Consumer complaint received 2022-08-15
Product: Mortgage — FHA mortgage
Issue: Closing on a mortgage — 
Company: Guild Holdings Company (CA)

I closed an FHA XXXX loan with Guild Mortgage in XX/XX/XXXX. The loan included {$280000.00} for me to build an addition to my house and renovate the existing home. 

This is a construction loan. The XXXX loan is a reimbursement loan, so my Contractor and I have to come up with funds to perform the work and then ask for reimbursement after the lender has reviewed the work performed, reviewed the pictures taken by our FHA Consultant, upon completion of the required HUD Reimbursement request forms. 

Since closing the loan, not a single individual from Guild Mortgage has contacted me on the back end or in Construction Management to discuss the process with me. All they did was send emails introducing me to their third party construction management firm XXXX XXXX. Not a single person from XXXX XXXX has contacted me either. My only source of contact with Guild Mortgage is still only the Loan Officer, who is on the front end of this transaction. 

As you know, a XXXX loan charges full principal and interest payments from the day the loan closes. Even though the construction funds have not yet been disbursed, I am still on the hook for the full loan amount. Most construction loans require a borrower to pay interest only during the construction period, and then full Principal and Interest payments commence upon completion of construction. XXXX loans are so archaic in their concept that it forces me to pay the full principal and interest payments from the start which I have done diligently. 

My complaint is about the fact that : 1. Guild mortgage takes on average 15 working days to disburse the funds after my Contractor, FHA Consultant and I work through their own processes and submit a draw request. In these times there is complete work stoppage on my project. So just imagine, you are paying full principal and interest on a mortgage on a house where the funds that I am paying the mortgage and interest on, takes 3 weeks to be released to me.

2. I am unable to reach anyone in the Construction team or the XXXX XXXX to discuss my situation. I resorted to emailing the CEO and COO. One time I got a call from someone who claimed to be the COO, but since then, no one responds to me. 
3. There is about {$170000.00} left in my project. So I am paying a full mortgage on a full loan balance of {$720000.00} of which {>= $1,000,000} is supposed to be funds that I am to use to renovate my house, but the bank takes XXXX weeks to disburse the funds to me. 
4. On XX/XX/XXXX, we submitted a draw request. This draw request was complicated because my Contractor failed to pay a vendor who proceeded to file a mechanics lien on my property. The vendor installed a steel beam in the property.

5. The options are for the Contractor to pay the mechanics lien, or I pay the mecha
nics lien, or we draw from the remaining funds allocated to framing to pay the lien.

6. We outlined these options, I obtained consent from the Contractor, the FHA Consultant and the Vendor that we would request that Guild Mortgage pay the vendor directly from the framing budget. I submitted the draw request with a copy of the outstanding invoice from the vendor that needs to be paid, the mechanics lien that was filed, and a detailed letter explaining what has transpired and why we are choosing the option where the mechanics lien is paid out of the framing budget. Just so you note, FHA 203k loans requires the Contractor or I to spend funds for the work to be completed before we can request reimbursement.

7. After 3 weeks of review, Guild Mortgage came back to say, they will not re
lease funds unless the Contractor or I paid the lien. The Contractor has indicated that he has spend funds and can not pay the lien.

8. The questions I proceeded to ask Guild Mortgage was : a. If I paid the lien, could I get reimbursed from the framing budget - no response b. If there is an issue with trust of the Contractor, then will they be willing to release reimbursement funds to me - no answer 9. All this while, not a single phone call from anyone at Guild Mortgage. At time of writing this complaint, I have written another email to the CEO and the COO without any response either. All I got was a letter giving me what my loan balance is, if I wanted to payoff the loan.

10. There is a fact that the Contractor received funds to pay the vendor and he did not. Which is bad. But in the end, in refusing to disburse funds, and asking the Contractor to pay the lien when he has already agreed that the amount that is supposed to be disbursed from the framing budget, is not hurting the Contractor, it is hurting me the homeowner.

11. The bottom line is that whether I pay the lien or the Contractor pays the lien, or it is taken from the remaining {$170000.00} that is still left in my budget, for which I am paying full interest on, is costing me, the homeowner whom the Lender and FHA claim to protect. This grand stance of wanting the Contractor to pay the lien before releasing funds is not hurting the Contractor, it is hurting me. because while all this is taking place, there is work stoppage on my project. I have no kitchen, no rooms for my children to resume school in, all because of {$7100.00} when there is {$170000.00} still left in my construction budget. I am paying interest on that {$170000.00} by the way.

12. My project is at a stand-still. Not a single person in Management or Leadership with either Guild Mortgage or XXXX XXXX has bothered to pick up the phone to contact me or to make an executive decision in this matter. While all this is taking place, there is work stoppage on my project. I have no kitchen, no rooms for my children to resume school in, all because of {$7100.00} when there is {$170000.00} still left in my construction budget. I am paying interest on that {$170000.00} by the way. There is no accounting system that any CPA or Tax Accountant can not write notes to explain what transpired. It can not be that complicated to take {$7100.00} from the existing framing budget and make a note that this is a special circumstance. Yes it is true that the previous Draw # 3 included funds to the Contractor to pay the Vendor and he did not, but holding up my project is really not a solution either. The solution is to ensure that the mechanics lien is paid. If I pay it, I should be reimbursed from the framing budget, especially since the Contractor has indicated that he has spent quite a bit of funds and does not have funds to pay the lien.

13. The only reason such treatment is being meted out is because there is a discriminatory element to it. My project includes {$20000.00} in contingency funds. The addition/new side of my house has a new shingle roof, but the existing house has old gravel roof from XXXX, when the house was built. It simply makes no sense to build a house with half the house having new roof from XXXX and the old house still has gravel roof from XXXX, so I had it changed. Mostly because the old roof was too heavy for us to be able to obtain solar. Every solar contractor we talked to, would not do it unless the old heavy roof was replaced.

14. For a lender, who has pictures of the roof that was changed, to ask me a homeowner, whose money they are holding for me to upgrade my home, whether the roof change was necessary or discretionary is enough to indicate the level of disrespect and discriminatory tone of that question. 
XXXX. Because of this treatment, I have half a house standing incomplete, I have children starting school with no rooms to work or study in. It is a mess, but the CEO and COO and all senior Management of both Guild Mortgage and XXXX XXXX do not have a solution, other than the grand stance of asking the Contractor to pay a lien else they are not releasing funds. 
XXXX. But above all, not even bothering to answer the questions I posed is quite indicative of the service levels they offer. 

This is not an organization that knows how to do FHA XXXX loans or understands construction loans. Construction loans are not loans where you simply close a loan and hide behind emails. It always requires more servicing, because after the loan closes, there is a whole new process going on afterwards. The process of constructing usually someone's primary residence, and it can not be taken lightly. That is why most lenders have a Construction Management team that serves as a contact person for all their Construction clients after the loan closes. Construction loans are not transactional, they require servicing until the construction is completed. To leave me in the lurch and resort to sending me emails from third parties who have no authority is ridiculous business at any level. I am surprised the any CEO or serious management team will ignore this. If this is happening to one borrower, it must be happening to others as well or it should never be allowed to happen at all.

How can punishing a Contractor be a solution to a problem. Why should that be a solution without any regard for me the homeowner caught in the middle, unless of course, there is no intent to ensure my success at all. In a half done construction project, no one wins. If Guild Mortgage were to take over my house now, they will still have to put in a kitchen, and paint the rooms before off loading it to anyone, so what sense does it make to them if I fail at completing my project?

There has to be enough smart business leaders in this organization to at least know this. I doubt these United States would even be in existence if every business leader simply stopped at the problem. We all go to school to learn how to problem solve, not to stop at problems. Those in Leadership are paid to solve problems not stop at every problem they encounter. That is the stance being presented in this situation - that the single solution is that the Contractor has to pay the lien, because not a single person at Guild Mortgage or XXXX XXXX seems to understand that taking money from the framing budget to pay the lien is not paying the lien twice, it means having to go back to draw # 3 and marking that item as not paid to the vendor, and then associating this payment in Draw # 4 to that item. Any CPA or Tax accountant can clearly note what transpired.

Unfortunately, it appears this is too complicated, and the apparent solution is to refuse to make this adjustment, but rather to put the project to a standstill. How can that be a solution under any circumstance?

There is not a single leader at Guild Mortgage that can claim that the company has not been cited or faced any type of issue with regulators and others who have oversight on their operations. Those institutions do not simply stop and say " there is a problem '' so stop. The question is always what is the path forward which means solving the problem. How can you hold up payment on a homeowner 's project unless the Contractor involved pays a lien, when the contractor can not pay? What is the solution, should be the natural question that follows.