Consumer complaint received 2026-03-10 00:00:00
Product: Mortgage — Conventional home mortgage
Issue: Closing on a mortgage — Changes in loan terms during or after closing
Company: FIRST INTERSTATE BANCSYSTEM, INC.
State: ID

Complaint narrative:
I applied for and closed a residential construction loan with First Interstate Bank in XX/XX/XXXX for a new home build in Idaho. What followed was not a routine construction dispute. The loan process, draw administration, disclosure handling, and document controls appear to have broken down in ways that exposed me to improper disbursements, inaccurate loan records, undisclosed conflicts, and mechanics lien exposure. At closing on XXXX XXXX XXXX, the loan documents classified approximately {$55000.00} in excavation and foundation-related construction costs as soft costs. These were hard construction expenses, not ordinary administrative or closing costs. That classification appears to have allowed funds to be advanced without the controls that should have applied to construction draws. From that funding sequence, {$19000.00} was later paid to XXXX XXXX by Check # XXXX. Records also indicate that XXXX XXXX was in a registration lapse period during part of the relevant work timeline. A second major concern is that First Interstate loan officer XXXX XXXX ( XXXX # XXXX ) appears to have performed dual roles on this file. Records identify her as the loan XXXX, while email evidence shows she also handled processor-type functions, including loan conditions and credit-rescore directives. That overlap appears to have compromised basic segregation-of-duties safeguards on a file where funds were routed to a subcontractor owned by her spouse, XXXX XXXX of XXXX XXXX XXXX The same record also shows that the construction contract used to support the loan was executed on XX/XX/XXXX, while the contractor entity, XXXX XXXX XXXX XXXX XXXX, did not legally exist until XX/XX/XXXX. The draw process then continued in a way that caused further harm. On XX/XX/XXXX, First Interstate funded a draw of {$98000.00}, including {$70000.00} specifically allocated to the lumber package and {$23000.00} for framing, siding, and labor. Despite that, Builders XXXX remained unpaid for months, later asserted an unpaid balance in the {$48000.00} {$49000.00} range, and recorded a lien against the property. At the same time, forensic reconstruction reflects transfers totaling at least {$15000.00} from the contractors primary operating account into XXXX secondary accounts, along with tax payments from that same account. That sequence raises serious concern that loan proceeds earmarked for construction materials and labor were not promptly or properly applied to the vendor obligations they were supposed to satisfy. There were also serious disclosure and document-integrity problems. XXXX personnel appear to have withheld federally required closing and disclosure documents and facilitated electronic document handling that did not match what the borrowers believed they were signing. The available records further reflect that DocuSign XXXX logged signatures from an IP address that conflicted with the borrowers physical location and carrier profile at the time. In addition, the DocuSign audit history later recorded that on XX/XX/XXXX, documents were PURGED from account - Requested by sending account during active litigation. A consumer should be able to rely on a bank and its settlement and title partners to preserve accurate loan records, provide required disclosures, and maintain a trustworthy audit trail. I also believe I was deprived of meaningful notice and the protections that should accompany a construction-loan closing. The record indicates that escrow and title personnel withheld key federally mandated documents tied to disclosure timing and rescission-related protections, and that material aspects of the loan and draw records were misclassified, altered, or later destroyed. These failures left me exposed to contractor nonpayment, mechanics liens, and a loan file that does not appear to reflect a transparent or properly controlled lending process. This complaint is not about dissatisfaction with construction quality alone. It concerns a federally regulated mortgage and construction-loan process that appears to have involved : ( 1 ) misclassification of draw categories, ( 2 ) conflicted loan administration, ( 3 ) funding tied to a contractor entity that did not yet legally exist when the contract was signed, ( 4 ) failure to ensure loan proceeds were applied consistently with their stated draw purposes, ( 5 ) withholding of required loan and escrow disclosures, and ( 6 ) later destruction or purge of audit-trail documents relevant to the loan.

Company response to consumer: Closed with explanation