorded line with the " senior underwriter '' at XXXX ( whose name she does not recall ) who said he was reviewing our file and inclined to " make an exception '' to approve it, but there was no one else at the office able to complete the review until the following day. When XXXX protested that people were planning travel to the closing on the XX/XX/XXXX, 600 miles away, and not having confirmation that it would proceed until 24 hours before the closing was not acceptable, the underwriter asserted that she should lower her voice when speaking to the person with the authority to approve the loan. When she protested the demands for what seemed to us to be improper letters from the CPA, which seemed like an inducement to fraud, he asserted indignantly that this was not fraud and she should not make that accusation. Nevertheless, she persisted. And he concluded the conversation with the promise that an answer would be forthcoming by noon on XX/XX/XXXX. <P/>At XXXX XXXX on XX/XX/XXXX, XXXX XXXX and XXXX XXXX, calling on a recorded line, informed XXXX that the loan was " cleared to close, '' and verified the spelling of our names, the property address and various other facts. By that time, we had revived an earlier application with another prospective lender and could have closed at the end of XXXX on that loan ( the only outstanding condition of which was the prior sale of our current residence, closing on which is scheduled for XX/XX/XXXX ). Nevertheless, to avoid the additional expense and mental trauma of rescheduling the moving company and all the other contingencies involved with moving as previously scheduled, we accepted the Morgan Stanley loan and closed at XXXX XXXX on XX/XX/XXXX at XXXX XXXX XXXX in XXXX, New Hampshire, driving late into the night and all the next day in order to be present at the closing.