Consumer complaint received 2024-01-05 00:00:00
Product: Mortgage — Conventional home mortgage
Issue: Closing on a mortgage — Closing disclosure or other related disclosures
Company: Intercoastal Mortgage LLC
State: VA

Complaint narrative:
We believe that Intercoastal Mortgage, through Vice President and Senior Loan Officer XXXX XXXX, engaged in predatory lending, as well as violations of both the Truth In Lending Act and the Real Estate Settlement Procedures Act, by withholding material negative information from us concerning the homebuilder we were considering hiring and who insisted we use Intercoastal for construction of our new family home. Specifically, Intercoastal either knowingly or negligently withheld the fact that XXXX XXXX XXXX XXXX had a history of not finishing ( let alone beginning ) construction within the time period required under Intercoastal 's loan terms. This information would have had a direct impact on our decision to undertake a loan with Intercoastal. We believe that despite the language in the loan contract that Intercoastal has hidden behind in response to complaints from other affected families, Intercoastal and XXXX XXXX maintained an ongoing relationship with XXXX XXXX XXXX XXXX and therefore stood to gain financially by collaborating with a homebuilder who is now facing multiple felony accounts for fraud and larceny in XXXX XXXX, XXXX  ( XXXX XXXX XXXXXXXX ). 

In fact, from our initial contact with XXXX XXXX on XX/XX/XXXXXXXX  until our loan closing on XX/XX/XXXXXXXX  the only information we received from XXXX was that XXXX was a good builder and they had worked with him a lot. Incidentally, another family that has filed a complaint with the CFPB ( # XXXX ) stated that XXXX said the same thing to them. 

We did not become aware of the true relationship between Intercoastal and XXXX XXXX XXXX XXXX until after we fired XXXX XXXX XXXX for fraud and breach of contract on XX/XX/XXXX. Since that time, we have come to know that there we are only one of nearly a dozen families who are victims of XXXX XXXX XXXX and whose loans were underwritten by Intercoastal with XXXX XXXX as the loan officer. Two families have already filed complaints about Intercoastal ( Complaint # XXXX and # XXXX ) with the CFPB and we anticipate more complaints against Intercoastal  to be filed. 

We now know that Intercoastal was made aware of concerns about XXXX XXXX and XXXX XXXX  XXXX XXXX  prior to our closing our loan with Intercoastal on XX/XX/XXXX. These communications were : Attorney letter to XXXX XXXX, SVP of the Construction Group at Intercoastal on behalf of one family, dated XX/XX/XXXX, detailing their problems with XXXX and XXXX XXXX XXXX, including lack of work and delays and the familys desire to purse legal action againsXXXX XXXX XXXX XXXX. 

Ongoing communications to Intercoastal  from multiple families over the course of XXXXXXXX  complaining about excessive delays in permitting and construction, incomplete or shoddy construction, blatant overcharges through change orders, and lax fiduciary controls with loan draw requests. One family, who first alerted us to the problems with XXXX XXXX  XXXX in XX/XX/XXXX, had contracted with him in XX/XX/XXXXXXXX  and had communicated with Intercoastal continually the ongoing issues with XXXX. It is estimated that between 8-10 families contracted with XXXX XXXX XXXX and Intercoastal and we believe the majority have fired XXXX and XXXX XXXX XXXX for fraud and breach of contract. 

[ Note : We encourage CFPB to utilize its XXXX XXXX to obtain these and other relevant communications from Intercoastal ] We also believe that Intercoastal acted in bad faith when XXXX and XXXX XXXX XXXX XXXX, after we notified Intercoastal that we terminated XXXX & XXXX, committed to work with us to move forward and transfer our loan to a new builder. On more than XXXX occasion, including in conversations with our attorney, XXXX committed to helping us move forward. Instead, less than a month later, Intercoastal sent us a Notice XXXX XXXX and despite CEO XXXX XXXX XXXX to help us find a positive way forward, in the end, Intercoastal had no real desire to help us. XXXX separate mortgage lenders we contacted, as we searched for alternative lending, expressed surprise that XXXX would take such steps and stated such action would be unusual and questioned whether there XXXX have been something to hide. By the time XXXX sent its final letter, via outside attorney, reiterating its intent to terminate the loan, we were left with little time to obtain new financing. In the end, we were forced to sell our property at a loss to pay off the construction loan with XXXX. 

Background : On XX/XX/XXXX, our realtor contacted XXXX XXXX XXXX XXXX XXXX XXXX, the realtor representing XXXX and XXXX & XXXX Builders, concerning construction of a new home on a property in XXXX, XXXX A subsequent email from XXXX to our realtor specified that I did speak with the builder and Intercoastal Mortgage XXXX XXXX XXXX XXXX, XXXX ) is the required lender for the construction to permanent loan. 

On XX/XX/XXXX, we met with XXXX XXXX with XXXX XXXX XXXX XXXX to discuss the construction of the new home for our family. Following our meeting, XXXX reiterated he wanted us to use XXXX Mortgage. 

On XX/XX/XXXX our realtor sent us an email with a link to XXXX application portal to begin the loan process. We completed the application same day. 

On XX/XX/XXXX we received an email from XXXX XXXX with the construction finance approval. 

On XX/XX/XXXX we had a conference call with XXXX and in the conversation he stated that XXXX was a good builder and they had worked with him a lot. 

On XX/XX/XXXX we executed the construction contract with XXXX XXXX and XXXX & XXXX Builders. 

On XX/XX/XXXX we closed our loan with XXXX Mortgage. 

On XX/XX/XXXXXXXX  we terminated XXXX & XXXX XXXX for fraud and breach of contract. 

On XX/XX/XXXX we called XXXX to report our termination of XXXX & XXXX XXXX. XXXX and I discussed options to move forward and transfer the loan to a new builder, extending the term of the original construction loan, and bumping up the loan to cover any additional costs. XXXX also mentioned that XXXX XXXX had called him to complain about the number of families ( approximately XXXX at that time ) that had begun to send him termination letters. 

On XX/XX/XXXX XXXX sent a follow-up email about our conversation where he stated that We want to accommodate a smooth transition to a new builder as quickly as possible so that you can move forward on the construction of you home. 

On XX/XX/XXXX we emailed XXXX a summary of our phone call from XX/XX/XXXX and asked if there was anything else they needed. 

On XX/XX/XXXX we emailed XXXX again asking what else they needed to move forward besides a declaration letter specifying the last day that XXXX & XXXX did work on our property. XXXX replied with a list of requirements, including a ridiculous requirement for a lien waiver from the builder despite the fact there was no legal standing for him to file one ( the required time to file under statute had long expired and the builder had not started any work ). 

On XX/XX/XXXX our attorney contacted us to say that she had had a very good conversation with Intercoastal CEO XXXX XXXX and XXXX of XXXX XXXX XXXX. The result was that XXXX would allow the loan to be extended to the new builder upon confirmation of a contract with the new builder and due diligence. 

On XX/XX/XXXX we received a Notice of Default via courier from XXXX saying that they would not extend any further consideration regarding our construction loan and would call the loan no later than its maturation date of XX/XX/XXXX. This was completely counter to the conversation we had with XXXX XXXX as well as the conversation our attorney had with XXXX XXXX and XXXX of XXXX. 

On XX/XX/XXXX we contacted XXXX XXXX, XXXX XXXX, regarding the letter and expressed our concern and shock that that they were not going to help us move forward. A number of times during the call XXXX XXXX reiterated his desire to find a positive outcome for us and that he wanted to help us find the right path to build our home. It is worth noting, though, that XXXX was more concerned with the rate XXXX was carrying on the construction loan note as opposed to our situation. 

On XX/XX/XXXX our attorney responded to XXXX letter of XX/XX/XXXX asking for reconsideration and that our new builder had been vetted and we were ready to move forward. 

On XX/XX/XXXX Intercoastals outside law firm responded that XXXX would not help us and would instead continue with the loan termination. 

On XX/XX/XXXX we were forced to sell our property at a loss to pay off the construction loan. 


Questions for XXXX : What would XXXX stand to gain through its relationship with a builder who was clearly known for permitting delays, construction delays, incomplete, late, and in most cases shoddy work? Furthermore, by not disclosing negative information on this builder to prospective clients, was there a financial incentive to be gained in the form of higher rates ( interest rates were increasing in XXXX ) and fees knowing the proposed house would not be constructed in the contracted 12-month timeframe? Lastly, why would XXXX be the required lender for the builder if no relationship is supposed to exist between the XXXX? 

Under the general construction loan terms, XXXX could XXXX homeowners XXXX separate three-month extensions ( something both XXXX and XXXX confirmed was a possibility for our family ). Each extension would result in a higher-interest rate and fees. 

In our discussions with the other families, to the best of our knowledge, out of the approximately 10 construction loans underwritten by XXXX for the purpose of XXXX XXXX XXXX to construct a new custom home, not a single home was completed within the original XXXX construction loan term. As such, families were forced to extend their construction loans that resulted in higher interest rate terms and additional fees and closing costs. 

XXXX consistently hides behind contract language that it is only a middle man and does not maintain a relationship with any builder. If that is true, why would XXXX call XXXX XXXX to complain about all the people firing him? Furthermore, we heard through one family that XXXX had a " sit-down '' with XXXX ( prior to our engagement with Intercoastal ) to discuss ongoing issues with customer home builds. Such action represents that a long standing relationship did exist. 

A reasonable person would then conclude that XXXX XXXX and XXXX withheld material negative information about XXXX & XXXX XXXX from our family in favor of underwriting a construction loan knowing that the construction of our home in XXXX would be impossible. This would result in the need to for us to apply for loan extensions whereby they knew they could gain greater compensation via higher interest rates and closing costs and fees. 

We reiterate that Intercoastal either knowingly or negligently withheld material negative information on XXXX and XXXX & XXXX XXXX. Had this information been disclosed to us, it is with 100 % certainty that we would not have taken a loan from XXXX. As a result of Intercoastals predatory lending and greed, our damages exceed {$400000.00}, including : 1 ) {$160000.00} for original down payment and closing costs, 2 ) {$29000.00} for the interested paid on the construction loan from closing to XX/XX/XXXX XXXX

Company response to consumer: Closed with explanation