Consumer complaint received 2023-08-31 00:00:00
Product: Mortgage — VA mortgage
Issue: Closing on a mortgage — Fees or costs after closing
Company: Intercoastal Mortgage LLC
State: VA

Complaint narrative:
Our familys attempt to build a custom home using a construction loan managed by Intercoastal Mortgage, XXXX ( XXXX ) was nothing short of horrendous. More specifically, XXXX XXXX, a senior loan officer with XXXX, provided services that fell far below our expectations of an experienced professional responsible for overseeing the ongoing construction funding of a high value single-family residential home. Over nearly two years, XXXX collected tens of thousands of dollars in interest from my family for a loan on the construction of a home that our original contractor, one XXXX XXXX XXXX of XXXX XXXX XXXX XXXX, XXXX, promised would be complete in approximately eight months. XXXX XXXX required us to use XXXX as our lender. He directed us to XXXX XXXX specifically, who assured us that XXXX was a great builder, that we would be in good hands, and that our home would be completed on time. Based at least in part on these representations, we signed a contract with XXXX XXXX and XXXX XXXX  XXXX in XX/XX/XXXX. At the time, we were still stationed in Colorado XXXX, CO, but we anticipated relocation to the Washington, XXXX, area in XX/XX/XXXX. Little did we know that not only was XXXX XXXX not even licensed to build homes, but that XXXX had no real knowledge or experience with him or XXXX & XXXX, nor had XXXX done any diligence to ensure XXXX XXXX and XXXX XXXX  XXXX were capable of building our home at all, much less in a timely manner. 

Over the course of the next two years, we relied on XXXX as our construction loan manager to conduct periodic inspections to ensure work was completed when draws were requested by XXXX XXXX and XXXX XXXX  XXXX. We did not learn until later in the construction process that XXXX actually contracts inspections to third party companies, which have little to no incentive to check to ensure work is completed. 

XXXX and XXXX XXXX lack of oversight over third party inspectors directly contributed to XXXX XXXX and XXXX XXXX XXXX receiving draw payments, taken out of our construction loan, for work that was not performed at all, was only partially performed, or was performed so poorly as to require us, the homeowner, to pay out of our own pocket to completely re-do or significantly fix the work performed. 

We expressed concerns to XXXX XXXX regarding our former builders egregious delays and requests for draws for incomplete work, but neither XXXX XXXX nor XXXX took any action to implement more stringent inspection measures. For example, XXXX approved our former builders request for payment for completion of water and sewer hook-ups when, in reality, no water or sewer had been hooked up at all. XXXX also approved our former builders request for payment for completion of interior paint-final when not a single drop of interior final paint had been applied. When we previously asked our prior builder, XXXX XXXX, why we were being asked to approve draws for construction either not completed at all, or only partially completed, he told us he had to request draws in advance of the work actually being completed to account for delays in payment from XXXX and that delays in payment from XXXX would result in delays of our project overall ( which would, ironically, ultimately only result in XXXX collecting additional interest payments ). When we asked XXXX about XXXX XXXX delays in completing work he had already been paid to do, XXXX XXXX told us it was our responsibility as homeowners to ensure the work had been fully completed in accordance with the draw schedule. How we, as homeowners, were expected to be able to verify that complex construction phases had been completed, was neither clear nor possible. 

When we relayed our issues with XXXX XXXX to XXXX XXXX, he feigned surprise and dismay, as though this was the first time hed heard of such problems. The same was true of our interactions ( and our lawyers interactions ) with ICMs leadership, including Senior Vice Presidents XXXX XXXX and XXXX XXXX and CEO XXXX XXXX. However, as time went on, we learned that, in fact, XXXX XXXX and XXXX were put on notice months before we signed a contract with XXXX XXXX and XXXX XXXX  XXXX regarding the same issues we experienced, but they continued to extend loans that unsuspecting customers would then pay XXXX tens, if not hundreds of thousands of dollars in interest to service. To add insult to injury, even after we fired XXXX XXXX and XXXX XXXX XXXX and hired a new builder, XXXX initially resisted our efforts to transfer the small remainder on our construction loan to our new builder without a written lien waiver from XXXX XXXX, something both we and they knew he would never agree to provide. Furthermore, as we learned during the mortgage appraisal process for our new home, XXXX appears to have failed to adhere to some of the lending requirements associated with VA construction loans, which we utilized for our home. Had these lending requirements been adhered to, we believe XXXX XXXX and XXXX XXXX XXXX fraudulent practices XXXX have been identified earlier in the process. 

On XXXX XXXX XXXX webpage, he states that the homebuying journey doesnt have to be painful or scary ( see XXXX XXXX XXXX ). For my family, it was all of this and worse. XXXXs complicity in using unsuspecting customers financial backing to extend massive loans to a fraudulent builder, all while collecting massive interest payments and failing to perform even basic oversight functions associated with construction loan management directly contributed to not only our family, but at least a dozen others, losing tens if not hundreds of thousands of dollars over the course of years. XXXX XXXX inaccurate, unfounded, and irresponsibly cavalier assurances to us as potential home buyers regarding our former builder and his complete lack of oversight over construction loan draws resulted not just our losses to XXXX in interest payments, but also in XXXX XXXX and XXXX XXXX  XXXX receiving hundreds of thousands of dollars we now owe to the bank, all for work he did not complete. 

We can not emphasize enough what a nightmare this experience was for us. If you are a customer searching for a construction loan servicer to oversee your project, or if you are a lending institution shopping for a construction loan servicer to manage your loans to customers, we can not more strongly recommend you steer as far away from Intercoastal Mortgage as possible. They have neither the customers nor your interests in mind. XXXX profited greatly by deliberately and knowingly lending customers money to a fraudulent and incompetent builder, ultimately leaving those same customers to pick up the pieces ( and pay hundreds of thousands of dollars out of their own pockets ) to fix the issues XXXX should have identified in the first place.

Company response to consumer: Closed with explanation